LONDON- Liberty International is raising euro 1 billion ($1.3 billion) of debt with a bond issue secured on two of its shopping centers. Eurohypo, the European real estate bank, is setting up two 10-year loans for the UK's third largest quoted property company--a euro 595-million ($769-million) loan secured on the Braehead shopping center and retail park and a euro 444.4-million ($575.5-million) loan secured on the Harlequin Centre.
The loans will be financed through the issue of commercial mortgage-backed securities by Eurohypo's Opera Finance conduit. The senior tranche of bonds is expected to receive a AAA rating from the major agencies. The cash will be used for refinancing the Harlequin Centre, which has an existing and more expensive syndicated loan, and for general corporate purposes.
This is the third bond issue used to fund loans secured on assets of Liberty International and arranged through Eurohypo. The first, a euro 805.3-million ($1-billion) loan, closed in August 2004 and was secured on the Lakeside center in Thurrock, Essex. The second, a euro 878.6-million ($1.1-billion) £600 million loan, closed in February 2005 and was secured on the MetroCentre, Gateshead.
This latest funding, "follows the structure used for the refinancing of Lakeside and MetroCentre, which enabled Liberty to obtain capital market debt pricing while retaining the flexibility of a bank loan," says Liberty finance director Aidan Smith.
"This loan involves two different assets," explains Eurohypo head of securitization Caroline Philips, "but they are not cross-collateralized, merely bundled together, which means the client saves in upfront costs."
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