Family-owned commercial property company, Bruntwood, announced today that it has successfully secured a new £115.5million, 15-year debt facility with Aviva Investors Real Estate Finance (Aviva Investors).
Bruntwood has plans for continued long-term growth in the regional cities and this new loan creates headroom in existing facilities to support its significant acquisition and development activities, particularly bringing forward the first commercial phase of its exciting development at Circle Square of 450,000sq ft.
The loan will be used to partially refinance Bruntwood’s £300million medium term loan facility (MTL) with RBS, HSBC, Barclays and Santander which expires at the end of 2019. The subsequent surplus in the MTL will then be used to undertake acquisition and development activity whilst the new Aviva Investors loan further reduces 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, 6 of which are in Manchester city centre, 3 in Greater Manchester and one in each of Leeds, Liverpool and Birmingham city centres.
Chris Oglesby, Chief Executive of Bruntwood added, “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 4 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 £1.5billion GDV 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 commented, “It’s been an incredible 4 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 (CMBS), at a time when the CMBS market was closed. Today we now have a well-diversified loan portfolio, which includes a 7 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. Bruntwood is all about long term relationships so we are delighted to have them on board.”
Gregor Bamert, Head of Real Estate Finance at Aviva Investors commented “We are delighted to have completed a long-term loan with Bruntwood. We have, for some time, aspired to build a relationship with this outstanding sponsor with whom we share a long-term, customer focussed ethos. We are pleased to have executed the facility within a short timeframe providing Bruntwood with a strong funding outcome at a time of broader market uncertainty.
“While our product range expands to include floating rate finance and European property lending, this transaction shows that our appetite for longer tenor annuity-matching loans remains as strong as ever.”