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Revealed: Monster Refinancing Of £750M Westfield Stratford Loan Launched

Westfield Stratford City

The owners of the 2M SF Westfield Stratford City shopping centre have begun the process of refinancing the £750M loan secured against the scheme, in what will be one of the largest refinancings in recent UK property history.

Unibail-Rodamco-Westfield has appointed BNP Paribas and HSBC to explore a potential refinancing of the shopping centre built on the edge of the 2012 Olympic Park, according to a document filed late on 5 June. Unibail owns the centre in a joint venture with Dutch pension fund APG and Canadian pension fund CPPIB, and manages the centre on the trio's behalf.

Opened in 2011, Westfield Stratford City regularly tops rankings of the best-performing shopping centres in the UK, vying for top spot with its sister centre, Westfield London. Nonetheless, the refinancing will be watched with interest, due to the great uncertainty in the retail sector caused by retailers cutting rents and shutting stores.

Shopping centre REIT Intu is undertaking the same process, looking to refinance about £1B of debt secured against the £2.1B Trafford Centre in Manchester.

Unibail is exploring its options ahead of the maturity of the £750M loan in November. The original loan was provided in 2014 by Crédit Agricole and Deutsche Bank and then securitised.

It is not certain yet whether Unibail will look to secure a new loan of the same size. The original loan was underwritten at a great time for borrowers: The interest rate on the loan was just 86 basis points, according to the securitisation prospectus.

In 2014 the centre was valued at £1.96B, putting the loan-to-value ratio of the debt at 38%. The annual net income was £93M.

Unibail does not provide an updated valuation or income statement for the centre in its financial reports. However, while the the retail market in general is having a tough time, the information Unibail does provide on the centre’s performance indicates it is faring well.

Footfall for the centre rose 4.1% in 2018, according to the company’s latest financial results, and it received 51 million visitors, surpassing 50 million for the first time. Unibail said its net rental income increased by 8.6%, and pointed to increased rents at Westfield Stratford City as a big driver.

It added that out of a total of 794 stores at Westfield Stratford City and Westfield London, only three saw rents impacted by retailers entering a company voluntary arrangement insolvency process.