GPE venture and Picton Property Income borrow from insurance firm
Canada Life has provided £194m of debt for new clients Picton Property Income and Great Victoria Partnership, the latter a joint venture between REIT Great Portland Estates and the Liverpool Victoria Friendly Society.
“We are looking to expand our client base to established investors and more publicly listed companies,” said Canada Life director of real estate finance Nicholas Bent. The insurer has been lending on UK property for more than 20 years.
Its latest loans, for £114m and £80m, are at the upper end of Canada Life’s lending, which typically sits in the £10m-£50m range. Canada Life’s loan to the Great Victoria Partnership is an £80m 10-year, fixed-rate, non-recourse facility at 51% loan-to-value.
It refinances the partnership’s existing bank loan, which had been securitised in 2005 and was due to mature in October. The new loan is secured by the long leasehold interest at Mount Royal and 508/540 Oxford Street in London, an 88,500 sq ft retail block. Unusually for Canada life, it is interest-only, reflecting the fact that “it is in a strong location and the loan-to-value level is just over 50%”, said Bent.
The facility is priced off the 10-year gilt and cuts the all-in debt cost from 5.5% to below 4%. Great Portland finance director Nick Sanderson said the financing, GPE’s first with Canada Life, would diversify both its funding sources and the maturity profile of its debt.
Canada Life is also helping Picton Property Income, formerly ING UK Real Estate Income Trust but now managed internally, refinance £188.5m of securitised debt and bank loans due to mature next year.
It is providing £114m of senior debt for up to 15 years, with £34m repayable in year 10. This sits alongside another new, £95m loan from Aviva – a fixed rate, 20-year loan, which is amortising and will repay around a third of the debt over its life.
Both facilities have a 65% loan-to-value ratio and taken together, Picton’s £209m of new funding carries a blended margin of around 2.1%, reflecting an all-in fixed cost of 4.4%. Picton’s early repayment of existing facilities means it will have to pay an estimated £5.1m of swap breakage costs.