Following the recent announcements on the successful restructuring of the Halle, VBG and Crewe facilities, Redefine International is pleased to confirm that it has reached an in-principle agreement to extend and restructure the £114.6 million (approx. 144 million) Delta facility. The Delta facility, together with the £199.7 million (approx. 251 million) Gamma facility, provides the majority of debt funding for the Company's UK government focused (formerly Wichford) portfolio.
The restructure will involve repaying £33.5 million (approx. 42.2 million) of debt associated with a portfolio of seven assets, which comprises the Lyon House, Harrow development site and six other assets let to predominantly UK central government occupiers. The seven assets will be released from security and will be ungeared going forward. The repayment of debt associated with the six income producing assets reflects a net initial yield of 7.6% and a weighted average unexpired lease term in excess of 17 years.
The maturity date of the Delta facility will be extended to April 15, 2015 subject to the Company meeting annual disposal targets, which the Company considers achievable, in respect of the remaining 16 Delta portfolio assets. The disposal proceeds, together with amortization requirements, will be applied to reducing the remaining £81.1 million (approx. 102 million) facility balance. Further details of the terms of the extension will be announced once the agreement is finalized.
The present facility margin of 0.75% p.a. will remain unchanged. The existing interest rate swap will mature in line with the current facility maturity date of October 15, 2012, following which the interest rate on the facility will revert to a three month Libor rate (currently 0.74% p.a.) plus the margin of 0.75% p.a. The Company aims to secure an interest rate cap at a strike price of not more than 4.95% p.a. The facility has no loan to value covenant.
The terms of the Delta restructure are still subject to documentation and final agreement between the parties; however the Company is confident that all necessary conditions and approvals will be achieved on or before the facility's maturity date on October 15, 2012. The £33.5 million repayment is anticipated to be funded utilizing part of the proceeds from the proposed and previously announced £100 million capital raise, which is expected to take place in September 2012.
Discussions with the Gamma facility servicer are on-going. Although the Company believes that a workable solution will be negotiated, it is unlikely that this will be agreed prior to the proposed capital raise.
Greg Clarke, Chairman of Redefine International, commented:
"The Company has now repaid or is in the process of restructuring £254.5 million (approx. 320 million) of legacy financing facilities since the interim reporting period ending February 2012. The Delta facility restructuring will be another major step forward in reducing the Company's exposure to near-term debt maturities and government-let UK regional offices."
Source: FTI Consulting