Great Portland pays 18m to exit bet
PROPERTY group Great Portland Estates yesterday spent £18.2m to buy its way out of an expensive interest rate hedge.
The London landlord became the first major property company to pay a hefty break fee to end an interest rate hedge on £190m of debt. It’s thought the move will save the company about £8.5m a year in interest payments, bringing annual costs down to £10.8m a year, from £19.3m previously.
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 £15.2m to end one of its costly bets.
The Bank of England’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.
Great Portland’s share price yesterday dipped by 1.31 per cent to 319.7p.