St Modwen Properties, the UK real estate investor and developer, has sourced a £475 million (€538 million) unsecured revolving credit facility from a syndicate of banks.
The debt facility, provided by Barclays, HSBC, NatWest, Santander UK and AIB Group, will replace £488 million of existing secured debt facilities.
The refinancing provides a reduced cost of debt by 50 basis points, from 4.2 percent to 3.7 percent, the firm said.
St Modwen also noted the unsecured debt financing would provide it with added flexibility ahead of the maturities of its £100 million convertible bond and £80 million retail bond in 2019.
The facility has an initial maturity of five years which can be extended to a maximum of seven years, subject to lender consent. St Modwen was advised on the refinancing by Rothschild & Co.
As part of the transaction, the company has cancelled interest rate swaps at a cash cost of around £6 million on completion, which will result in initial annual savings of around £2.5 million.
A non-cash expense of an estimated £4 million will be recognised in the first half of the company’s 2018 financial year regarding capitalised arrangement fees relating to the previous facilities.
“The successful transition to an unsecured debt structure will provide us with a greater level of financial and operational flexibility to implement our intended business plan at a lower overall cost of finance,” said Rob Hudson, chief financial officer of St Modwen.