3 April 2005 – LAWFUEL – The Law News Network – Herbert Smith has closed the £152.5 million financing of Insight Foundation Property Trust’s property portfolio through a securitisation issue of £300 million of notes (£150 million being issued in reserve for potential future additional gearing).
The securitisation was arranged by NM Rothschild and Merrill Lynch and has been structured as 10-year secured loan to a subsidiary of the trust by the issuer of the notes.
The interest rate payable by the trust will reflect the pricing of the notes, and the loan covenants have been structured to ensure that the trust has maximum flexibility to deal with its portfolio over the life of the loan whilst preserving the AAA rating for the majority of the notes.
The deal has also been structured to allow further issues of notes should the trust want to increase the gearing of the portfolio in the future.
Herbert Smith’s team was led by securitisation partner Jane Borrows and banking partner Simon Chadney with support from corporate partner Scott Cochrane, tax partner Bradley Phillips and real estate partner Jeremy Walden.
Simon Chadney commented:
“This was a ground-breaking deal for Insight. The trend over the last few years has been for property finance lenders to securitise their loans behind the scenes and retain the benefit of the bond pricing for themselves. This deal enables Insight to take full advantage of the lower rates available in the bond market compared to the debt market. The other key to the deal was to ensure that Insight have sufficient flexibility to deal with their portfolio over the life of the funding. We believe the flexibility they have obtained is unprecedented.”
Clifford Chance advised lead managers NM Rothschild and Merrill Lynch. Ozannes provided Guernsey law advice to the trust; Carey Olsen provided Guernsey law advice to the lead managers.