22 Nov 2016 07:00
The Local Shopping REIT plc
Extension of Borrowing Facilities
The Local Shopping REIT plc ("the Company") announces that it has extended the term of the two cross-collateralised loan facilities provided to the Company's property-holding subsidiaries NOS 4 Limited and NOS 6 Limited by HSBC Bank Plc (the "Loans") by an additional 20 months. The Company has thereby secured bank funding through to 31 December 2019.
As part of the revised terms the balance of the Loans will be reduced by £7 million on 30 November 2016 through the release of cash held by the Company (derived from the sale of properties and operational income). As a result, the balance of the Loans outstanding on 30 November 2016 will be approximately £43.5 million.
Under the terms of the extension of the facilities, further property assets valued at £1 million will be added to the existing security pool. The interest margin will be 2% above 3 month LIBOR and an arrangement fee of 0.5% has been paid on the outstanding balance of the Loans. The loan to value ratio default covenant applying to the Loans is 70%, the cash sweep covenant is 65% and the income cover ratio covenant is 120%.
Capital repayments of the Loans will be made at the rate of 1% per quarter for the next 24 months, falling to 0.25% per quarter thereafter until the balance of the Loans falls below £36m. Under the terms of the extension of the facilities, the proceeds of sales of properties within the security pool (net of sales costs) are to be applied to reducing the balance of the Loans. No other material changes have been made to the pre-existing loan agreements.
As at the date of this announcement the loan to value ratio in respect of assets charged under the Loans is 61.0%. This will be further reduced to 60.2% following the contribution of the additional assets. The Company's net debt to value ratio on all its property assets (including those not charged under the Loans) is 52.4%. The Company has no debt finance liabilities other than the Loans and will continue to hold a cash reserve (expected to be approximately £4.1 million at 30 November 2016) to cover its working capital requirements.
The extension of the Company's borrowing facilities until 31st December 2019 has placed the Company in a stronger and more secure position, enabling the Board to continue with confidence the execution of the investment strategy approved by shareholders. The amendment of the Loans will also allow the Company to extend the timeline initially envisaged for the implementation of its current investment strategy, which had been approved in July 2013. This will permit the Board to continue with the sale of the Company's property portfolio in an orderly manner and in a way which maximises shareholder value.
For more information please contact:
The Local Shopping REIT plc
Tel: 020 7355 8800
Bill Heaney, Director and Company Secretary