Custodian REIT PLC New Term Loan (8590B)

TIDMCREI

RNS Number : 8590B

Custodian REIT PLC

07 April 2017

7 April 2017

Custodian REIT plc

("Custodian REIT" or "the Company")

New Term Loan

Custodian REIT (LSE: CREI), the UK property investment company, is pleased to announce the completion of a new term loan facility.

On 5 April 2017, the Company and Aviva Investors Real Estate Finance ("Aviva") entered into an agreement for Aviva to provide the Company with a new term loan facility of GBP50 million ("the New Loan"), comprising two tranches of GBP35 million ("Tranche 1") and GBP15 million ("Tranche 2") respectively.

The Company drew down Tranche 1 on 6 April 2017, which is repayable on 6 April 2032 with a fixed rate of interest of 3.02% per annum payable on the balance. Tranche 2 is available for draw down on or before 5 October 2017 with a fixed rate of interest payable on the balance, calculated at the same margin as Tranche 1 above the prevailing Treasury 4.25% 2032 gilt rate on the date of draw down.

Following agreement of the New Loan, the Company has GBP150 million of agreed debt facilities comprising:

-- A GBP35 million revolving credit facility ("RCF") with Lloyds Bank plc expiring in November 2020, with a maximum loan-to-value ("LTV") of 50% and attracting annual interest of 2.45% above three-month LIBOR;

-- A GBP20 million term loan with Scottish Widows Limited repayable in August 2025, with a maximum LTV of 45% and attracting fixed annual interest of 3.935%;

-- A GBP45 million term loan with Scottish Widows Limited repayable in June 2028, with a maximum LTV of 45% and attracting fixed annual interest of 2.987%;

-- A GBP35 million term loan with Aviva repayable in April 2032, with a maximum LTV of 50% and attracting fixed annual interest of 3.02%; and

-- A GBP15 million term loan facility with Aviva repayable 15 years from the date of drawdown, with a maximum LTV of 50%.

The Company's debt facilities have a weighted average term of 10.1 years, a weighted average cost of 3.1%(1) per annum and 23% of the available facilities are at a variable rate of interest.

Following drawdown of Tranche 1 the Company has cash and undrawn facilities of GBP78.0 million available to deploy, which will be used to acquire GBP14.1 million of properties currently under offer and in solicitors' hands ("the Pipeline Properties"), with the balance expected to be significantly invested in other commercial properties within a period of three to six months.

Net gearing(2) is 13.9%, which is expected to rise to 17.0% on completion of the purchase of the Pipeline Properties, with the Company's objective to increase gearing towards a ratio of 25% loan to value.

Commenting on completion of the New Loan, Richard Shepherd-Cross, Managing Director of Custodian Capital Limited (the Company's discretionary investment manager), said:

"With interest rates continuing to be significantly below their historical average, we have taken the opportunity to reduce the Company's exposure to interest rate risk, while increasing debt capacity, lengthening the debt expiry profile and maintaining the weighted average cost of debt at 3.1% per annum. The flexibility to repay the RCF and manage the facility limit to minimise non-utilisation fees further demonstrates the efficiency of the Company's debt structure.

"In addition to the Pipeline Properties, we are seeing an increasing number of acquisition opportunities within our target lot size and are tracking circa GBP40 million of further opportunities that fit our investment objectives."

Gregor Bamert, Head of Aviva Real Estate Finance said:

"We are delighted to support Custodian REIT's requirement for a flexible debt structure, which combines the attractive pricing currently available for long term debt with the ability to manage their portfolio proactively. We look forward to being a long term partner of Custodian REIT, starting with this transaction."

(1) Assuming Tranche 2 attracts fixed annual interest of 3.02% when drawn.

(2) Gross borrowings less unrestricted cash divided by property portfolio valuation.

-Ends-

For further information, please contact:

 
     Custodian Capital Limited 
     Richard Shepherd-Cross / Nathan Imlach / Ian            Tel: [phone] 
      Mattioli MBE                                                          8740 
                                                        www.custodiancapital.com 
 
 
     Numis Securities Limited 
     Nathan Brown / Hugh Jonathan       Tel: [phone] 
                                               www.numiscorp.com 
 
 
     Camarco 
     Ed Gascoigne-Pees       Tel: [phone] 
                                    www.camarco.co.uk 
 

Notes to Editors

Custodian REIT plc is a UK real estate investment trust, which listed on the main market of the London Stock Exchange on 26 March 2014. Its portfolio comprises properties predominantly let to institutional grade tenants on long leases throughout the UK and is characterised by properties with individual values of less than GBP10 million at acquisition.

The Company offers investors the opportunity to access a diversified portfolio of UK commercial real estate through a closed-ended fund. By targeting sub GBP10 million lot size, regional properties, the Company intends to provide investors with an attractive level of income with the potential for capital growth.

Custodian Capital Limited is the discretionary investment manager of the Company.

For more information visit www.custodianreit.com and www.custodiancapital.com.

This information is provided by RNS

The company news service from the London Stock Exchange

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April 07, 2017 02:00 ET (06:00 GMT)