Aviva cracks police HQ funding case

Aviva Commercial Finance has provided £104m of senior debt for the building and operation of two headquarters for West Yorkshire Police Authority.

The 24-year term loan, made by the insurer’s Public Private Finance team, is the third large loan made by Aviva’s commercial lending business this year.

Last month Aviva provided £100m of senior debt at a competitive rate of 4.9% to self-storage company Big Yellow and in March, £145m to the Kirsh Group to buy Tower 42 in the City of London.

The fixed-price loan for the police project was priced over the 2028 gilt at 2.43%, so the cost to the sponsor is likely to be around 5%.

The loan will fully amortise over the term according to  cashflows of the operation of the business.

Infrastructure investor and developers Interserve and Equitix advise the borrower, West Yorkshire PFI Operational Training and Accommodation.

The buildings, in Leeds and Normanton, will start coming into use from December 2013.

Aviva and other insurers active in the UK senior lending market have been targeting large loans and have been the main source of such finance for borrowers so far this year.

Kevin Sale, Aviva’s commercial finance director, said: “We are really pleased to have been able to extend our lending to the police sector on this project.

“Aviva Commercial Finance provides long-term, fixed-rate debt across a number of sectors and this scheme is a good long-term investment for Aviva and our customers.”