Santander lends against regional assets with £63m loan to Legal & General fund

Santander has provided £63m of additional debt for Legal & General’s UK Property Income Fund, taking the total loan facility to £177m.

The bank, which is a new lender to the fund, will add to the £112.5m initially provided by Eurohypo in 2010.

“We always intended for one more bank to join,” said fund manager Charlie Walker. The facility expires in 2017.

Santander’s tranche is split as £52m of senior debt and £11m for capital spending. It brings the facility’s all-in borrowing cost to about 4% for the duration.

The loan provides UKPIF with a ‘hunting licence’, giving it flexibility on the assets the banks will lend against. “We don’t need to get consent per deal, but have guidelines against which we select the assets,” said Walker.

The core/core-plus fund has a £475m investment capacity and the new loan will help complete its investment programme.

“The essence for Santander was the quality of the income and underlying assets,” said Walker. “It’s great to see them lend on property outside London.”

The fund’s assets are clustered in the south east and include The Meadows shopping centre in Chelmsford and a Co-op distribution centre in Andover.