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.
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|
Initial Tier 3
|Final Tier 3||
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.
Security Group Reports
Older Security Group Reports are available in the Download Centre|.