Bruntwood secures £115m Aviva loan

Chris Oglesby

Manchester-based commercial property company Bruntwood said it secured a new £115.5 million, 15-year debt facility with Aviva Investors Real Estate Finance.

Family-owned Bruntwood said the new loan “creates headroom” in existing facilities to support its acquisition and development activities and in particular will bring forward the first commercial phase of its development at Manchester’s Circle Square.

“The loan will be used to partially refinance Bruntwood’s £300 million medium term loan facility (MTL) with RBS, HSBC, Barclays and Santander which expires at the end of 2019,” said Bruntwood.

“The subsequent surplus in the MTL will then be used to undertake acquisition and development activity whilst the new Aviva Investors loan further reduces risk in the group by extending out £115.5 million of debt maturities to 15 years with a covenant package which reflects the long term nature of this deal.”

The loan is secured against 12 buildings in Bruntwood’s portfolio, six of which are in Manchester city centre, three in Greater Manchester and one in each of Leeds, Liverpool and Birmingham city centres.

Bruntwood chief executive Chris Oglesby said: “This deal is part of our long-term approach to sustainable growth and further testament to the strength of our customer focussed business model.

“In the last four years, not only have we significantly reduced debt gearing and risk in the group, but we’ve also grown our asset base and secured a £1.5 billion GDV development pipeline.

“This new facility allows us to respond to the strong customer demand that we are experiencing by bringing forward another significant portion of that pipeline.”

Kevin Crotty, chief financial officer of Bruntwood, said: “It’s been an incredible four years for the business.

“Prior to this time we had a £600 million debt cliff, the majority of which was in a Commercial Mortgage Backed Securitisation (CMBS) at a time when the CMBS market was closed.

“Today we now have a well-diversified loan portfolio, which includes a seven year retail bond, a 10 year L&G loan, various medium term loans and now a 15 year Aviva Investors loan.

“With gilt rates near to all-time lows and predicted to rise, it made absolute sense to undertake this deal.

“We have been talking to Aviva Investors for a few years now, and they have taken the time to understand our business and our flexible customer proposition and to tailor a finance package around our requirements.”

Gregor Bamert, head of real estate finance at Aviva Investors, said: “We have, for some time, aspired to build a relationship with this outstanding sponsor with whom we share a long-term, customer focussed ethos.

“We are pleased to have executed the facility within a short timeframe providing Bruntwood with a strong funding outcome at a time of broader market uncertainty.

“While our product range expands to include floating rate finance and European property lending, this transaction shows that our appetite for longer tenor annuity-matching loans remains as strong as ever.”