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LONDON-British Land has refinanced its Meadowhall shopping center in anticipation of converting to REIT status next year. The euro 1.5-billion ($1.9-billion) refinancing will save the company euro 4.4 million ($5.7 million) a year on interest repayments.

The shopping center in Sheffield is currently securitized through Meadowhall CMR Finance and will be refinanced for euro 1.5 billion ($1.9 billion) through Meadowhall Finance PLC, a wholly owned subsidiary of British Land. The proposed refinancing will have a weighted average interest rate of about 4.9%.

The deal is similar to the euro 3.1-billion ($4-billion) structure put in place for British Land’s Broadgate project in March 2005 and to the euro 1.1-billion ($1.4-billion) securitization of its BL Superstores supermarket in February of this year. Financing costs of Meadowhall will shrink from 5.5% to 4.9% following the deal. Meadowhall represents a major proportion of the group’s total portfolio and the refinancing drops the group’s weighted average cost of debt by nearly 10 basis points.

The funding “unlocks significant additional value for bondholders and British Land,” says finance director Graham Roberts. “Bondholders will benefit from a simplified structure and significant rating improvements. For shareholders, there’s improved financing flexibility, prior to our anticipated change to REIT status, allowing reduced interest charges going forward.”

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