Great Portland pays 18m to exit bet

PROPERTY group Great Portland Estates yesterday spent &pound;18.2m to buy its way out of an expensive interest rate hedge.<br /><br />The London landlord became the first major property company to pay a hefty break fee to end an interest rate hedge on &pound;190m of debt. It&rsquo;s thought the move will save the company about &pound;8.5m a year in interest payments, bringing annual costs down to &pound;10.8m a year, from &pound;19.3m previously.<br /><br />The landmark deal, negotiated by finance director Timon Drakesmith, is expected to be followed by a flood of similar deals from other indebted property companies. Self-storage group Big Yellow recently paid &pound;15.2m to end one of its costly bets.<br /><br />The Bank of England&rsquo;s interest rate cut from five per cent in October to the current 0.5 per cent has left firms tied in to expensive deals.<br /><br />Great Portland&rsquo;s share price yesterday dipped by 1.31 per cent to 319.7p.