SA Corporate Real Estate Fund Refinances Debt at Lower Rates

Posted On Wednesday, 03 October 2007 02:00 Published by eProp Commercial Property News
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SA Corporate Real Estate Fund, managed by Old Mutual Investment Group Property Investments (OMIGPI), has renegotiated its debt and reduced its effective cost of funding by over 40 basis points

Craig EwinCraig Ewin, CEO of SA Corporate and head of listed real estate at OMIGPI, says the fund has secured facilities with Old Mutual Specialised Finance (OMSFIN) and ABSA Bank to replace most of the current facilities. 

He says the OMSFIN facility is for R1 billion at a current variable rate cost of 10.87%, while ABSA’S is a R700 million five-year facility at a current variable rate cost of 10.9%.  Both facilities have very competitive raising fees, he says.

“The new facilities, added to the existing R100 million fix with Nedbank, will give a total facility of R1.8 billion.  Given that SA Corporate’s existing debt level is only R950 million, 12% of asset value, this provides significant scope for funding of acquisitions when appropriate,” says Ewin.

“It is management’s intention to fix R700 million in the short term” says Ewin.  “On current fix rate quotes, this would result in a 42 basis point reduction off the current cost of debt”.

Ewin says the reduced cost of funding and high percentage fixing that will result from the new facilities is in line with the view in a recent Investec Securities report on investment strategy for South African property.

“The report presented a portfolio of listed real estate stocks suited to differing interest rate environments and included SA Corporate at 15% of the portfolio for rising interest rate environments."

Last modified on Wednesday, 23 April 2014 12:07

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