Development Securities has restructured its €47m floating rate loan notes and associated hedging and cash collateralisation arrangements.
The restructure has reduced the maturity of the loan from 13 to seven years, resulting in a reduction of £800,000 pa in the combined interest, hedging and transaction costs.
The restructure will be finance cost neutral in the year to February 2015 as previously capitalised costs will now be written off, with annual savings of £800,000 delivered thereafter.
At 4.9% pa, the cost of the restructured, unsecured €47m loan notes including related interest rate and currency hedging arrangements will be about £1.9m a year.
The loan restructure has also released cash collateral of £9.5m to Development Securities which is now available for further investment.
DevSec finance director Marcus Shepherd said: “While this source of finance has been useful for the past few years, it was important for us to renegotiate the terms to be more appropriate in today’s economic environment.
“By structuring revised commercial terms with a maturity reduced to seven years we have been able to put in place a less capital-intensive hedging structure and also deliver annualised finance cost savings. Most importantly, the restructure has released cash collateral, enabling us to invest in new real estate opportunities where we can add value.”
bridget.o’connell@estatesgazette.com
