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L&G completes debut property debt deal

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Legal & General has made its debut real estate debt financing deal.

The insurance firm has provided a £121m debt facility to student accommodation provider Unite.

The facility, which has a ten-year life, enables Unite to pay down its existing debt facilities which are due to expire next year. Unite said the facility will extend its next refinancing event until May 2014.

The cost of the debt is 5.05% for the duration of the loan, reducing Unite’s total cost of debt by 10 basis points to 5.6%.

Ashley Goldblatt, head of commercial lending at Legal & General Investment Management, said: “Having looked at the market in depth over the last year and with an experienced team in place, this first, sizeable, complex transaction answered our objectives in developing this area of our business.

“UNITE represents a market leader, with a strong track record, operating in a resilient but non-traditional sector of the real estate market.

“Additionally we have proven ourselves capable of taking a more flexible approach to lending, as is seen in the ten year loan term.

“Traditionally insurance companies have restricted themselves to long term loans, of 15/20 years or more, that match their long dated liabilities, whereas those banks that are still willing or able to lend are only prepared to do so on short terms. This is a space that we feel comfortable in filling.”

Joe Lister, chief financial officer at Unite, said: “Securing this new, long term facility with a lender of Legal and General’s quality, is further testament to the strength of UNITE’s business and marks an important step for the group. We have now arranged over £400m of new debt facilities for UNITE and its funds in the last 12 months.

“Controlling gearing levels and extending debt maturities remains a key priority for UNITE and we will continue to work closely with our financing partners to further strengthen the group’s financial position over the year.”

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