Legal & General completes Â£120m loan to Bruntwood in second lending deal.
25 January 2013
Legal & General (L&G) announces that it has agreed a new £120 million, 10 year debt facility to Bruntwood, the Manchester-based, family-owned commercial property company which owns and manages over 100 UK office buildings.
The loan, at 65% loan-to-value, has £20 million amortising over the term and is at a fixed rate of 4.64% for its duration. It is secured against seven buildings within Bruntwood’s portfolio, comprising six office buildings in Manchester and one in Birmingham, which include City Tower, the 28-storey Manchester city centre office building which is also home to the Company’s Head Quarters.
The new loan will be used to partially refinance Bruntwood’s successful seven year Commercial Mortgage Backed Securitisation (CMBS) which is due to expire in January 2014. Traditionally financed via more medium term bank facilities, this is Bruntwood’s first significant institutional facility of a 10 year duration. This will enable the group to spread its funding maturities and also more closely matches Bruntwood’s philosophy as a long term investor in property. The loan has also reduced the group’s funding costs by nearly 0.5% from that which is paid on the CMBS.
This transaction represents L&G’s second real estate debt financing deal, following on from the successful £121 million loan which was agreed to UNITE Group, the UK’s largest developer and manager of student accommodation, on a 10 year facility in April 2012. It has been arranged by LGIM (Legal & General Investment Management) Commercial Lending Ltd (CLL), which also acts as facility agent.
Chris Oglesby, Chief Executive of Bruntwood, said: “Securing this new, long term facility with a lender like Legal & General is testament to the strength of our successful business model and allows us to part refinance our CMBS as well as to position ourselves for future growth. A well established business, with a successful 35 year history, Bruntwood puts the customer at the heart of its business. We not only provide a standard of service more akin to that which you would expect in a hotel, but we also have the critical mass in our core markets to accommodate our customers ever changing space requirements. Customers have the flexibility to grow with Bruntwood; it is this service and flexibility that leads to retention rates unparalleled in the wider industry.
”Bruntwood owns over a fifth of Manchester’s city centre office space, as well as a number of other key regional locations in the North of England and Birmingham, and we believe that our growth will continue to come from careful stock selection and incredibly hands on asset management. We are extremely pleased to form a long term partnership with Legal & General, a lender who has taken the time to get to know our business and have been very accommodating and understanding of our requirements in order to ensure that our business model can continue to prosper.”
Graham Rouse, Commercial Real Estate Lending Manager at Legal & General, commented: “Another significant and sizeable deal, this is the successful conclusion of several months’ close discussions and yet again demonstrates our ability to take a more adaptable and innovative approach to lending.
“Whist operating within a core sector, focussed upon offices in major regional city centre locations, Bruntwood is rare in that it offers space of all sizes on leases from one month to 20 years, seeing its niche as developing long term tenant relationships. This successful, proven business model therefore required a flexible and tailored arrangement, which other institutional lenders would not traditionally look to offer. We have therefore worked hard with Bruntwood to ensure that we could deliver a supporting structure that gives them the flexibility they need to continue to run their business in their unique way whilst also providing us with suitable security.”
For more information please contact:
PR Manager, Legal & General Capital and Real Assets, LGIM (Property, infrastructure and alternative finance)
t: + 44 (0) 203 124 2777
m: + 44 (0) 7718 395 279
About Legal & General
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Registered in England 2091897.