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Fizzy Living signs £53.5m US debt deal
The private rental arm of Thames Valley Housing has expanded its relationship with the US investor PGIM Real Estate, bringing its debt with the organisation to £53.5m.
The £21.1m debt, which is an extension of an existing £32.4m PGIM arrangement for Fizzy Living, will refinance existing senior debt at two new Fizzy sites in Lewisham. PGIM is part of investment management business Prudential Financial.
Fizzy said the reason for the new borrowing was to take advantage of the low interest rate environment and to lock in certainty in the run-up to Brexit and beyond.
Fizzy also receives capital funding from the Abu Dhabi Investment Authority (ADIA); since January 2015, ADIA has committed a further £200m, bringing its total investment to £400m.
The Fizzy portfolio has increased in value by 36% since ADIA originally invested. Any profits from Fizzy are recycled into Thames Valley’s charitable arm.
Fizzy Lewisham comprises two 68-flat blocks adjacent to the Docklands Light Railway and London Underground stations. The first block was completed the week following the Brexit vote in June 2016. Fizzy said it had experienced the fastest lease-up to date for a Fizzy building, reaching 95% occupancy in four months.
The second Lewisham block is due to hand over in September 2017 and is expected to be 95% occupied by March 2018. The senior debt provided by PGIM will be drawn in two tranches: £9.8m in May 2017 for the first block and £11.3m in May 2018 for the second block.
Rita Akushie, group finance director at Thames Valley, said: “Attracting keenly priced third-party senior debt is a key element to increasing investment returns.
“From a PGIM perspective, the Fizzy portfolio is attractive as the assets are proven to generate cash sufficient to cover interest payments, and the loan to value is low.
“From a Fizzy perspective, the low financing cost increases investor returns and the covenant headroom provides comfort that Fizzy can withstand market fluctuations without risking a breach of those covenants.”
