Lloyds scoops £320m Value Retail Bicester refinancing

Outlet village operator picks Lloyds-led group to refinance flagship asset and repay high-yield loan, replacing lenders no longer originating in UK

Value Retail has refinanced its flagship Bicester Village asset and the company that owns it in a £320m restructuring led by Lloyds Bank. Value Retail pre-paid a 2009, £190m loan on the asset and high-yielding debt lent to the sponsor entity.

Hammerson has a majority interest in the limited partnership that owns the Oxfordshire mall, and 22% of the parent sponsor, alongside Simon Property Group, APG and the Value Retail team, led by Scott Malkin. Value Retail owns nine European schemes, which it developed and runs.

The Lloyds-led bank club's new loan includes an option to fund a fourth phase at Bicester Village
The Lloyds-led bank club’s new loan includes an option to fund a fourth phase at Bicester Village

The portfolio’s gross sales rose 13.3% last year; Bicester’s sales grew 17% and it has achieved double-digit sales growth since opening in 1995.

Lloyds Bank Commercial Banking has emerged from the financial crisis that left it with a £97bn legacy property book and aims to ramp up lending this year if it can find the right sponsors and deals.

Lloyds spent years getting to know Value Retail and won the mandate a year ago, after proposing a refinancing and offering to provide up to £350m.

Charles Mackintosh, Value Retail’s director of corporate, legal and finance, said another reason for the early refinancing was to plan ahead: “The banking landscape is changing significantly and two banks in the previous loan [WestImmo and DG Hyp] are no longer originating UK loans.

“We plan to build a fourth, 45,000-60,000 sq ft phase and will need funding at the end of this year or the early part of next. The two German banks couldn’t have expanded to accommodate phase 4. We wanted to make sure we were established with banks able to lend in the UK on development.”

An option to fund the development is written into the new loan for the club banks, which include Helaba, Royal Bank of Scotland and Santander, alongside Lloyds. The new interest-only finance is for five years and about £14m of it will repay a swap from the earlier loan, with the remaining £300m after costs secured on Bicester Village.

The 2009 loan refinanced debt securitised in Epic Value Retail. Mackintosh said a lender had approached the group about refinancing via a new securitisation, but he said “the fees are expensive, the reporting requirements hideous and the group prefers to work closely with a trusted group of relationship banks past the point of transaction execution.”

Value Retail will refinance one of its two outlet centres in Spain next. Las Rozas, in Madrid, was also securitised in RBS’s Epic programme. Last year the group refinanced La Roca, in Barcelona, with pbb Deutsche Pfandbriefbank and Pramerica.

In December, Deutsche Bank provided a €70m, five-year loan to refinance Fidenza Village in Italy.

Mackintosh said the quality of Value Retail’s assets made them bankable. “More debt is coming to the market but I am told it wants to go to safe places; the quality of the sponsor is what matters.”