Intu Announces A £485m Bond Issue

Intu Properties plc announced today a £485m bond issue for Intu Metrocentre Finance plc, the issuance vehicle for The Metrocentre Partnership. The issue is a single tranche £485m, ten year, 4.125 per cent bond, priced at a spread of 137 basis points over the relevant reference gilt. This represents an initial loan to value ratio of c. 55% based on a valuation prepared for the purposes of the bond issue of £881m at 28 October 2013.

The bond will be rated Asf by Fitch and BBB+(sf) by Standard & Poor’s. HSBC and Lloyds Bank acted as joint bookrunners. Rothschild provided independent debt advice to The Metrocentre Partnership.

The bond will be secured on Intu Metrocentre, the prime super-regional shopping centre and retail park in Gateshead and the largest covered shopping and leisure centre in Europe.

The proceeds of the issue will be used to repay the existing debt facilities secured on intu Metrocentre, with a small net receipt to Intu. The cost of borrowing of the new bond represents a saving of some 160 basis points compared to the existing debt facilities and will reduce the Group’s average cost of borrowing to 4.9 per cent.

Intu’s share of the costs of terminating the swaps associated with the existing financing is estimated to be around £20 million and will be accounted for as a one-off exceptional charge to the income statement and will reduce diluted adjusted net asset value by the same amount.

Matthew Roberts, Finance Director of Intu Properties plc, commented:

“I am delighted with the successful launch of this bond secured on intu Metrocentre and by the level of demand shown by investors at this competitive rate. Building on the well over-subscribed inaugural bond issue of our secured group structure in March 2013, this transaction demonstrates the continuing attractiveness of our prime assets to debt investors. The issue further extends our debt maturity profile and we now have no significant maturities until 2016.”

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