CAPE TOWN - UK-BASED real estate investment trust Stenprop has significantly reduced the cost of debt on its multi-let industrial (MLI) portfolio.
The group, which has a secondary listing on the JSE, said on Tuesday that it had entered into a new £66.5 million (R1.33 billion) long-term, fixed rate facility, the company said on Tuesday.
The new facility with ReAssure refinances an existing £61.5m loan, which was due to expire in June 2022, and is secured against a portfolio of 30 multi-let industrial assets located across the UK with a loan-to-value ratio of 38 percent.
Stenprop debt and special projects head James Wakelin said the new facility allowed the company to significantly reduce its financing costs by around £930 000 a year, as a result of the new loan being fixed at an annual rate of 1.66 percent, compared with 3.2 percent on the prior arrangement.
The additional drawn funds had been used to finance a recent MLI acquisition in Cardiff, together with the costs associated with putting the loan facility in place.
Across the whole MLI portfolio, the transaction would reduce the cost of debt from 3 percent to 2.2 percent, and substantially extended the weighted average maturity to 5.6 years from 2.8 years.
“The refinancing provides us with long-term stable capital, as well as the support of an institutional partner,” Wakelin said.
Wakelin added that as the company continued to transition to being 100 percent MLI by the end of the 2021/22 financial year, the intention was to remain flexible in seeking ways to optimise the balance sheet.
Earlier this month, the group said its rent collections in the six months to end-September had remained strong at 90 percent, despite the impact of the Covid-19 pandemic.
A dividend of 3.375 pence per share was declared in line with the payout at the same time a year before.
Loan to value at the time was 36.6 percent versus 40.8 percent a year before, falling to 29.6 percent when applying free cash (March 2020: 27.7 percent), leaving significant headroom for both interest cover and LTV loan covenants.
Stenprop rose 1.66 percent on the JSE on Tuesday to close at R26.99.
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