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April 3, 2014 9:52 am
The real estate investment trust – one of Britain’s biggest listed property companies – has raised a new five-year, £785m revolving credit facility priced at 115 basis points above the London inter bank offered rate with 14 banks from North America, Europe and Asia. It has also arranged a 12-year, £200m credit deal with New York Life and Pricoa Capital at 103 basis points above Libor.
The pricing is thought to be one of the tightest achieved by a UK Reit since Lehmans crashed in 2008.
British Land will use the funds to pay down debt, maintaining its current net asset value ratio at 42 per cent.
Banks have begun to relax credit terms on lending to property firms as they try to compete with a growing number of alternative lenders and to place finance into the market before tighter regulations come into force. Insurance companies in particular have become enthusiastic lenders to property companies, filling the gap left by banks when they scaled back after the financial crisis.
The Bank of England’s latest credit conditions survey, released on Thursday, found that lenders plan to significantly increase lending to the sector in the coming months. Commercial real estate was the sector cited most often by lenders for expansion.
Lucinda Bell, British Land’s finance director, said: “The level of demand we have seen from lenders is very strong. Margins have come down in the past year. There is enthusiasm among banks to get their assets working for them.”
Over the past 12 months British Land has raised a total of £1.5bn in new debt finance.
Kelvin Davidson, a property economist at Capital Economics, said: “Lenders to commercial property plan to make it easier for borrowers to access finance. Not only is the supply of credit expected to improve steadily again this quarter but lenders also plan to raise the share of loan applications being approved and to cut interest rate spreads.”
British Land has total UK assets of £17.1bn, of which 59 per cent are retail properties and 39 per cent City and West End offices.
The company – which, along with other major Reits, was forced into a major discounted rights issue in 2009 as asset values plummeted – is now building the Cheesegrater, a 225m tower in the City which is due for completion this spring.
The banks providing its new five-year credit facility are Lloyds, Sumitomo Mitsui, Santander, the Bank of Tokyo-Mitsubishi, Barclays, Bank of China, HSBC, JPMorgan Chase, Landesbank Hessen-Thüringen Girozentrale, Royal Bank of Canada, Wells Fargo, BNP Paribas, Crédit Agricole and the Royal Bank of Scotland.
Lloyds, Sumitomo Mitsui, Santander and Bank of Tokyo-Mitsubishi were joint co-ordinators and bookrunners. Lloyds is the facility agent.
British Land’s total net debt stands at £2.1bn, of which £978m has a maturity of more than three years.
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