Shaftesbury Capital PLC, a prominent central London mixed-use Real Estate Investment Trust (REIT), has successfully inked a £300 million unsecured loan agreement with major financial institutions, including Santander UK PLC, HSBC UK Bank PLC, and BNP Paribas, London Branch.
The new medium-term bank loan, with an initial maturity of three years, offers the option to extend the tenor by two additional periods of one year each, pending lender approval. This financial maneuver comes as part of Shaftesbury Capital’s strategic efforts to optimize its capital structure. Situl Jobanputra, Chief Financial Officer of Shaftesbury Capital, emphasized the significance of the move, stating, “We are pleased to have completed the early refinancing of the £576 million loan through this facility and other initiatives this year, which highlight the attractiveness of our exceptional portfolio and further enhance our capital structure.”
The proceeds from the Facility, combined with the company’s existing cash resources, will primarily be utilized to settle the remaining balance (£376 million) of an unsecured loan arranged earlier. This loan, drawn in April 2023, was initially structured to facilitate the repayment of Shaftesbury PLC secured bonds and is set to mature in 2024. As of 30 September 2023, adjusted cash balances, accounting for recent asset sales, stood at approximately £200 million, while the Covent Garden revolving credit facility of £300 million remained undrawn.
The Facility comprises both term loan and revolving credit elements, offering Shaftesbury Capital flexibility in managing drawn debt, liquidity, and finance costs. Notably, an uncommitted accordion feature of £125 million is embedded in the Facility, potentially allowing the company to expand total revolving facility commitments.
As a result of this refinancing, the weighted average maturity of the Company’s drawn debt will extend to over 5 years. Despite these changes, the current weighted average cost of debt remains unchanged at 4.2 per cent. However, taking into account interest income on cash deposits and the benefit of interest rate hedging, the effective cash cost is reduced to 3.3 per cent.
The financial arrangement was facilitated by prominent financial institutions, including Santander UK PLC, HSBC UK Bank PLC, and BNP Paribas, London Branch. Shaftesbury Capital received advisory support from Rothschild & Co and legal counsel from Herbert Smith Freehills.
Shaftesbury Capital, as a leading central London mixed-use REIT, manages a property portfolio valued at £4.9 billion as of June 2023, extending to 2.9 million square feet across vibrant areas of London’s West End. The company’s focus remains on creating thriving destinations in London’s West End, where people can enjoy visiting, working, and living.
The refinancing is expected to positively impact shareholders, demonstrating the company’s commitment to a robust financial strategy and enhancing its overall financial health. The move aligns with Shaftesbury Capital’s broader mission of investing to create thriving destinations in London’s West End.
The successful £300 million bank loan agreement underscores Shaftesbury Capital PLC’s commitment to strategic financial management and further solidifies its position as a key player in the central London real estate market. The company’s proactive approach in optimizing its capital structure demonstrates resilience in a dynamic economic landscape.