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New £200M Refinancing Shows How Debt Terms Have Changed

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Vivion Investments has refinanced a £272M loan with a new £200M debt facility in a sign that lenders remain active in the UK property market.

But a look back at the terms of the original loan gives insight into how the debt markets have changed. 

Vivion, an investment vehicle controlled by Amir Dayan, has refinanced a loan secured against 20 UK hotels operating under the Crowne Plaza and Holiday Inn brands, it said in a statement. 

The £272M outstanding on the loan was refinanced by a combination of its own equity and a new £200M debt facility, which CoStar reported was provided by M&G. The original loan matured in April this year, while the new loan matures in October 2027, Vivion said. 

The portfolio was bought for £742M in 2018 and financed using a £450M senior loan provided by Goldman Sachs and a £69M mezzanine loan, for a total of £519M of debt. The senior part was securitised.

A valuation from Savills in July 2022 put the value of the portfolio at £559M, a fall of almost £200M since the deal closed. 

The original loan had an interest rate margin of 3.19% on the senior portion and 6.25% on the mezzanine portion, an offering circular for the securitisation showed, with an interest rate hedge capping the margin at 2%. 

Vivion has used its own equity to reduce the overall size of the loan, partly to secure covenant waivers on the securitised loan. 

The margin on the new senior loan is 3.95%, almost double the margin that would have been paid on the previous loan, given the interest rate cap. The higher rate on a much smaller loan, where the value has already dropped, indicates lenders are now much more conservative when underwriting deals. 

Vivion was the target of criticism from short seller Muddy Waters last year, which said its portfolios were overvalued and shorted its bonds. Vivion said the criticism was inaccurate.