LGP agrees €348m refinancing for industrial property fund

Legal & General Property (LGP) has completed a new £275 mln (€348 mln) refinancing of its Industrial Property Investment Fund (IPIF) with three UK lenders.

The new part fixed rate, part floating rate facility was agreed with RBS, Wells Fargo and L&G’s lending arm, LGIM Commercial Lending Limited. Including a £75 mln revolving credit facility provided by RBS and Wells Fargo, the loan facility comes to £350 mln.

The new loan is arranged over a six-year term to support the fund through its recently extended life span to 2020 and replaces a £210 mln facility that was due to expire in September 2015. The £75 mln revolving credit facility can be drawn down for future investment opportunities, LGP said in a press release.

Commenting on the refinancing, Jonathan Holland, Fund Manager of IPIF, said: 'This new financing arrangement supports the fund through to the end of its life cycle and provides us with significant headroom with which to capitalise on attractive investment opportunities that we believe currently exist in the market.'

RBS continues to be the principal debt provider and arranger, with a £95 mln stake in the secured facility and 50% share of the revolving credit facility, whilst LGP has increased its loan to £90 mln (from £75 million). Wells Fargo has come in as a new lender to the fund, providing £90 mln of the secured facility and a 50% share of the £75 mln revolving credit facility.

IPIF is the largest industrial fund in the IPD and has continued to be one of the most active investors in the UK industrial market, growing its assets under management from £920 mln to over £1 bn since the beginning of the year.

IPIF was launched in 1997 as one of the first indirect specialist real estate funds in the UK and claims to be a leader in its sector. The fund delivered a total return of 25.9% to its investors over the 12 months to June 2014.

Towards the end of last year the fund merged with the Falcon Property Unit Trust, which added over 280 units over 36 multi-let estates. The merger followed shortly after the news that IPIF had extended its life to 2020, whilst also adding redemption provisions and introducing a number of initiatives enabling it to be more flexible in terms of raising further equity and responding to market conditions.