TOWN Centre Securities (TOWN); refinances Merrion House

Published on 23-07-2018 07:25:44
Author Sparks Team

TOWN has finalised the agreement with Leeds City Council (LCC) for re-financing of the Merrion House in Leeds, jointly and equally owned by TOWN and LCC in Merrion Limited Liability Partnership (MH LLP).

Under the terms of the agreement with LCC, MH LLP will advance all the base rent due from 1 October 2018 until the lease end on 11 February 2043 discounted at an annual equivalent rate of 3.5% plus costs. As a result, TOWN will receive £26.4m in cash on 2 July 2018, net of the estimated costs. From an accounting perspective, this transaction will be a financing agreement within MH LLP. Accordingly, MH LLP will continue to recognise a quarterly rent of £0.8m, offset by the interest charge calculated on an effective interest rate basis. TOWN’s 50% share of the accounting net income will continue to be recognised in its income statement. The lease will continue allowing for capped RPI increases every five years, and will flow as normal rental payments through MH LLP.

Edward Ziff, TOWN’s Chairman and CEO said: “The innovative transaction allows us to maintain joint ownership of Merrion House and benefit from future rental increases, while giving the company a material cash injection. The proceeds will be used to immediately reduce debt, while giving more flexibility to invest in our acquisition and development pipeline for future growth, including the recently announced George Street development in Leeds.”

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