Legal & General completes first real estate debt funding

UK insurance group Legal & General has provided a £121 mln (EUR 148 mln) debt facility to London-listed student accommodation specialist Unite.

The 10-year facility is the first real estate debt financing to be completed by Legal & General Investment Management's commercial lending unit which was established in May 2011. The new lending division also acted as the facility agents.

The all-in cost of the new borrowing, which is at 60% loan-to-value, is fixed at 5.05% for the duration of the loan. The loan will amortise to £109 mln, 55% loan-to value, by 2022.

Unite said that the new loan in conjunction with headroom in other existing facilities with enable the developer-owner of student apartments to pay down its facilities that mature in 2013. This will extend the next 'financing event' until May 2014.

Following the refinancing, the Group’s weighted average debt maturity increases to 3.5 years.

Ashley Goldblatt, head of commercial lending at Legal & General Investment Management, commented: 'Having looked at the market in depth over the last year and with an experienced team in place, this first, sizeable, complex transaction answered our objectives in developing this area of our business. Unite represents a market leader, with a strong track record, operating in a resilient but non-traditional sector of the real estate market.

'Additionally we have proven ourselves capable of taking a more flexible approach to lending, as is seen in the 10-year loan term. Traditionally insurance companies have restricted themselves to long term loans, of 15/20 years or more, that match their long dated liabilities, whereas those banks that are still willing or able to lend are only prepared to do so on short terms. This is a space that we feel comfortable in filling.'