Business
Re-financing to Reduce Debt Cost and Extend Dur...
Re-financing to Reduce Debt Cost and Extend Dur....
About this update from Schroder Real Estate Investment Trust Ltd
[{"type":"text","content":"\n \n04 July 2018\n\nSchroder Real Estate Investment Trust Limited(\"SREIT\"/ the \"Company\" / \"Group\")\n\nRE-FINANCING COMPLETED TO REDUCE DEBT COST AND EXTEND DURATION\n\nSchroder Real Estate Investment Trust, the actively managed UK-focused REIT, announces that it has completed two refinancings in respect of its £129.6 million term loan with Canada Life and its £20.5 million revolving credit facility (“RCFâ€) with Royal Bank of Scotland (‘RBS’). These initiatives reduce the Company’s interest costs and extend the overall duration of its debt facilities.\n\nImproved terms with the refinancing and part extension of Canada Life term loan:\n\n\nThe refinancing is in respect of the £25.9 million portion of the loan that was due to expire in April 2023.\n\nThe maturity of this portion has been extended by five years to be co-terminus with the rest of the loan, due to expire in April 2028 and fixing this interest rate for a further five years to remove the risk of rising interest rates.\n\nThe fixed interest rate cost has reduced from a 4.77% to 3.09% on this portion of the loan, saving approximately £435,000 of interest per annum.\n\nThe refinancing has resulted in a negotiated break cost of £2.625 million.\n\n\nExtension of the revolving credit facility:\n\n\nThe Company has also extended its RCF with RBS and increased the available facility from £20.5 million to £32.5 million, with £20.5 million already drawn. The additional loan amount available provides the Company with greater funding flexibility, to be used for acquisitions or capital expenditure across the portfolio.\n\nThe RCF is an efficient and flexible source of funding due to the low margin of 1.6% and the ability to be repaid and redrawn as often as required and substitute assets within its security pool.\n\nThe existing RCF had been due to expire in July 2019, and the new five year loan has a maturity in July 2023.\n\nThe Company will also extend its interest rate caps in respect of the RCF to align with the new term of the facility and mitigate the potential risk of interest rate increases.\n\n\nThese transactions capitalise on current low interest rates and reposition the balance sheet for a lower cost and longer term. This active management of the balance sheet results in:\n\n\nCompetitive financing terms that lengthen both near-term debt maturi...