Wells Fargo in £162.3m shopping centre refinance

Wells Fargo has refinanced Intu’s 50% share in the St David’s Shopping Centre in Cardiff.

The deal is part of a continued drive by the retail specialist to drive down its cost of finance and take advantage of the buoyant debt market.

The seven-year facility is split between a £122.5m term loan and a £40.7m revolving credit facility which is currently undrawn.  The financing is priced below 200 basis points.

Its half of the centre was valued at £282.5m as of 30 June according to the company’s latest interim results, meaning a loan-to-value on the term loan of 43.4%. This in line with Intu’s corporate debt level of 44%, which prior to the Wells arrangement had an average cost of 4.7%.

Matthew Roberts, finance director at Intu told Real Estate Capital: “We have refinanced over £200m in the past 18 months, brought down our cost of borrowing by 50 basis points and extended our term by two years. This is another good transaction that shows that lenders want to lend on high quality assets like St David’s Cardiff.”

The loan by Wells on a 50% share of an asset, as opposed to lending against a whole asset or to a vehicle owning a whole asset, is unusual.  Wells is understood to have made an exception as a result of a longstanding relationship with Intu and is not looking to replicate the structure on future deals.

The facility has been used to repay Intu’s £78m share of £156m of outstanding debt held against the centre that matured on 28 August and for general corporate purposes. That previous facility was put in place in 2009 by a club of banks – DekaBank, Nationwide, WestImmo and Eurohypo, prior to the latter’s UK book and team being bought by Wells Fargo in July last year.  The initial £290m loan had amortised down over the term.

The remaining 50% of the 1.4m sq ft centre is owned by Land Securities. Land Securities has paid back its share of the debt using already existing resources.

As of 30 June St David’s was 94% let and generated an initial yield of 4.9%