Metrocentre announces £70m refinancing with Lloyds
Metrocentre, one of the most extensive multi-use destinations in Europe, announces the approval of a £70m refinancing with Lloyds which will complete on Tuesday 18 November. The refinancing will lower Metrocentre’s cost of capital and provide additional headroom for capital expenditure and working capital requirements, enabling it to build on its successful investment programme to continue to enhance the value of Metrocentre. It also replaces the existing New Money Notes and Liquidity Facility.
Key transaction details
The proposed Super Senior Facilities:
- Refinances the £20m Liquidity Facility provided by HSBC
- Repays the £25m New Money notes originally provided for capital expenditure purposes and their associated PIK element (projected to be £24.7m on 6 December 2025)
- Comprises a £50m Term Loan and a £20m Revolving Credit Facility for an initial two-year term, with an option to extend by two further one-year periods at the Company’s request, subject to lender consent
- Provides increased working capital headroom and additional flexibility for capital expenditure funding to support the ongoing operations and enhance the value of Metrocentre as an asset
- Reduces the overall cost of capital
Metrocentre has undertaken a significant capital expenditure programme in recent years, as the management team has sought to adapt the centre to cater to the wide-ranging needs of its visitors to drive footfall, diversify its tenant base and increase occupancy.
Its evidenced track record of achieving strong returns on investment, through carefully selected strategic developments and capital expenditure, is demonstrated by achieving an increase in proforma Net Operating Income from £24.6m at the end of December 2020 to £38.5m at the end of June 2025 (a CAGR of 10.5%), alongside an increase of 13.4 percentage points in f inancial occupancy from the low of 78.6% at the end of September 2021 to the current level of 92.0% at the end of June 2025.
Financial occupancy is stated excluding non-trading tenants in administration With the agreed refinancing in place, this will provide additional optionality for Metrocentre to explore further opportunities to invest in and upgrade the Centre.
Recent trends have proven the importance of public transport for visitors, and as a result Metrocentre is investing £940k to improve the train station. Commenting on the transaction,
Martin Healy, chairman of Metrocentre, said: “We are delighted to have secured this refinancing, which simplifies our financing structure, reduces our cost of capital, and will support Metrocentre’s value enhancement strategy.
“Value-adding investment in the centre has been an important driver of Metrocentre’s improved operating performance in recent years. This refinancing, on more attractive terms, will ensure we can build on this programme to continue to enhance the centre’s increasingly diverse offer, experience, and long-term value.”
Raj Jayaprakash, head of Listed REITs at Lloyds also commented: “Lloyds is committed to supporting the UK’s retail sector and our £70m refinancing for Metrocentre further strengthens the centre’s financial foundation, supports business growth, and enables continued innovation for a key retail and leisure destination in the North East.”
Tom Quoroll, partner, Linklaters commented: “We congratulate Metrocentre, our long standing client, on the approval of their new super senior financing from Lloyds, which is a great vote of confidence in the success of the business. It was a pleasure to work with Metrocentre, Lloyds and the broader adviser group on the deal.”
Chris Geaves, head of asset and development management at Sovereign Centros commented: “Metrocentre continues to go from strength to strength on the back of strong and diversified tenant demand, and this refinancing reinforces our ability to grow the asset.”
Giles Barling, partner, EY Debt Advisory commented: “We are delighted to have been trusted to advise on this important and bespoke refinancing for the Metrocentre and extend our congratulations to our client and Lloyds Bank for concluding the transaction. The outcome reflects the strong operating performance improvement delivered in recent years, as well as the strength of Metrocentre as a leading retail and leisure destination. The refinancing also provides a robust foundation for the future delivery of the business plan which we look forward to seeing evolve. We thank everyone at Metrocentre for their hard work, and also thank all at Lloyds Bank and our fellow advisors for their collaboration.”