Hercules Unit Trust ('HUT' or the 'Trust') the specialist retail warehouse fund advised by The British Land Company PLC and managed by Schroders, is pleased to announce that Canada Pension Plan Investment Board ('CPPIB'), a major global investor, has made a £100 million capital investment into the Trust.
CPPIB has invested in HUT through its subscription for £100 million of subordinated Convertible Notes which are due in 2020 and carry a fixed coupon of 10%. Up to a further £100 million is expected to be raised through the issue of Notes on the same terms to the Trust's existing investors. £50 million of this has been underwritten by British Land.
It is anticipated that the commitment of this additional capital, together with the Trust's existing cash resources, will be used to make an early repayment of part of the Trust's REC Retail Park Limited debt facility. A commitment to pay down £300 million of debt is part of a package of proposals currently being considered by noteholders that inter alia reduces the refinancing risk at maturity.
William Hill, Head of Property, Schroders, said: "CPPIB's investment is a significant demonstration of their confidence in the quality and management of the HUT portfolio and we are very pleased to have them on board as a new and wholly supportive investor. This transaction ensures that the Trust will not breach its loan covenants at the end of June should agreed property sales fall through.
"The introduction of the new capital provides the Trust with greater flexibility. It ensures that it is strongly placed to exploit market opportunities ahead and is able to maximise long-term investment returns for investors."
Andrew Jones, a director of British Land, added: "The HUT portfolio has always benefited from a highly intensive program of active asset management which has more recently involved a focused program of disposals. This activity has supported the Trust throughout its life ensuring it is always on the front foot. This together with the restructuring, will place the Trust on a stronger and more flexible footing as we move through the current cycle."
Graeme Eadie, Senior Vice-President, Real Estate Investments, CPPIB said: "CPPIB is pleased to be making a substantial investment into the Hercules Unit Trust, a unique portfolio of high quality UK retail warehouse assets. Hercules is well managed by Schroders and British Land and we expect it to provide an excellent platform for growth as the UK property market begins to recover."