Unite secures new £500m debt facility
Unite Group has secured a new £500m unsecured debt facility from HSBC and RBS that provides additional financial headroom for its development pipeline and greater financial flexibility.
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The facilities will increase the debt maturity by 12 months and with an initial margin of 145 basis points, will reduce the average cost of debt, when fully drawn, to 3.9% from 4.2% currently.
The new loan facilities comprise a five year £350m revolving credit facility and a one-year £150m bridge loan, replacing a £280m secured debt facility. Unite, which provides student accommodation, intends to replace the bridge loan in the first half of next year with longer term unsecured debt to further extend its maturity profile and diversify its finance sources.
Also on Thursday, Unite said it has been assigned an investment grade corporate rating of BBB from Standard & Poor's and Baa2 from Moody's.
Chief financial officer Joe Lister said: "I am excited that we have taken this step to a rated, unsecured debt structure. The rating demonstrates the robustness of our business and the new facility will support the delivery of our existing strategy. The reduction in the cost of debt will contribute to the earnings growth trajectory over the next few years."
Numis said: "While it has only a limited financial impact on day 1 (FY18 EPS is likely to benefit by circa 0.8-0.9p or +2-3% from our current 34.6p estimate), the increased flexibility helps position UTG well to continue to exploit the opportunity in the market, and the credit rating should open access to further alternative sources of capital giving it greater
optionality in future."
At 0910 GMT, the shares were down 0.6% to 724.50p.