Derwent London raises £105m in private placement

Derwent London had a bit more cash in its back pocket on Thursday, having entered into £105m of new unsecured fixed-rate private placement funding, with 12 and 15 year maturities.

The FTSE 250 company said the issue was in two tranches, both of which would be drawn on 4 May. The first was £30m in senior notes at 3.46%, due on 4 May 2028, and the second was £75m in senior notes at 3.57%, due on 4 May 2031.

Derwent said the notes were placed with three institutional investors, all of whom were new lending relations for the group.

The debt issue was priced on 4 February, and the note purchase agreement was signed on 19 February. Derwent said the funds would be used for general corporate purposes, and to refinance existing debt.

As a result, the groups total facilities were increasing to £1.266bn. The financial covenants were the same as the group's other unsecured facilities, including its £100m US private placement notes arranged in November 2013, Derwent's board confirmed.

"We are delighted to welcome three new funding relationships to our pool of lenders and extend our available facilities by £105 million," said finance director Damian Wisniewski.

"With a December 2015 loan-to-value ratio of just under 18% and a strong increase in earnings cover during 2015, the group is well placed to fund its pipeline of value-enhancing projects and to continue growing earnings. When drawn in May, this long-term debt will also increase the group's weighted average maturity of borrowings by about 12 months," he added.

At the same time, Derwent London also announced the pre-letting of the entire office element of The Copyright Building, 30 Berners Street W1 in London, to Capita Business Services.

Capita had agreed to take 87,150 square feet at a rent of £7.4m per annum, which netted back to £6.5m per annum after allowing for ground rent payable to the freeholder.

The agreement included the ground floor reception of 1,500 square feet, and office floors one to seven. Capita was taking a 20 year lease with no breaks, at an average office rent of £86 per square foot.

Rental incentives equated to a 34-month rent free period, and there were five-yearly upward-only market rent reviews included in the deal.

To facilitate Capita's back-to-back move to The Copyright Building, Derwent confirmed it had made a payment to their landlord to extend their current lease.