Commercial property servicer secures £120m L&G loan

Commercial property servicer secures £120m L&G loan

An office landlord in the North-West has agreed terms on a new £120 million loan with Legal & General, with a proposal in place for an extension to £229 million.

An office landlord in the North-West has agreed terms on a new £120 million loan with Legal & General, with a proposal in place for an extension to £229 million, pending a shareholder vote, next month.

Manchester-based firm Bruntwood had already secured a £120m ten-year facility with Legal & General, representing a 65 per cent loan-to-value.

£20 million of the facility will be paid off over the term and will be charged at a fixed rate of 4.64 per cent for its duration.

The debt is currently 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 funds will be used to partially refinance Bruntwood's seven-year £432.5 million commercial mortgage-backed securitisation, which is due to expire in January 2014.

The securitisation is made up of two smaller debts: the £203.4 million Bruntwood Estates Alpha Loan and the £229.1 million Bruntwood 2000 Alpha Loan.

The firm plans to repay the Bruntwood Estates Loan early and extend the Bruntwood 2000 Loan, so that it is set to be repaid in 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, has said that the proposal will be launched with the full support of the bondholders' committee, which represents 72 per cent of all the firm’s bondholders.

Kevin Crotty, Finance Director at Bruntwood, said: "The proposal to extend the £229 million 2000 Alpha loan to January 2016 represents the second stage of the refinance of the Bruntwood Group, following the agreement of the £120 million 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 £170 million 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.

He added: "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."

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