A syndicate of four banks has provided a £303m facility at 1.9% to Redefine International to help it fund £490m worth of purchases from Aegon UK Property Fund.
HSBC, Barclays, Abbey National Treasury Services and the Royal Bank of Scotland have teamed up to lend the UK REIT a £155m term loan and a £148m revolving credit facility.
Redefine reported the financing in an announcement on £490m worth of acquisitions. It has bought the AUK Portfolio of 19 mixed-use assets located across the UK for £437.2m, and Banbury Cross Retail Park in Oxfordshire for £52.5m, both from Aegon.
“This is a transformational deal for Redefine International, which rapidly improves the quality and scale of our overall portfolio, supporting our growth plans and strategy to generate consistent and growing income returns,” said Mike Watters, chief executive of Redefine, which is managed and majority-owned by South Africa’s Redefine Properties.
“In addition, the £303m debt facility secured as part of this transaction provides the company with additional flexibility as part of its future funding strategy.”
Its purchase of the AUK Portfolio, which includes offices, retail parks, industrial and a car showroom, about two-thirds of which are in London and the South East, will be split into two tranches:
Tranche 1 – comprising nine properties is expected to complete on or around 2 October 2015 at a purchase price of £203.5m (£212.1m including costs).
Tranche 2 – comprising 10 properties is expected to complete on or around 1 March 2016 at a purchase price of £233.7m (£243.6m including costs).
The new facility has a ratcheted margin structure which, with the completion of Tranche 2, is expected to be 1.9%.
Redefine said it also “intends to raise additional funds from assets sales, new equity and/or debt capital, subject to market conditions, to part fund the consideration of Tranche 2.”
“In order to provide certainty of funds to complete Tranche 2, Redefine Properties has agreed to provide the RPL Loan which, if utilised and not repaid, would result in the Combined AUK Portfolio becoming a 50:50 joint venture (the “RPL JV”) through the conversion and disposal.”
The latest acquisitions lift the value of the Redefine’s portfolio, which is mainly focused in the UK and Germany, to around £1.5bn.