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TH Real Estate secures new £400m debt financing on behalf of UK Retail Warehouse Fund

Kidderminster

TIAA Henderson Real Estate (TH Real Estate) has secured a new £400m debt financing on behalf of its c.£1.1bn flagship UK Retail Warehouse Fund (the “Fund”).

The new facility has been provided by a consortium comprising Wells Fargo, as Facility Agent, together with Aareal Bank and Helaba, and replaces the current financing which is due to mature at the end of this year.

The deal, negotiated on highly-competitive terms, is structured for a term of up to seven years, and consists of a £250m term loan and a £150m revolving tranche, maximising the Fund’s flexibility towards operational leverage, over the course of the loan period whilst exploiting the low financing rates currently available.

The prime retail warehouse Fund invests in retail parks across the UK, with a portfolio comprising 14 dominant schemes and with a fund value of c.£1.1bn.

The refinancing follows the successful six-year extension and re-structuring of the Fund agreed in September 2014, which, amongst other features, introduced the ability for the Fund to raise additional equity of up to 10% of NAV per annum.

Through asset recycling and active management, the Fund continues to deliver significant out-performance for its investors. The Fund produced a total return of 17.8% in 2014 against a benchmark of 14.3%.

Colin Throssell, Head of Treasury at TH Real Estate, says: “This is a great result for the Fund and its investors, and is a way to reward those that supported the Fund’s extension last year. Our success in achieving such a competitive and flexible financing for the next period of the Fund’s life, sourced through new and existing lenders, is a testament to our strong banking relationships and reputation for good stock selection, asset management and integrity.”

Michael Neal, Fund Manager at TH Real Estate, says: “Following the successful extension of the Fund’s life to December 2021, the terms and structure of the re-financing fully complement our Fund strategy, which is endorsed by the Unit holders. This secures the operational flexibility required to deliver our asset management pipeline, the firepower to acquire new assets, and locks in a significant reduction in the ‘all in’ cost of finance, to enhance earnings prospects for the Fund throughout its new term.”