SGS Group, the owner of four major UK shopping and leisure destinations - Lakeside, Atria Watford, Victoria Centre (Nottingham) and Braehead (near Glasgow), has completed a landmark recapitalisation which includes £445 mln (€520 mln) of new senior financing from Lloyds Bank.
The refinancing comprises a £395 mln senior term loan and a £50 mln capex facility, reflecting Lloyds Bank’s support for SGS and the sector.
The senior term loan, which has an initial maturity in 2028 and can then be extended by up to a year, is fully drawn and has been used alongside available cash to repay a total of £444 mln to existing creditors. The residual £1.3 bn of SGS debt not repaid from the transaction has been exchanged into equity or equity-like equivalents within the structure.
As part of the deal, a new SGS Board will be appointed with Jaap Tonckens, former Group CFO of Unibail-Rodamco-Westfield, as Non-Executive Chairman, and Peter Williams, Jon Lurie and Anders Hemmingsen as Non-Executive Board members - with extensive operational retail and investment experience.
The landmark transaction received significant support - with 100% of creditors who voted supporting the deal - and reflects the strong operational performance seen across SGS centres in recent years, the company said.
SGS separated from Intu Properties when the landlord entered into administration in 2020, appointing AlixPartners in an executive management and Board role, Global Mutual as asset manager and Savills as property manager.
Since taking over management, SGS has performed very strongly including raising physical occupancy at SGS centres to 93% in December 2023.
The recapitalisation transaction marks a shift to institutional standard governance and management for SGS, which is designed to follow a typical real estate privately-owned structure.
Lloyds Bank was advised by Herbert Smith Freehills.
Andrea Trozzi, outgoing SGS Executive Chairman, commented: 'The completion of this landmark deal marks a major achievement for SGS and a vote of confidence by Lloyds Bank. This is the largest UK shopping centre refinancing in the past five years and means that the Group’s long term capital structure is now secured, backed by a supportive investor group and a solid financial and operational performance across all four assets.'
Jaap Tonckens, incoming SGS Non-Executive Chairman, added: 'These leading retail and leisure assets have gone from strength to strength since separating from Intu four years ago due to the excellent work of Alix Partners, the outgoing Board members, Global Mutal and Savills. The overwhelming support for the recapitalisation reflects this very strong performance and investor confidence in prime shopping centres.'
