Segro to pay more under new loan term

Bloomberg

Segro gained the most in more than two months in London trading after saying it will pay a fee of 8.6 million pounds, while borrowing costs for the loans increase by 1.1 percentage points under an agreement with banks and other lenders. Net debt will be permitted to rise to 160 percent of the value of Segro’s properties, compared with 125 percent before, according to a statement released yesterday by the company.

"The amendments provide ... additional headroom to the company," Segro said. The "present low interest rate environment provides an opportunity to mitigate most, if not all, of this increased cost."

The new loan terms, which exclude 1.3 billion pounds of bonds maturing in 2010 and 2035, will help Segro weather the steepest property slump since the mid-1970s. A week ago, the company said it was considering a share sale to inject more capital onto its balance sheet.

U.K. commercial-property companies need capital after amassing debts to buy offices, stores and industrial buildings during a five-year boom that ended in mid-2007. British Land, Hammerson and Land Securities Group raised a combined 2.08 billion pounds in the biggest rights offers announced by U.K. real-estate companies since the start of the crisis.