- What Royal Bank of Canada plans to securitize a $260m loan slated to close next week
- Why The debt is backed by 23 Rona stores across Canada
- What next The offering is expected to price next week
Sycamore Partners has lined up $260m of fixed-rate debt from Royal Bank of Canada backed by 23 home improvement retail centers across Canada.
According to a presale report from Moody’s Ratings, the five-year loan is expected to bear interest at 7.5%, with a 30-year amortization schedule.
RBC plans to securitize the loan in a single-borrower offering (REALT 2024-RONA) that’s expected to price next week. Moody’s has assigned a provisional rating of Aaa to the $217.6m top tranche, Aa2 to the $27.3m of class B notes and A1 to the $15.1m C class.
The collateral properties, spanning 2.5m sq ft, are leased to Rona. Sycamore bought Rona in February 2023 from Lowe’s and rebranded all Lowe’s stores in Canada as Rona+. As of Jan. 31, the appraised value of the properties was $506.8m, or $209/sq ft.
The lease agreement, signed in February 2023, expires in eight years, with three five-year renewal options. Nearly 75% of the properties are in Ontario, with the balance in Alberta (20%) and Saskatchewan (4%).
Several weeks ago, Citigroup and RBC Capital Markets priced a $550m single-borrower deal, the first in Canada since 2019.
