OREANDA-NEWS. Extra MSA Group has successfully completed a £220m private Bond Issue on one of its portfolios containing nine Motorway Service Area ("MSA") assets. The Abraham portfolio has a current total annual net rental income in excess of £23m and includes Extra's M40 Beaconsfield and M25 Cobham MSAs, two of the newest and busiest Service Areas in the UK.

Extra is majority owned by Evergreen, an investment partnership managed by London-based M3 Capital Partners. It owns 18 MSAs in total with its Ulysses Portfolio also containing nine property assets.  Each MSA provides around 300 jobs across a mix of retail and leisure operators, with the two portfolios combined attracting more than 800,000 vehicles per week.  The Abraham portfolio comprises seven MSAs operating under the 'Extra' brand along with two pairs of separate MSA filling stations let to Shell and BP.

The newly secured Bond Issue has a 10-year term with a fixed annual coupon of less than 3.7%. The proceeds have been used by Extra to refinance existing bank funding, return funds to the equity holders and support further growth of the business.

Through real estate investment manager Aalto Invest LLP, the Bonds have been placed with a consortium of long-term institutional investors comprising Rothesay Life Ltd, Dongbu Insurance and Dongbu Asset Management, together with one other substantial UK institution. Aalto Invest LLP will additionally act as loan manager for the term of the Bonds.

Andrew Long, Chief Executive Office for Extra MSA Group said:

"We are pleased to have concluded this debt transaction at a low fixed rate for a full 10-year term. The calibre of the three global investors underlines both the quality of Extra's property assets and its tenant-base, as well as Extra's ability to proactively manage a secure income stream in this specialist sector, with further ongoing long-term income growth potential."

Stephen Eighteen, Head of Origination at Aalto Invest, said

"This transaction provides Extra with long term institutional debt funding via the capital markets, allowing them to both diversify sources of debt funding and significantly extend the maturity of their overall debt profile. Extra holds a market-leading position in the MSA sector. The surplus income above the low fixed coupon on the Bond locks in a healthy and growing dividend stream for the Issuer, as well as providing the Institutional Investors with a fixed long term, secure income stream."

RBS Private Placements acted on behalf of Extra, in conjunction with lawyers Clarke Willmott, Clifford Chance and DWF, together with Carey Olsen. Aalto Invest acted on behalf of the three Investors who were also advised by DLA and Walkers. Colliers International provided valuation advice to the investors.

The transaction legally completed on 23 December 2014. 

Extra MSA Group

Extra MSA Group was established in 2010 and is a proactive asset manager introducing many popular new 'brands' to the UK Motorway Network, most recently including Nando's, Patisserie Valerie and JD Wetherspoon, as well as its kiosk-style tenants El Mexicana, Chozen Noodle, Mint Leaves, Carvery Express and Chopstix, which have all been extremely well received by Extra's customers. This is in addition to Extra's established ongoing relationships with its other main tenant 'brands' McDonald's, KFC, Starbucks, Costa, M&S Simply Food, Greggs, Quicksilver, WH Smith, Days Inn, Ibis Budget, Travelodge and the fuel groups, Shell and BP, across its Bond Issue nine locations. 

Extra's operating model is significantly different to the majority of other MSAs in the UK, as Extra has 'multi-let' modern food court-style buildings with Hotels and Filling Stations, all let on long-term leases with a combination of guaranteed minimum base rent and associated performance rent provisions specific to each tenant. Extra has deliberately embraced the Government's objective of introducing more choice and competition onto the Motorway Network, driving a successful sustainable business model and achieving high operating standards to satisfy current day customer demand. 

Evergreen

Evergreen, with \$3.5 billion of committed equity, has investments in 13 specialised real estate companies in Europe, the U.S., Asia, Australia and South America. Evergreen's strategy targets entity-level investments in and strategic joint ventures with specialized, private real estate companies with long-term prospects (10+ years) for outperformance that include attractive cash yields and risk-adjusted returns.

Aalto Invest LLP

Aalto Invest is an FCA authorised investment management firm and one of the leading institutional investor debt financing platforms in the UK, with a range of debt programmes ranging from development finance through to 10-15 year term finance. These programmes include a committed ?700m medium term (5-7 year term) senior debt lending programme backed by a collection of European pension funds. Aalto Invest typically originates the investment opportunity and manages the underlying debt investment on behalf of its investors.

Rothesay Life

Rothesay Life was established in 2007 and has become one of the leading providers of regulated insurance solutions in the UK market for pensions de-risking, with over ?15 billion of insurance contracts. In 2014, Rothesay Life wrote ?1.4 billion of new bulk annuity business and also completed the acquisition of MetLife Inc.'s UK subsidiary, MetLife Assurance Limited with ?2.5bn of bulk annuity liabilities. This strong growth has been achieved through the steady accumulation of pension scheme clients. Existing Rothesay Life clients include the pension schemes and members associated with such names as RSA, British Airways, Rank, Uniq, General Motors, the MNOPF (Merchant Navy Officers Pension Fund), InterContinental Hotels, Philips and GKN.

Dongbu Group

Dongbu Group is a leading diversified international conglomerate headquartered in South Korea. Dongbu Group is active in seven core industry sectors: steel, chemicals, electronics, construction, finance, insurance and IT/consulting. Dongbu Insurance and Dongbu Asset Management are subsidiaries of Dongbu Group and invest domestically in South Korea and internationally.