Santander Corporate and Commercial Banking has provided a £27 million revolving credit facility (RCF) to real estate investor Picton.
The borrower said that, in addition to existing undrawn facilities, the RCF could be used to meet the repayment of the 7.25 percent zero-dividend preference shares which mature in October 2016. The firm said that it will also provide additional firepower to make opportunistic investments.
The facility has a term of five years and is secured across four assets. Once drawn, the RCF is priced at 175 basis points over three-month Libor, which would currently reflect an all-in cost of 2.3 percent. The loan has a non-utilisation fee of 70 basis points.
Picton said that the terms of the facility allow for it to be repaid and redrawn over the life of the loan, enabling it to manage its gearing position.
If the facility is used to repay the preference shares in October, it will reduce the group’s overall annual cost of debt by £1.3 million, resulting in a 7 percent increase in dividend cover per year on a pro forma basis.
Picton currently has £37.2 million of undrawn facilities. The firm’s property portfolio is weighted towards UK industrial assets, but also includes offices and retail and leisure.
“This transaction will enable Picton to simplify its corporate structure in October through the repayment of zero-dividend preference shares, extending the group’s debt maturity profile and reducing the overall cost of debt,” said Picton chairman Nicholas Thompson.
“We have secured a flexible five year facility that complements our existing debt structure. It also ensures we can maintain an efficient balance sheet that we can adjust according to market conditions,” added Andrew Dewhirst, finance director at Picton Capital.