Terra Firma's Annington in £4bn refinancing

Terra Firma raised £550m from existing investors through its Terra Firma Special Opportunities Fund 2 vehicle to contribute new equity to the refinancing. In addition, the company secured £3bn in corporate bonds (in sterling and euros) and £400m in bank loans.

Barclays and JP Morgan were mandated as joint lead managers on the issuance.

The refinancing will allow Annington to move from a securitisation structure maturing in 2021 to facilities with staggered maturities extending to 2047. Terra Firma claimed in a statement that Annington would also benefit from lower costs of borrowing and a de-risked structure, as well as extra growth capital to capitalise on opportunities in the UK private rental market.

The GP also stated it was aware from the point of the original investment that it would have to address the company's legacy capital structure at some point during the holding period.

Terra Firma bought the British real estate business for £3.2bn, including £500m in equity and £2.2bn in existing debt being refinanced, in 2012. The new debt package included a £500m PIK bond, unquote" understood at the time. Nomura acquired Annington in 1996, when it comprised approximately 57,000 properties. Terra Firma's Guy Hands originally sourced the deal and managed it for the bank before his Terra Firma days.

Company
Annington is a British real estate business. It originally managed 57,425 properties purchased from the UK Ministry of Defence (MOD), most of which were leased back to the MOD. The company currently owns 40,000 properties.

Group profit on ordinary activities after taxation stood at £607m in 2016.

People
Terra Firma – Andrew Géczy (CEO).

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