TIDMSIR
RNS Number : 5568Y
Secure Income REIT PLC
09 September 2015
9 September 2015
SECURE INCOME REIT PLC ("SIR" or the "Company")
GBP587 MILLION NEW CREDIT FACILITIES AND
RELATED PARTY TRANSACTION
The Board of Secure Income REIT Plc, the specialist long term
income REIT, announces today new credit facilities replacing some
GBP587 million, representing around two thirds, of its existing
debt, and an agreement with its current lender, Bank of Scotland
Plc ("BOS"), to reduce swap break costs and other fees relating to
its loan facilities.
Following these transactions, the Company has:
-- reduced the weighted average cost of debt from 6.8% per annum to 5.7%;
-- increased the weighted average term to debt maturity from
just under two years to six years; and
-- reduced amortisation such that there are no longer any
facilities where all surplus cash flow is applied to amortise
debt.
As outlined in the Company's preliminary results announcement in
March 2015, the Board has been weighing up the advantages to
shareholders of replacing the debt that was in place on listing
ahead of its scheduled maturity dates in mid-2017 with a longer
term debt package. The Board considers that, whilst doing so
crystallises certain hedging break costs, the advantages of a lower
cost and longer term debt structure, along with the benefits of
obtaining finance well ahead of scheduled maturity and while the
markets remain relatively strong, are compelling.
The Company has now entered into new non-recourse term loan
facilities totalling GBP587 million secured on two separate
portfolios comprising all of the remaining leisure assets and nine
of the 20 healthcare assets. The new loans have been advanced by
Blackstone Mortgage Trust, Inc. and Rothesay Life in the case of
the Company's leisure portfolio, and by Legal & General and a
Legal & General client fund in the case of the Company's nine
healthcare assets. The interest rate payable on these two
facilities amounts to a blended fixed rate of 5.2%, well below the
current blended interest cost of 6.8%. The new loans have a
weighted average term to maturity of eight years. Together with the
existing facilities, the whole of the Group's debt of GBP885
million has a weighted average term to expiry of six years,
compared to just under two years for the original loans and a
weighted average cost of debt of 5.7%, reduced from 6.8%.
The Board is continuing to pursue opportunities to refinance the
balance of the portfolio and will provide an update in due course.
Further details of the new facilities, including loan to value
ratios based on the 30 June 2015 valuations once they are
available, will be included within the Company's interim results
announcement which is expected to be released in late
September.
The original loans, which amounted to GBP1,158 million at the
start of the year, were arranged in 2007 with BOS at the time of
the original acquisition of the properties owned by the Company.
BOS held approximately 86% of that total debt and, through its
specialist equity investment arm, was also an equity investor in
the original acquisitions. It is BOS's original equity investment
which has resulted in its current 23.6% shareholding in the
Company. Following an approach by the Company to BOS, an agreement
has been concluded such that swap break costs and other fees that
would otherwise have crystallised as a result of the accelerated
repayment of the Group's loan facilities will be reduced by up to
30% of swap break costs, subject to a maximum of GBP27.5 million,
with amounts saved depending on the amount and timing of any early
repayments. This is in recognition of the economic advantages to
BOS of early debt repayments.
Following the completion of the sale of Madame Tussauds on 25
August 2015, together with the partial refinancing referred to
above, GBP849 million of the Group's secured loan facilities have
recently been repaid. As a result, the first of the conditions to
the recent agreement with BOS has been met and swap break costs
that would otherwise have amounted to GBP70.5 million have been
reduced by GBP14.1 million.
Of the original loans, GBP298.2 million remains outstanding and,
should those loans be repaid in full before the end of this year,
up to a further GBP 13.4 million of cost reduction would be
available to the Group. The eventual net break costs incurred will
be reported in the results for the year ending 31 December 2015
within the Group's financing costs.
Prestonfield Investments Limited, through three wholly owned
subsidiaries and itself an indirect wholly owned subsidiary of BOS,
holds 23.6% of the Company's share capital and is therefore a
related party (as defined by the AIM Rules for Companies) of the
Company by virtue of being a substantial shareholder. Accordingly,
the reduction of the swap break costs constitutes a related party
transaction under Rule 13 of the AIM Rules. The Directors consider,
having consulted with the Company's Nominated Adviser, Stifel
Nicolaus Europe Limited, that the terms of the transaction are fair
and reasonable insofar as the Company's shareholders are
concerned.
Eastdil Secured LLC and Morgan Stanley & Co. International
plc provided debt advisory services to the Company.
Martin Moore, Chairman of Secure Income REIT Plc, said:
"We are pleased to have concluded these significant steps in the
transformation of the business through which we aim to increase
profitability, generate attractive growth in shareholder value and
ultimately to generate a stable stream of cash distributions once
the process is complete."
Enquiries:
Secure Income REIT Plc +44 20 7647 7647
Nick Leslau
Sandy Gumm
Stifel Nicolaus Europe Limited
(Nominated Adviser) +44 20 7710 7720
David Arch
Tom Yeadon
FTI Consulting +44 20 3727 1000
Richard Sunderland
Claire Turvey
About Secure Income REIT
Secure Income REIT floated as a Real Estate Investment Trust on
the AIM segment of the London Stock Exchange in June 2014. Upon
Admission, the Company had a share price of 174p, representing a
market capitalisation of GBP293 million, which has subsequently
grown to in excess of GBP450 million.
The Company specialises in generating long term, inflation
protected, secure income from real estate investments. Its
investment strategy is designed to satisfy investors' growing
requirements for high quality, safe, inflation protected income
flows.
In its audited results for the period ended 31 December 2014 the
Company reported gross assets of GBP1.63 billion and, with a
weighted average unexpired lease term of 25 years across its
portfolio, all with annual fixed or RPI rental uplifts, has one of
the longest income profiles in quoted property sector. Subsequent
to this, the Company completed the sale of Madame Tussauds for
GBP332.5 million.
The Company's Board is chaired by Martin Moore and also
comprises three further independent Directors in Leslie Ferrar,
Jonathan Lane and Ian Marcus, as well as three members of the
Prestbury Team in Nick Leslau, Mike Brown and Sandy Gumm.
The Company is externally managed by Prestbury Investments LLP
which was also external manager to Max Property Group plc until
August 2014, when was sold to Blackstone Group.
General
Morgan Stanley & Co International plc ("Morgan Stanley") is
acting exclusively for SIR and no one else in connection with the
matters referred to in this announcement and will not be
responsible to anyone other than SIR for providing the protections
afforded to clients of Morgan Stanley, or for giving advice in
connection with the matter referred to in this announcement or any
matter referred to herein. Morgan Stanley, its affiliates and its
and their respective directors, officers, employees and agents will
not regard any other person as their client nor will they owe or
accept any duty, liability or responsibility whatsoever to any
person other than SIR for providing advice in connection with this
announcement, any statement contained herein or otherwise.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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