UK Commercial Property REIT refinances debt facilities
By Josh White
Date: Thursday 21 Feb 2019
(Sharecast News) - UK Commercial Property REIT has refinanced its debt facilities, it announced on Thursday, increasing its total debt by up to £50m.
The FTSE 250 company said it meant it now had £95m available to take advantage of future investment opportunities that could arise.
In addition, the board said the refinancing provided the group with an increase in the weighted maturity profile of its fixed term debt from four years to 10 years, and additional flexibility, with £150m - or 43% - of available debt now in the form of a revolving credit facility available until 2024.
Based on the current cost of the drawn revolving credit facility, it also provided a reduction in its current blended cost of debt from 2.89% per annum to 2.79%, and would see the group maintain a low net gearing of 14.7% and a gross gearing of 17.4%.
UKCM claimed that was one of the lowest in its peer group, and the wider quoted REIT sector, and compared to 14.6% and 17.1% as at 31 December, respectively.
Looking closer at the details, UKCM said its £150m Barclays term loan facility, due to expire in April 2020, had been repaid along with the associated interest rate swap.
The cost of closing out the swap was £0.7m, which was accounted for in the fourth quarter net asset value, with no repayment fees on the term loan facility.
UKCM said the current £50m Barclays revolving credit facility had been increased to £150m, and extended to February 2024.
A total of £55m of that revolving credit facility had been utilised to repay the term loan.
In addition, a new £100m 2.72% fixed rate facility had been taken out with Barings Real Estate, - part of Barings - which would mature in February 2031, and had been used to repay the balance of the Barclays term loan facility.
The group now had £200m of debt in two equal tranches with Barings, with £100m expiring in April 2027 and £100m in February 2031.
In total, the group now had £350m of debt available, of which £255m had been utilised, with £95m of the Barclays revolving credit facility remaining unutilised.
There were no plans to draw down additional amounts from the Barclays revolving credit facility at the current time, UKCM said.
The portfolio value as at 31 December was £1.45bn.
"This new debt refinancing has a number of clear benefits to the group by extending our weighted maturity profile, improving flexibility and reducing our cost of debt," said UKCM chairman Andrew Wilson.
"It also provides additional capital that can be drawn down to allow us to take advantage of future investment opportunities.
"At the same time it allows UKCM to maintain a prudent gearing level, which remains one of the lowest in the REIT sector."
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