Security Group

In November 2004, we put in place a new debt structure for the Group to improve our operational and financial flexibility and to enhance the position of our noteholders by utilising the credit strength inherent in our investment portfolio.

The structure created a security pool (the Security Group) which grants our debt investors security over the majority of our investment properties. The remaining property assets, mainly comprising our joint venture holdings and certain other assets, are outside this Security Group. As a result of this structure we have the flexibility to finance these assets separately without impacting upon the credit rating of the debt issued by the Security Group.

Tiered covenant regime

The secured debt structure has a tiered covenant regime that gives the Group flexibility to run its business, while increasing the protection available to debt holders if gearing rises materially. While loan to value and interest cover in the Security Group are less than 65% and more than 1.45 times respectively, we retain substantial operational flexibility. If these limits are exceeded, operational restrictions increase and would act as an incentive to reduce gearing.

Operating environment - key points
Tier 1 ≤55 ≥1.85
  • Few operational restrictions
Tier 2 56-65 ≥1.45
  • Liquidity facility required for senior interest payments

Initial Tier 3


66-80 ≥1.2
  • Existing secured facilities draw stopped
  • Debt to be amortised
  • Disposal proceeds locked up for limited purposes (including development capex)
  • Property manager appointed at
Final Tier 3




  • Block on dividends from the Security Group
  • No developments allowable >£50m
  • Property manager recommendations to be followed in all material respects
  • Administrative receiver could be appointed purely to sell assets (>85% LTV)
Default >100
  • Default which allows the secured creditors to instruct the Trustee to enforce security and if appropriate  accelerate
Debt priority

Debt Priority We have the ability to issue different classes of debt, with different priorities as to payments and security - Priority 1 debt, Priority 2 debt, subordinated debt and unsecured debt.

In order to provide Priority 1 noteholders with an element of protection, Priority 1 debt can only be issued up to 45% LTV (loan to value).

Debt supported by the next 10% of LTV must be in the form of switchable debt which can migrate between Priority 1 and Priority 2 depending upon various financial tests.

In the event that there is insufficient switchable debt to bring the remaining Priority 1 debt below 55% LTV, then any excess will be progressively collateralised.


Please note that the information captured on this page is a summary only, full details of the Security Group can be found in the Base Prospectus.


For information on the current status of the Security Group, please refer to the latest Security Group investor report which can be found below.

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