Tritax Big Box cuts debt cost with £500m facility

Tritax Big Box REIT has signed a £500m, five-year facility with a syndicate of four lenders, reducing its cost of debt by 35bps.

Barclays, Helaba, Wells Fargo and ING Real Estate Finance have provided the loan, secured on Tritax’s portfolio of logistics assets, at an opening margin of 140bps above three-month LIBOR. When fully drawn, it will reduce Tritax’s average margin payable on its debt facilities from 177bps to 142bps.

The facility is made up of a £320m term loan to be drawn immediately, an additional £80m available for a year, and a £100m revolving credit facility which includes a £10m overdraft. It can also be extended by £200m with lender support and an extra year after the first and second years respectively.

“The facility offers us substantial operational flexibility and includes an option to draw against our current and future forward funded investment assets at the same margin,” said Colin Godfrey, partner and fund manager at Tritax.

“The facility will also provide the debt resource needed to support our ongoing growth plans, building upon our strong financial performance.”

The new loan refinances just over £253m of existing debt provided by Barclays and Santander. Tritax’s existing three loans from Helaba, which total almost £70m, are unaffected. It is Wells Fargo’s and ING’s first loan to Tritax.

Tritax said the drawing of the initial £320m term loan will increase the portfolio’s loan-to-value (LTV) ratio to around 35%. It wants to increase LTV towards 40% in the near term.

“This is a very attractive loan package that will immediately reduce the group’s average cost of borrowing by 35bps, extend our average unexpired loan term and bring our LTV ratio more in line with the stated medium term target,” said Godfrey.

The new facility extends Tritax’s average unexpired loan term to five years.