Ediston Property, a newly-launched UK REIT, said on Thursday that it has entered into a 10-year, £40 mln (€54 mln) secured term loan agreement with Aviva Commercial Finance.

Ediston Property, a newly-launched UK REIT, said on Thursday that it has entered into a 10-year, £40 mln (€54 mln) secured term loan agreement with Aviva Commercial Finance.

The loan has been fixed at an interest rate of 3.09% for the period of the loan as long as the loan-to-value ratio is maintained below 40%.

The loan is secured over the company's existing property portfolio including a recently purchased property in Bath. The facility agreement includes terms that are typical for a facility of this nature, Ediston said, including loan to value and interest cover ratio covenants and the ability to substitute properties in the security pool.

Following drawdown of the facility and completion of pending acquisitions, the company said its gearing will stand at 29%, just below its target gearing level of 30%.

Commenting on the transaction, Chairman William Hill said: 'Putting in place this debt facility and providing the means to expand the portfolio was a key part of the strategy we stated at the time the company was floated. The board considered several financing options but considered a long-term partnership with Aviva was the most attractive together with the ability to fix the interest for 10 years at a rate accretive to the company’s dividend.'

He added: 'On completion of the pending acquisitions the board will be turning its attention to the next phase of the company’s strategy by looking at the opportunities to grow its equity base.'

Ediston Property launched in October 2014 with the acquisition of an initial £76.7 mln diversified portfolio of UK commercial properties. It typically targets assets which have a net initial yield over 6.5%.