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UK CPT secures £120m Cornerstone facility and rejigs debt

The MassMutual-owned lender is close to agreeing a loan secured against six assets.

The UK Commercial Property Trust is close to agreeing a new £120 million (€165.2 million; $183.9 million) loan from MassMutual-owned Cornerstone, PDI sister title Real Estate Capital reported.

The £1.2 billion closed-ended Guernsey-listed company will use the fixed-rate, 12-year loan to repay an £80 million facility from Lloyds that expires in June. The balance will be used for general working capital purposes.

The loan will be secured against six assets: Aberdeen Gateway; Junction 27 Retail Park in Leeds; 81-85 George Street in Edinburgh; Broadgate Retail Park, Horsham; Motor Park, Portsmouth and Emerald Park, Bristol.

The pricing of the Cornerstone facility, for which Chris Bates (pictured) heads the real estate finance practice in Europe, is expected to be 1.25 percent to 1.45 percent over the 12-year UK gilt, which at present would mean a total cost of 3.31 percent to 3.51 percent.

The company is looking to take advantage of the competitive lending market by putting in place cheap, long-term debt.

In addition to the Cornerstone facility, UK CPT has extended the term of a £150 million loan from Barclays, which was due to expire in May 2018, by a further two years. Barclays has also provided the company with a five-year £50 million revolving credit facility at a rate of 1.5 percent over Libor.

UK CPT has a gearing limit of 65 percent but the board does not expect its borrowings to exceed 25 percent and once the financings are concluded its loan-to-value will be 18.7 percent. The group will have £300 million of debt, of which £250 million will be drawn down, with a weighted average maturity of 7.8 years.