Wells Fargo has provided a £200m loan to central London offices investor WELPUT to refinance its existing £132m facility.
The new facility comprises a £100m term loan, which has already been drawn down, and a £100m revolving credit facility. Both parts of the loan have a maturity of five years and options for one-year extensions at WELPUT’s discretion.
The term loan is a fixed rate loan of 1.37% plus margin. Based on a closing loan-to-value ratio of less than 20% secured on six assets, the initial all-in interest rate on the term loan is 2.27%. The revolving credit facility is a floating rate loan. Both loans carry the same margin which is ratcheted depending on LTV and is capped at 1.40%.
The old £132m facility has an interest rate of 5.33% and is due to mature in December.
Michael Acratopulo, head of origination for Wells Fargo’s London Commercial Real Estate, said: “We have sought to structure the financing so that it will positively assist WELPUT in its open ended format and allow the fund and its unitholders to move forward in its next stage of evolution. We look forward to WELPUT building upon its existing track record with Wells Fargo.”
Wells Fargo led a £400m seven-year facility to TH Real Estate for its £1.1bn UK Retail Fund last week. The bank has also backed other UK funds for institutional fund managers, including Legal & General’s UK Property Income Fund II where it provided £150m of debt with Santander last year.
Schroders, which manages the WELPUT trust, said the new Wells Fargo loan would help it make new investments. It would also allow capital expenditure projects on existing assets to go ahead, such as the refurbishment of 20 St James Street which it recently purchased for £62m.
Established in 2001, WELPUT owns nine assets totalling £1.2bn and recently converted from a closed-ended to an open-ended fund. Schroders said the conversion to an open-ended fund would give it a more modern, stable structure and allow it to attract more investors.
Earlier this year, Schroders brought in a new investor to redeem units worth £162m from existing investors looking to take profits. Schroders said many of those redemptions were also investors top-slicing their weighting in WELPUT because of the large size of its returns – 21.5% pa in the five years to 31 December 2014.
WELPUT is attempting to raise an additional £140m-£150m of new equity.