Regional REIT, the regional commercial property specialist, has agreed a three-year extension of its £72.4 million debt facility as it continues to upgrade its portfolio.
The facility, which was due to mature in August, was originally £128 million but the outstanding balance has been lowered through a debt reduction programme of property disposals employed by the REIT.
It said the facility will be fully hedged to maturity, with the existing hedging remaining in place until August, after which new hedging will be in place through to expiry. The facility's margin remains unchanged.
The Royal Bank of Scotland, the Bank of Scotland and Santander UK comprise the lending group behind the extension of the facility, with Regional REIT able to request two, one-year extensions to its expiry date, pending lender approval.
As a result of the refinancing, the group said its weighted average unexpired debt term will extend to 2.6 years. "There will initially be no change to the cost of borrowing until the expiry of the existing hedge, at which point it is anticipated that the weighted average cost of debt will increase to circa 4.1% from 3.4%," it added.
Stephen Inglis, head of ESR Europe London & Scottish Property Investment Management, the REIT's investment adviser, said in a statement: "Securing this facility extension on competitive terms underlines the strength of our banking relationships and the attractiveness of our portfolio.
"The three-year extension of the £72.4 million facility will provide stability as we continue to execute our strategy, with a focus on continuing to reduce debt, improving income and adding value via our capex programme."
Earlier this month the REIT sold Oakland House on Talbot Road, Old Trafford, Manchester to Legacie Developments for £13 million, reflecting a net initial yield of 5.1%. The sale was part of its strategy to reduce gross indebtedness and vacancy levels.
In June Inglis told CoStar News that buildings which fail to evolve to suit the needs of modern occupiers risked being left behind, or picked off for other uses as he discussed the REIT's work to upgrade its portfolio.
This followed the group's £110.5 million equity fund raise announced in July 2024, helping the company to repay a £50 million retail bond and deleverage the balance sheet reducing the loan to value from 56.8% to 40.6%.