The UK Commercial Property Trust is close to agreeing a new £120m loan from MassMutual-owned Cornerstone.
The £1.2bn closed-ended Guernsey-listed company will use the fixed-rate, 12-year loan to repay an £80m facility from Lloyds that expires in June. The balance will be used for general working capital purposes.
The loan will be secured against six assets: Aberdeen Gateway; Junction 27 Retail Park in Leeds; 81-85 George Street in Edinburgh; Broadgate Retail Park, Horsham; Motor Park, Portsmouth and Emerald Park, Bristol.
The pricing of the Cornerstone facility, for which Chris Bates (pictured) heads it real estate finance practice in Europe, is expected to be 1.25% to 1.45% over the 12-year UK gilt, which at present would mean a total cost of 3.31% to 3.51%.
The company is looking to take advantage of the competitive lending market by putting in place cheap, long-term debt.
In addition to the Cornerstone facility, UK CPT has extended the term of a £150m loan from Barclays, which was due to expire in May 2018, by a further two years. Barclays has also provided the company with a five-year £50m revolving credit facility at a rate of 1.5% over Libor.
UK CPT has a gearing limit of 65% but the board does not expect its borrowings to exceed 25% and once the financings are concluded its LTV will be 18.7%. The group will have £300m of debt, of which £250m will be drawn down, with a weighted average maturity of 7.8 years.