Our level and cost of borrowing is carefully monitored. A disciplined approach ensures we have access to sufficient financial resources to achieve our business strategy.
The level and cost of borrowing is monitored on an ongoing basis. We maintain a disciplined approach to manage leverage and target a loan-to-value (LTV) ratio of 30-35% and net debt to EBITDA of 6-7x over the medium term.
At 31 December 2022, LTV was 31%, reduced from 29% in 2021 through valuation growth and planned disposals.
The company has an investment grade corporate rating of BBB from Standard & Poor’s and Baa2 from Moody’s, reflecting the strength of our capital position, cash flows and track record.
The following key principles guide how we look to structure and manage our debt:
- We proactively manage our cost of debt to mitigate the impact of rising rates’
- We have published Sustainable Finance Framework (April 2021) to enable future sustainable debt.
- We manage our maturity profile to ensure no more than 25% debt matures in any one year.
- We diversity funding sources to reduce reliance on any single lender.
- We maintain flexibility for the business through our unsecured debt portfolio for the Group.
- We protect against potential interest rate volatility by maintaining our fixed/hedged ratio at 75% to 95% of total debt.
Sustainable finance framework
In April 2021, we launched a sustainable finance framework. This links the company’s financing strategy with our wider sustainability strategy.
The framework sets up the criteria for financing projects through sustainable bonds, loans and other debt products. Projects will also have a positive environmental and/or social impact, aligning with the United Nations’ Sustainable Development Goals and supporting the company’s business strategy. These include green buildings, projects aimed at improving our properties’ energy efficiency and use of renewable energy, as well as social initiatives, including affordable housing, financial support for students through the Covid-19 pandemic, and projects aimed at widening participation in post-18 education.
ISS ESG has assessed the framework to make sure it aligns with principles published by the International Capital Markets Association and the Loan Markets Association. ISS’s opinion is available on the investor relations section.
NatWest acted as the sole sustainability structuring advisor while we developed the framework.
Key debt statistics