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(Alliance News) - Ground Rents Income Fund PLC on Friday said it has refinanced its loan with Santander UK PLC, replacing it with a new and larger facility.
The new loan GBP25 million loan, also with Santander UK, replaces a previous GBP19.5 million loan and consists of a GBP12.5 million term loan plus a GBP12.5 million revolving credit facility.
The GBP25 million loan is at a margin of 1.85% per annum above 3 month LIBOR, 45 basis points below the current 2.30% current margin.
The new loan matures in January 2025, extended from the previous maturity date of November 2021.
In addition, a new interest rate swap will be put in place to hedge the interest rate on the term loan, while around GBP5.0 million of the revolving credit facility is expected to be hedged through an interest rate cap.
Given the initial amount drawn, GBP15.5 million, the loan-to-value on the charged pool of assets will be 24% versus a 45% covenant, raised from 40% under the refinancing. This gives undrawn headroom of GBP9.5 million while the overall borrowing limit of 25% of gross assets is unchanged.
Ground Rent said its interest rate will fall to 2.76% per annum from 3.37%, a saving of around GBP120,000 per year based on the existing drawn amount of GBP19.5 million and agreed hedging. Further, the deal eliminates the 2021 refinancing risk in addition to capitalising on the lower interest rate.
As a result of the refinancing, Ground Rents will have GBP67.2 million worth of uncharged assets as well as a consolidated net loan-to-value of about 11.3%.
Ground Rents Fund Manager James Agar said: "The refinance was a key objective identified in the review of the company's strategy. The refinancing with Santander increases net income and reduces risk with longer term debt. The [revolving credit facility] component provides important operational flexibility and capacity to take advantage of opportunities in the market."
Shares in Ground Rents were flat at 92.25 pence in London on Friday morning.
By Anna Farley; annafarley@alliancenews.com
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