Intu Properties, formerly known as Capital Shopping Centres, has announced the establishment of a new debt funding platform. The special purpose vehicle will work to secure investment-grade secured debt.
Intu Properties, formerly known as Capital Shopping Centres, has announced the establishment of a new debt funding platform. The special purpose vehicle will work to secure investment-grade secured debt.
The UK shopping centre owner said the new secured group structure (SGS) will become a central source of financing for the group, enabling it to access the medium and long dated bond and private placement markets and to diversify its financing sources.
'We will in 2013 absorb the costs of the launch of the platform, principally from early settlement of existing interest rate swap obligations,' Intu said.
The shopping centre landlord will initially use the platform to refinance its Intu Lakeside, Intu Braehead, Intu Watford and Intu Victoria shopping centres, which altogether provide some 400,000 m2. The malls, worth a total of £2.3 bn (€2.6 bn), will be contributed into SGS which will issue bonds and raise bank debt secured against them.
Intu said SGS will initially borrow £1.15 bn through a benchmark sterling bond issue and bank debt including a bridge facility, corresponding to an overall loan to value ratio of around 50%. The bridge facility will be refinanced through further capital markets issues while the bank debt, which has already been signed, will come into effect when the bonds are issued. The bond road show will commence on Monday 4 March.
The move allows Intu to refinance about one third of the group’s debt and over 55% of the debt that is falling due within the next three to five years. It will also lower the group’s medium-term average cost of debt, although the initial phase may create a short-term increase in funding cost.
'This robust and flexible platform diversifies the group’s sources beyond the banking markets and brings the considerable benefits of ready access to debt markets through an investment grade rating, access to longer maturities and ability to issue a range of instruments at competitive margins,' said Matthew Roberts, Finance Director of Intu Properties.
