Insurers Aviva and Canada Life have provided £209m of long-term refinancing for listed property fund Picton Property Income.
The vehicle has entered two new facilities which will be used to refinance Picton’s existing CMBS facility and bank loan totalling £188.5m, which are due to mature in 2013.
From the Canadian firm it has secured up to £114m of debt for a term of up to 15 years with £34m repayable in year 10, while Aviva has agreed to a £95m, 20-year facility that will be one-third repaid over the life of the loan.
Both facilities reflect a loan-to-value covenant of 65%. They have been agreed at a blended margin of approximately 2.1% which, based on benchmark gilts, currently reflects a fixed cost of around 4.4%.
The conditional agreements are expected to complete in July.
As part of the transaction, the company will complete a corporate restructuring to create two bilateral pools of assets, providing debt to be made available to two group vehicles on a reflective non-recourse basis, one for each lender.
Picton has around £8m of smaller non-core unsecured assets and these continue to be held for disposal as part of an orderly realisation process.
In order to complete an early repayment of its existing facilities, the company will incur £5.1m of swap break costs, along with additional arrangement and restructuring costs.
The company is still looking at options to repay its zero-dividend preference shares, including a mechanism that would allow investors to elect to extend the maturity of their ZDPs.
Nick Thompson, Picton chairman, said: “This successful refinancing, together with the internalisation of the management, are two strategic aims we set some 18 months ago and the delivery of these now provides clear financial benefits.”
Michael Morris, chief executive of Picton, said: “These new debt facilities provide the company with a much more balanced debt exposure and staggered maturity profile.
“With the increased financial stability and flexibility that this transaction provides, we are now able to focus on the active management of the underlying portfolio.”
bridget.oconnell@estatesgazette.com
