Nabarros leads derivatives deal for Quintain” />Nabarro Nathanson has advised Quintain Estates and Development on a £15m property index-linked return swap with Barclays Bank.
This type of transaction, understood to be the second such deal by a listed property company, is expected to become more common. Previously swap deals had only been used as loans against interest rates.
Nabarros banking partner James Dakin, who led the team advising Quintain, said the market had gained “significant momentum” in the past year.
“The rush is coming. We’ve got one other deal going at the moment, but we’re in discussions on a significant number of others. We anticipate that this deal will be the tip of a derivatives iceberg as increasing numbers of property companies, institutions and funds recognise the flexibility and inherent value that property derivatives can provide,” said Dakin.
“The problems have slowly been ticked off – the tax reasons, the accounting systems, the faith in the property indexation,” he added.
Nabarros completed extensive research into the property derivatives market with survey findings suggesting expectations were high.
The deal enables Quintain to increase its exposure to the property market without purchasing physical assets. Under the terms of this transaction, Quintain will make quarterly payments to the bank for three years, while Barclays, which was advised by its in-house team, will make an annual index-linked payment.