Schroder Real Estate Re-financing to Reduce Debt Cost and Extend Duration

 
TIDMSREI 
 
04 July 2018 
 
                 Schroder Real Estate Investment Trust Limited 
                      ("SREIT"/ the "Company" / "Group") 
 
        RE-FINANCING COMPLETED TO REDUCE DEBT COST AND EXTEND DURATION 
 
Schroder Real Estate Investment Trust, the actively managed UK-focused REIT, 
announces that it has completed two refinancings in respect of its GBP129.6 
million term loan with Canada Life and its GBP20.5 million revolving credit 
facility ("RCF") with Royal Bank of Scotland ('RBS'). These initiatives reduce 
the Company's interest costs and extend the overall duration of its debt 
facilities. 
 
Improved terms with the refinancing and part extension of Canada Life term 
loan: 
 
  * The refinancing is in respect of the GBP25.9 million portion of the loan that 
    was due to expire in April 2023. 
  * The maturity of this portion has been extended by five years to be 
    co-terminus with the rest of the loan, due to expire in April 2028 and 
    fixing this interest rate for a further five years to remove the risk of 
    rising interest rates. 
  * The fixed interest rate cost has reduced from a 4.77% to 3.09% on this 
    portion of the loan, saving approximately GBP435,000 of interest per annum. 
  * The refinancing has resulted in a negotiated break cost of GBP2.625 million. 
 
Extension of the revolving credit facility: 
 
  * The Company has also extended its RCF with RBS and increased the available 
    facility from GBP20.5 million to GBP32.5 million, with GBP20.5 million already 
    drawn. The additional loan amount available provides the Company with 
    greater funding flexibility, to be used for acquisitions or capital 
    expenditure across the portfolio. 
  * The RCF is an efficient and flexible source of funding due to the low 
    margin of 1.6% and the ability to be repaid and redrawn as often as 
    required and substitute assets within its security pool. 
  * The existing RCF had been due to expire in July 2019, and the new five year 
    loan has a maturity in July 2023. 
  * The Company will also extend its interest rate caps in respect of the RCF 
    to align with the new term of the facility and mitigate the potential risk 
    of interest rate increases. 
 
These transactions capitalise on current low interest rates and reposition the 
balance sheet for a lower cost and longer term. This active management of the 
balance sheet results in: 
 
  * Competitive financing terms that lengthen both near-term debt maturity 
    dates by five years, and extend the average weighted debt term from 7.7 
    years to approximately 9 years. 
  * The overall cost of debt reduces from 4.4% to 4.0% assuming the RCF is 
    fully drawn. 
  * Over 80 per cent. of the Company's debt is fixed with the remainder capped. 
  * Enlarged RCF provides additional liquidity for acquisitions and capital 
    expenditure, with the ability to efficiently de-gear following asset sales 
    or equity issuance. 
  * The Company's net LTV post the transactions is approximately 26% based on 
    the 31 March 2018 valuation, within the target ratio of 25% to 35%. 
 
The successful refinancing combined with contemplated acquisitions should allow 
the Board to consider the Company's ability to progressively increase the level 
of dividend. 
 
                                    -ENDS- 
 
For further information: 
 
Schroder Real Estate Investment Management   020 7658 6000 
Limited: 
Duncan Owen / Nick Montgomery / Frank 
Sanderson 
 
Northern Trust:                              01481 745529 
Fraser Hiddelston 
 
FTI Consulting:                              020 3727 1000 
Dido Laurimore / Richard Gotla 
 
 
 
END 
 

(END) Dow Jones Newswires

July 04, 2018 02:00 ET (06:00 GMT)