Fortune REIT refinances its HK$3.8bn current loan facilities

The company enhanced its new facilities will bear a 0.91% per annum interest margin and will mature on 11 April 2016.

ARA Asset Management (Fortune) Limited (the “Manager”), as manager of Fortune Real Estate Investment, is pleased to announce that Fortune REIT, has on Monday successfully refinanced the whole of its current loan facilities of HK$3,100 million.

• The new facilities will extend Fortune REIT’s outstanding debt maturity to April 2016;
• Interest margin will be substantially reduced to 0.91% per annum over Hong Kong Interbank Offer Rate (“HIBOR”);
• The revolving credit facilities will be expanded to HK$970 million, which will enhance the funding flexibility for acquisition opportunities and other yield enhancing asset enhancement initiatives (“AEIs”).

The New Facilities
On 11 April 2011, eleven property holding companies of Fortune REIT entered into a syndicated credit agreement (the “Credit Agreement”) with Australia and New Zealand Banking Group Limited, DBS Bank Ltd. and Standard Chartered Bank (Hong Kong) Limited as the mandated coordinating arrangers and bookrunners. The Credit Agreement relates to a Hong Kong Dollar 5-year term loan and revolving credit facilities of up to an aggregate principal amount of HK$3,800 million (the “New Facilities”), comprising a HK$2,830 million term loan facility and a HK$970 million revolving credit facility. The New Facilities will bear an interest margin of 0.91% per annum over HIBOR, and will mature on 11 April 2016.

The current facilities of HK$3,100 million (comprising a HK$2,828.7 million term loan facility and a HK$270 million revolving credit facility) is due on 15 October 2013. The New Facilities will be used in part to refinance the existing facilities, and the balance for financing the corporate funding requirements of Fortune REIT including any acquisition opportunities and AEIs.

Financial position further strengthen
The opportunity window in the credit environment to strengthen Fortune REIT’s financial position has come to the Manger’s attention and this refinancing exercise is completed well ahead of the existing facilities’ maturity and at a more favourable rate. The interest margin under the Credit Agreement will be substantially lowered to 0.91% over HIBOR (from 2% per annum over HIBOR under the existing facilities). The New Facilities, which will be due by April 2016, will extend the outstanding debt maturity of Fortune REIT from 2.5 years to 5 years. The enhanced revolving credit facility of HK$970 million will act as standby funding for potential acquisition opportunities and value-added asset enhancement initiatives in the pipeline. Together with cash on hand of HK$500 million1 and HK$2.5 billion worth of unencumbered assets, Fortune REIT has ample financial resources to respond quickly to acquisition opportunities.

Ms Justina Chiu, Deputy Chief Executive Officer of the Manager said, “We have been closely monitoring the credit market and is committed in lowering the cost of financing for Fortune REIT. We have proactively refinanced the loan well ahead of the maturity in view of current opportunities in the credit market. With the successful completion of the subject refinancing, Fortune REIT will have no refinancing needs until 2016. Most importantly, this exercise also enables Fortune REIT to enjoy greater debt flexibility and an even stronger capital structure for future growth.”