Legal & General has agreed a new GBP120m, 10 year debt facility to Bruntwood, the Manchester-based, family-owned commercial property company which owns and manages over 100 UK office buildings.
The loan, at 65 per cent loan-to-value, has GBP20m amortising over the term and is at a fixed rate of 4.64 per cent for its duration.
It is secured against seven buildings within Bruntwood’s portfolio, comprising six office buildings in Manchester and one in Birmingham, which include City Tower, the 28-storey Manchester city centre office building which is also home to the company’s headquarters.
The new loan will be used to partially refinance Bruntwood’s seven year Commercial Mortgage Backed Securitisation (CMBS) which is due to expire in January 2014. Traditionally financed via more medium term bank facilities, this is Bruntwood’s first significant institutional facility of a 10 year duration. This will enable the group to spread its funding maturities and also more closely matches Bruntwood’s philosophy as a long term investor in property. The loan has also reduced the group’s funding costs by nearly 0.5 per cent from that which is paid on the CMBS.
The transaction represents L&G’s second real estate debt financing deal, following on from the GBP121m loan which was agreed to Unite Group, the UK’s largest developer and manager of student accommodation, on a 10 year facility in April 2012. It has been arranged by LGIM (Legal & General Investment Management) Commercial Lending Ltd (CLL), which also acts as facility agent.
Chris Oglesby, chief executive of Bruntwood, says: “Securing this new, long term facility with a lender like Legal & General is testament to the strength of our successful business model and allows us to part refinance our CMBS as well as to position ourselves for future growth.”
Graham Rouse, commercial real estate lending manager at Legal & General, says: “Another significant and sizeable deal, this is the successful conclusion of several months’ close discussions and yet again demonstrates our ability to take a more adaptable and innovative approach to lending.
“Whist operating within a core sector, focussed upon offices in major regional city centre locations, Bruntwood is rare in that it offers space of all sizes on leases from one month to 20 years, seeing its niche as developing long term tenant relationships. This successful, proven business model therefore required a flexible and tailored arrangement, which other institutional lenders would not traditionally look to offer. We have therefore worked hard with Bruntwood to ensure that we could deliver a supporting structure that gives them the flexibility they need to continue to run their business in their unique way whilst also providing us with suitable security.”