Bruntwood close to securing fresh bond deal
The dominant regional office landlord has agreed a new loan worth £120m with Legal & General and proposed an extension to a £229m loan which bondholders will vote on next month.
Bruntwood secured a £120m 10-year facility with Legal & General, at 65% loan-to-value. The loan will have £20m paid off over the term and is at a fixed rate of 4.64% for its duration. It is secured against seven buildings within Bruntwood's portfolio, comprising six office buildings in Manchester, including City Tower where the firm is based, and one in Birmingham.
The new loan will be used to partially refinance Bruntwood's seven-year £432.5m commercial mortgage-backed securitisation which is due to expire in January 2014.
There are two loans within Bruntwood's CMBS; the £203.4m Bruntwood Estates Alpha Loan and the £229.1m Bruntwood 2000 Alpha Loan.
Bruntwood plans an early repayment of the Bruntwood Estates Loan coupled with an extension on the Bruntwood 2000 Loan, taking it out to January 2016.
The proposal requires the passing of a special resolution of bondholders at an extraordinary general meeting to be held in London in three weeks' time, on Tuesday 19 February. Bruntwood, advised by Cairn Capital, said the proposal will be launched with 100% support of the bondholders' committee, which represents 72% of all bondholders.
Kevin Crotty, finance director of Bruntwood, said: "The proposal to extend the £229m 2000 Alpha loan to January 2016 represents the second stage of the refinance of the Bruntwood Group, following the agreement of the £120m L &G facility. We are also well advanced with the final stage of our group refinancing and are in positive on-going discussions with our club of banks; RBS, HSBC and Barclays about extending and increasing our current £170m medium-term loan facility.
"In negotiating the extension of part of our CMBS, we have been heartened to see that there is still strong demand in the market for bonds which are backed by a recognised sponsor, secured on a performing portfolio. Far from being dead, it would appear that the CMBS market could yet play an important part in providing investors with strong running yield and help the commercial property market address its major debt cliff issue.
"We were also pleased to see, through the back end of 2012, a significant increase in liquidity in the banking sector. Whilst there is still a long way to go, this, coupled with the return of demand in the bond markets and the increase in institutional lending represent some long overdue positive movements in the funding of commercial property."
