Commercial property company Bruntwood has announced that it has agreed a new £115.5m, 15-year debt facility with Aviva Investors.
Bruntwood said that with plans for continued long-term growth in regional cities, this new loan creates headroom in existing facilities to support “significant acquisition and development activities”, particularly the first 450,000 sq ft of commercial development at Manchester’s Circle Square.
The loan will be used to partially refinance Bruntwood’s £300m medium term loan facility with RBS, HSBC, Barclays and Santander, which expires at the end of 2019. The subsequent surplus will be used for acquisition and development activity. The Aviva Investors loan will further reduce risk in the group, by extending out £115.5m of debt maturities to 15 years with a covenant package which reflects the long term nature of this deal.
The loan, at 55% loan-to-value, has £15.75m amortising over the term at a fixed rate of 3.46% for its duration. It is secured against 12 buildings in Bruntwood’s portfolio, six of which are in Manchester city centre, two in Cheshire, one in Warrington and one in each of Leeds, Liverpool and Birmingham city centres.
Chris Oglesby, chief executive of Bruntwood, said: “This deal is part of our long-term approach to sustainable growth and further testament to the strength of our customer focussed business model. In the last four years, not only have we significantly reduced debt gearing and risk in the group, but we’ve also grown our asset base and secured a £1.5bn development pipeline. This new facility allows us to respond to the strong customer demand that we are experiencing by bringing forward another significant portion of that pipeline. It also affords a level of flexibility that will allow us to remain nimble in the way in which we both accommodate our customers’ requirements and approach further acquisitions in this ever changing, uncertain world.”
Kevin Crotty, chief financial officer of Bruntwood, continued: “It’s been an incredible four years for the business. Prior to this time we had a £600m debt cliff, the majority of which was in a Commercial Mortgage Backed Securitisation, at a time when the CMBS market was closed. Today we have a well-diversified loan portfolio, which includes a seven-year retail bond, a 10-year L&G loan, various medium term loans and now a 15-year Aviva Investors loan. With gilt rates near to all-time lows and predicted to rise, it made absolute sense to undertake this deal. We have been talking to Aviva Investors for a few years now, and they have taken the time to understand our business and our flexible customer proposition and to tailor a finance package around our requirements.”
The properties in the North West that the Aviva loan is secured against are:
- 113-119 Portland Street, Manchester
- 38-42 Mosley Street, Manchester
- 5 New York Street, Manchester
- Blackfriars House, Manchester
Kings House, Manchester
Oxford Place, Manchester
- Booths Park, Knutsford
- Caledonian House, Knutsford
- Cotton Exchange, Liverpool
- Wilderspool Business Park, Warrington