Schroder Real Estate Investment Trust Ltd. is borrowing about 130 million pounds ($197 million) from Canada Life Investments to repay debt packaged into a mortgage-backed bond named Real Estate Capital (Foundation).
The 15-year property loan expects to pay an interest rate of about 5 percent, according to a statement from the Guernsey-based company. The outstanding loan will be repaid next month, more than a year before it matures in July 2014.
Property firms in Europe are turning to insurers and bond investors to raise money, as banks cut lending to the sector. The shift is an opportunity for these investors to get higher returns than offered by government debt.
Real Estate Capital (Foundation), also known as REC 3, is a single-loan commercial mortgage-backed security secured by 53 U.K. properties, according to data compiled by Bloomberg. The CMBS was first sold to bond investors in 2005, the data show.
Dido Laurimore, a spokeswoman for Schroder Property Investment Management, has said previously the loan was part of REC 3 CMBS.
Canada Life is a unit of Great-West Lifeco Inc., the country’s second-largest insurer.