Shaftesbury has shifted some of its debt to longer-term, fixed-rate funding, arranging a new £134.75m, 15-year loan with Canada Life Investments.
“We’re a long-term business and we wanted to tap into long-term funding, which is at historically low rates,” said Shaftesbury’s finance director Paul Ward. “We’re very pleased with the pricing, which is very competitive.”
The company is not disclosing the rate on the loan, but with UK gilts at 2.7%, JPMorgan Cazenove’s analysts put it at between 4% and 5%. Shaftesbury’s earlier 15-year loan from Aviva, taken out in January 2012, was at 4.43%, when gilts were around 2.1% but margins were wider, they point out.
The loan is secured on a number of properties held in a subsidiary company and is repayable in full at maturity in May 2029. Shaftesbury will cancel its £100m revolving credit facility with Bank of Scotland, which was due to expire in September 2016.
Part of the Canada Life loan will be used to repay drawings and the £29m cost of terminating £110m of interest rates swaps with BoS, with the balance used to repay drawings under other revolving credit facilities.
Shaftesbury has also cancelled a £30m short-term credit facility it arranged with Lloyds in February and will be increasing its revolving credit facility with the bank by £25m to £150m; this matures in November 2018.
Together, the deals add £31m to Shaftesbury’s debt facilities and move its weighted average debt maturity from 5.6 years to 7.6 years. “We’re delighted to have entered into this long-term relationship with Canada Life Investments, a new lender to the group, as well as complet-ing the restructuring of our arrangements with Lloyds,” said Ward.