Royal Bank of Scotland has provided a five-year, £50m revolving credit facility for UK retail REIT Metric Property Investments, secured against specific assets.
“We will refinance assets that we own, enabling us to draw down on the facility to finance future acquisitions,” said Sue Ford, Metric’s finance director.
Conditions of the loan include that the loan-to-value ratio must not exceed 65% of properties’ total value and net rental income must not be less than 1.75 times net interest. This will be tested quarterly on a rolling basis of looking backward and forwards by two quarters.
The facility also requires the properties’ weighted average lease length to be more than seven years and for a minimum of 60% of the amounts drawn under the facility to be hedged. Total drawings cannot exceed 50% of the aggregate total value of the properties at the time of drawdown.
Metric aims to maintain a mix of revolving credit and asset-specific term debt with a variety of banks, hedging its interest rate exposure using derivatives.
“The group has used cash to fund its acquisitions to date,” said Ford. “With 90% of the proceeds from its flotation last March committed, the majority of its £190m of remaining firepower will be provided by refinancing with debt.”
She added that the company was in talks to secure other debt facilities with a number of banks who are “very receptive” to Metric’s proposition.
Metric sees a rise in the number of properties coming onto the market as banks tackle their backlog of problem loans and said 10 out of its 11 deals had been off-market transactions.