Self storage group Big Yellow has secured a new £100m, 15-year loan from Aviva Commercial Finance in what is thought to be the first mortgage loan from an insurance company to self storage.
The facility is secured over a portfolio of 15 freehold self storage centres valued at £242.1m at 29 February 2012. The annual fixed interest rate on the loan is 4.9%.
It has been used to repay and cancel £100m of the group’s core bank debt facility, reducing it to £225m, of which £190m is drawn.
This facility expires in September 2013 and is secured on the remainder of the group’s self storage centres.
The repayment and cancellation has been disproportionately applied against HSH Nordbank’s commitment, which has been reduced from £150m to £65m.
The group has also cancelled £100m of interest rate derivatives at a cost of £9.2m. In addition to the Aviva fixed-rate loan, there is a residual £90m interest rate swap in the core bank debt facility at 2.99% plus margin to September 2015, with the remaining £100m of the core bank debt paying at floating rates plus margin.
As a result of this transaction, Big Yellow has repaid £100m of bank debt which was costing 4.8% pa, with a 15 year loan fixed at 4.9% pa. The group’s pro forma average cost of debt remains at 3.7%.
The loan amortises to £60m over the course of the 15 years, consistent with the group’s medium-term debt reduction strategy.
Big Yellow chief financial officer John Trotman said, “We are delighted to have arranged this new loan with Aviva which provides a stable core of long term financing for the group from a new debt provider to the business.
“We will now enter into discussions with our banking group, who continue to be supportive, with a view to refinancing the core bank debt facility in the current year.”
The group also announced that it has completed the sale of its site at Blackheath to Hexagon Housing Association for £4.5m.
It has also exchanged contracts on the sale of the surplus one-acre site adjacent to its new flagship Chiswick store for £4.75m, with completion expected in July 2012.
bridget.o’connell@estatesgazette.com
