HUT secures EUR 433m financing from MetLife and banks

Retail warehouse fund Hercules Unit Trust (HUT) has signed a new £350 mln (EUR 433 mln) five-year loan facility provided by US-based insurance company Metropolitan Life Insurance Company (MetLife) and UK banks Lloyds TSB and Royal Bank of Scotland (RBS).

HUT and its joint venture partners have raised £850 mln of loan facilities within the last nine months. These will be used to refinance maturing facilities and provide funding for future capital projects, including extensions to a number of retail parks in the Hercules portfolio.

The fund is managed by fund manager Schroder Property and advised by UK REIT British Land, which holds a 41% interest in the fund.

As a result of these financings, the weighted average interest rate of HUT's share of gross debt has fallen from 6% per annum in September 2011 to 3.8% per annum, assuming that the revolving elements of the new facilities are fully drawn.

A £250 mln term loan, provided in equal shares by MetLife and RBS, will be used to fully repay an existing credit facility three months before it expires in October 2012. The interest rate on the term loan has been swapped to a fixed rate, resulting in an all-in rate including margin and arrangement fees below the fixed-interest rate under the existing financing.

A further £100 mln revolving loan has been provided by Lloyds and will provide flexibility for Hercules in respect of acquisitions, capital projects, disposals and general business purposes.

Lloyds, MetLife and RBS acted as arrangers of the new facility and RBS acted as co-ordinator. Lloyds will act as facility agent and security agent.

HUT owned and managed 21 retail and shopping parks in the UK at end-December 2011.