Hammerson has announced the syndication and signing of a £360m unsecured Revolving Credit Facility at an initial margin of 90 basis points with a syndicate of 14 international banks as it continues to cheapen its debt and introduces five new Asian bank lenders.
The facility has a maturity of five years which may be extended to a maximum of seven years.
The facility will refinance an existing £175m RCF maturing in April 2018. This facility featured a margin of 150 basis points, so the new facility will result in a reduced margin of 60 basis points.
The existing facility will be cancelled resulting in a net increase of £185m of available bank facilities and increasing total bank facilities to £1.2bn. The commercial terms of the new facility are the same as Hammerson’s two other RCFs (a £415m RCF signed in April 2015 and a £420m RCF signed in April 2016) and include Hammerson's standard unsecured financial covenants.
The transaction is the latest in a sequence of recent transactions by Hammerson "reinforcing the strong financial position of the group and extending the maturity of debt".
The £400m private placement funded in January and both the £415m and £420m RCFs were extended by one year earlier this month. The €1.5bn short-term facility raised for the acquisitions in Ireland and Birmingham has now been fully repaid. This combination of transactions extends the weighted average maturity of debt from 5.5 years at 31 December 2016 to 6.4 years on a pro forma basis.
MUFG acted as Coordinator for the facility and Deutsche Bank was appointed as Facility Agent. BNP Paribas, First Commercial Bank Limited, ICBC (London) plc, J.P. Morgan Limited, The Royal Bank Of Scotland PLC and Wells Fargo Bank were appointed Mandated Lead Arrangers and Bookrunners. Commitments were also provided by Agricultural Bank of China (UK) Limited, Bank of China Limited London Branch, Bank of Taiwan London Branch, Chang Hwa Commercial Bank Limited London Branch, CIC and Hua Nan Commercial Bank London Branch.
There are five new lenders to Hammerson - ICBC, Agricultural Bank of China, Bank of Taiwan, First Commercial Bank and Hua Nan Commercial Bank.
The RCF means all three of Hammerson's facilities are now on the same terms.
The REIT is pursusing an ongoing strategy of cheapening its debt in the continuing low interest rate environment.
Having refinanced its bank facilities, the next debt maturity is in the bond markets with a eurobond featuring a 2.75% coupon maturing in 2019 (its most recent eurobond in March 2016 was issued at an 1.75% coupon) and a 20-year sterling bond with a 6.875% coupon due to mature in 2020. Its most recent sterling bond was issued in October 2015 at a 3.5% coupon.
The latest RCF sees it continue to diversify its banking relationships and increases its available funds, with the total unsecured line of £1.2bn the largest amount of facilities Hammerson has had since the financial crisis of 2009.
Timon Drakesmith, chief financial officer of Hammerson, said: “This new credit facility is the latest milestone in our journey to reduce Hammerson's cost of debt by refinancing in an attractive funding environment. I am particularly delighted to welcome five new banks into our relationship group and appreciate the support from major institutions from Asia, US and Europe.”