British Land in £2.1bn refinancing of Broadgate Estate (UK)

The British Land Company plc said it has proposed a major refinancing of its Broadgate Estate that will amount to £2.1bn and will reduce ongoing interest costs by about £12m annually.

The refinancing will be at an average interest rate of about 5.1 pct - below the previous 6 pct net initial yield on the estate, British Land said. It added that it will incur a pre-tax exceptional charge of 178 mln from the refinancing but that against this, its FRS 13 disclosure will reduce by 170 mln.

'There will thus be virtually no effect on British Land´s NNNAV, 'triple net' asset value, that is, broadly, net asset value (NAV) less the FRS 13 disclosure and less contingent capital gains tax,' the group said. It noted, however, that 'NAV will be reduced by 24p per share'.

British Land is to add four further properties to its security pool - which will then comprise all 15 commercial properties of the Broadgate Estate - as part of the proposed transaction.

Fixed rate bondholders will receive new bonds secured on the enlarged estate, with a compensating increase in nominal value of about 129 mln stg to reflect the lower interest rate.

British Land, meanwhile, will raise 500 mln stg of additional long-term funding from the refinancing, which will be used to pay down other group debt. The proposed transaction is expected to be completed by early March.

Commenting, British Land director Nick Ritblat said: 'This major refinancing of the Broadgate Estate has been approved by a special committee of the ABI representing 50 pct of the fixed rate bonds. It offers significant benefits to current holders of Broadgate bonds, to British Land shareholders and to its unsecured lenders.'

For bondholders, Ritbalt said the new bonds are expected to have greater liquidity while for shareholders there is 'improved financing flexibility and a reduced interest charge going forward'.
Source: Freeman News

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