Landlord acquires cushion against pain of credit crisis
Apr 1 2008 by Chris Knox, The Journal
THE UK’s biggest homes landlord has secured £228m of extra debt funding to help protect itself from the credit crunch.
Newcastle company Grainger plc has raised the money from six banks, despite concerns over corporate lending since the Northern Rock debacle.
The extra facility brings the firm’s liquidity up to £412m, which includes £73m of cash, £45m of which has been set aside to buy German property company FranconoRheinMain AG later this month.
The firm had been due to refinance itself later this year, but decided to bring this forward amid fears it might be denied additional funding later as a result of tightening lending conditions.
Grainger deputy chief executive and finance director Andrew Cunningham said: “We will be using this extra liquidity in a defensive manner as opposed to an offensive manner.
“Trading conditions are challenging at present and we want to ensure we have room to manoeuvre going forward. This will allow us to make the most of investment opportunities rather than be held back by current conditions.”
The firm said the extra debt did not mean it was overstretching itself and pointed out that the new facility was well below the banks’ loan to value limit of 80% at 57.9%.
It was also able to attract two new banks to its group of financiers in the shape of the Bank of Ireland and Swedish bank Handelsbanken. Last month saw Grainger formally publish its £35m tender offer document for FranconoRheinMain AG, which is listed on the Frankfurt Stock Exchange. The deal is expected to boost Grainger’s interests in Germany from 4,500 homes to 6,800.
Mr Cunningham said: “We are very encouraged that our relationship banks continue to support us in such a positive way, demonstrating third party confidence in the robustness of our business model.
“Whilst we continue to seek and identify opportunities, as with FranconoRheinMain, we do so with caution and will continue to only act upon those that are well priced and can add value.”
