Legal & General Property and PGGM have secured a £152m loan to finance their acquisition of the Bishopsgate Long Term Property Fund Unit Trust.
Wells Fargo and Santander have jointly provided the senior loan, which has a five-year term. It is understood that a margin of below 160bps has been agreed and the loan reflects a 41% loan-to-value ratio based on the £370m purchase price. Santander acted as lead arranger.
Legal & General’s joint venture with the Dutch pension fund, known as the Bishopsgate Partnership, bought the portfolio of 24 assets from the Bishopsgate Long Term Property Fund Unit Trust in January. The portfolio is being managed by Legal & General.
A short-term loan had initially been provided by Legal & General Capital to fund the acquisition, which the Wells and Santander facility will replace.
Despite the London-centric name of the portfolio the assets financed in the deal are spread throughout the UK.
Some 60% are located in the London and the South East, including two prime office assets in Covent Garden, WC2, and Kensington, SW5, but the balance of the portfolio is situated in major regional cities such as Manchester, Leeds, Glasgow and Cardiff.
The passing rent on the portfolio was just under £22m when purchased, with a 2.3% vacancy rate and an average weighted lease term of 9.3 years.
The facility continues a strong relationship between Legal & General and the two banks.
In March last year the two banks supplied the pension fund manager with £150m for its second UK Property Income Fund.
The deal marked one of the first major loans completed by Wells Fargo in the UK after it acquired the British part of the Eurohypo business it bought from Commerzbank in 2013.
Eurohypo, alongside Santander, also provided the debt for Legal & General’s first UK Property Income Fund.
