Citigroup has arranged the first offshore loan for Malaysia’s Employee Provident Fund (EPF).
The £300m recourse facility is secured on three UK properties worth £490m that the pension fund has bought since starting to invest in Europe in 2010.
They are: 65 Fleet Street, EC4 let to Freshfield; 40 Portman Square, W1; and the Sheldon Square headquarters of Visa at Paddington, W2.
The debt was taken by four overseas and Asian banks: Bank of Tokyo-Mitsubishi; OCBC Bank of Singapore; Scotiabank; and Sumitomo Mitsui.
Sourcing the debt in the Far East and making it recourse meant the margin was only 123 basis points over Libor “instead of starting with a three,” said a source close to the deal.
With a fee of 110bps, the all-in cost was 145bps. Three weeks ago, Citi completed the £300m financing, with Royal Bank of Canada, of Lone Star’s acquisition of the Project Royal debt portfolio from Lloyds Banking Group, for around £540m, at a 600bps margin. The nominal value of the debt was around £900m.