Asset management company Schroders and UK REIT British Land announced on Tuesday that bondholders in the REC 4 retail park fund have unanimously approved proposals to restructure the terms of the £1 bn (EUR 1.08 bn) Commercial Mortgage Backed Security loan facility made to the Hercules Unit Trust.
Asset management company Schroders and UK REIT British Land announced on Tuesday that bondholders in the REC 4 retail park fund have unanimously approved proposals to restructure the terms of the £1 bn (EUR 1.08 bn) Commercial Mortgage Backed Security loan facility made to the Hercules Unit Trust.
The transaction is believed to be the first restructuring of its kind approved by bondholders. The Hercules Unit Trust was created in 2004 by British Land and Schroders and invests in small UK retail parks.
The restructuring will enable Hercules to actively manage the refinancing of its debt before maturity in 2012. The original loan was set up in 2005 when single refinancings of £1bn were achievable. As a result the loan, like many others at that time, included a number of portfolio restrictions aimed at ensuring minimum levels of diversification within the asset pool. 'However, in today’s market with significantly reduced liquidity, a £1bn refinancing is a very different proposition and the portfolio restrictions make it difficult, if not impossible, to refinance such a large portfolio on a piecemeal basis,' the partners announced.
'The removal of these restrictions will allow the assets to be refinanced gradually over time, thus reducing the refinancing risk and allowing the management team to focus its activities on maximising performance from the portfolio,' they said.
