Argosy Property cuts borrowing costs, lifts size of bank facility

Borrowings fell to $382 million as at the end of the financial year from $410.9 million in 2011.

BUSINESSDESK: Argosy Property, whose shareholders agreed to corporatise the company after buying out its ANZ Bank-owned manager last year, has renegotiated its syndicated bank facility, increasing the amount it can borrow and reducing costs.

The facility with ANZ National Bank, Bank of New Zealand and Hong Kong and Shanghai Banking Corp has been increased to $500 million from $450 million and split into two $250 million tranches that expire in June 2015 and June 2017, the Auckland-based company said.

The banks also agreed to lift the loan to valuation ratio to 50% from 45%, which would provide Argosy “with considerable headroom on the current LVR of 40.7%”.

Argosy would receive immediate margin and line fee reductions on both tranches averaging 25 basis points, after fees, it said.

In May, Argosy posted full-year distributable earnings of $33.4 million, little changed from a year earlier, while saying it was “well-positioned to make the most of future opportunities for growth”.

Its bank borrowings fell to $382 million as at the end of the financial year from $410.9 million in 2011.

The shares rose 0.6% to 87.5 cents and have gained 10% this year.