Sunday 22 September 2019

Hibernia Reit in Irish first as it moves to unsecured debt structure

Debt switch: Hibernia Reit’s move will help it keep funding options open but CEO Kevin Nowlan has said it will be at least three years before it completes new homes on its Newlands Cross site
Debt switch: Hibernia Reit’s move will help it keep funding options open but CEO Kevin Nowlan has said it will be at least three years before it completes new homes on its Newlands Cross site

Hibernia Reit is to refinance its €400m secured revolving credit facility.

The refinancing will be done with a €320m unsecured revolving credit facility and €75m of unsecured US private placement notes.

The unsecured facility has a five-year term and a margin of 2pc over Euribor. As a result of the refinancing, the weighted average maturity of the group's debt has increased from 1.9 years to 5.7 years.

The company's current net debt position is €210m.

Hibernia is the first Irish Reit to move into an unsecured debt structure.

Investec chief economist Philip O'Sullivan said the switch from secured to unsecured debt gives the group additional flexibility.

"The group currently has net debt of €210m, so this refinancing also ensures continued firepower both for investment in Hibernia's development pipeline and acquisitions," Mr O'Sullivan added.

Tom Edwards-Moss, chief financial office of Hibernia, said the company was "delighted" to have agreed the refinancing, which significantly extends the maturity of the group's debt and "locks in longer term, low-cost funding".

"In addition, our move to an unsecured debt structure ensures we have access to the widest possible range of funding options in future."

The participating banks in the refinancing are Bank of Ireland, Wells Fargo, Barclays Bank Ireland and Allied Irish Banks.

Bank of Ireland and Wells Fargo acted as joint coordinators, and Bank of Ireland is acting as agent.

Previously the secured facility, which was repayable in November 2020 and had a margin of 2.05pc, was the group's sole debt facility.

The notes have an average maturity of 8.5 years and a weighted average coupon (fixed rate) of 2.53pc.

They are being placed with a single institutional investor in a transaction priced on October 26 2018 and pursuant to a note purchase agreement signed on December 18, 2018, which will close on January 23, 2019, and comprises two tranches: €37.5m at 2.36pc due in 2026 and €37.5m at 2.69pc due in 2029.

In November, Hibernia CEO Kevin Nowlan said it will be another three years at least before any new homes are delivered on his company's massive land bank at Newlands Cross in west Dublin.

Speaking to the Irish Independent last month Mr Nowlan said there was now a "body of work" to be done to try to get the lands rezoned for residential development.

With South Dublin County Council's current development plan due to run for a further three years, he said any rezoning, should it take place, "probably won't happen until 2022".

Hibernia Reit's Newlands Cross portfolio extends to 143.7 acres and is composed of four adjoining parcels of land, which it acquired in individual transactions over the past four years.

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