Aareal loan helps pay off REC debt

British Land and Schroders are to repay half of the £500m debt outstanding in the REC Retail Parks securitisation, secured against assets in Hercules Unit Trust. HUT has signed a £350m, five-year loan, entirely underwritten by Aareal Bank.

A £250m term loan will be used to repay half of the debt that expires in a year’s time and the manager will use a £100m revolving loan for acquisitions and disposals. Together with cash reserves, the revolving facility means the fund can serve notice to redeem the £194m of subordinated convertible notes issued at a coupon of 10% two years ago, when HUT was recapitalised. British Land said the term loan’s all-in cost is 4%, compared with 5.25% for the existing loan.