PRS REIT refinances £150 million revolver with two new facilities

By Marisa Wong

Los Angeles, July 10 – PRS REIT plc announced it completed the refinancing of its £150 million revolving credit facility provided by Royal Bank of Scotland plc and Lloyds Banking Group plc.

The revolver had been originally due to mature in February 2023 and was extended on substantially the same terms to mid-July 2023, with an option to extend until October 2023.

The company said its board views the refinancing as having been completed on attractive commercial terms in light of the current interest rate environment.

The investment manager has secured a £102 million facility of fixed-rate debt for 15 years, together with a further £75 million of floating-rate debt agreed for two years, providing the company with the flexibility to refinance this element over that period, according to a press release.

An interest rate cap will be put in place on the floating-rate debt to hedge against downside risk on further interest rate movements.

These new facilities have been established with Legal and General Investment Management and RBS respectively.

The investment manager will immediately deploy almost two-thirds, or £115 million, of the total debt, specifically the entire £102 million fixed-rate facility and £13 million of the floating-rate facility, to fund already completed and stabilized sites.

The balance of £62 million of floating-rate debt is expected to be drawn down to fund sites completing and stabilizing before calendar year 2024.

The company now has total fixed long-term debt facilities of £352 million, with an average blended interest rate of 3.8%. This compares favorably with the average net initial valuation yield of 4.3% as of Dec. 31, 2022.

Roughly 82% of the company’s overall debt is now covered by long-term facilities, which have an average term of 16 years. This compared to 63% of overall debt previously covered by long-term facilities, with an average term of 17 years.

The two new facilities significantly lengthen the maturity of the company’s overall debt facilities.

The average term for all debt has increased to 13.7 years at June 30, from 10.9 years at Dec. 31, 2022.

The Manchester, U.K.-based close-ended real estate investment trust invests in high quality, new build family homes in the private rented sector.

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