27 July 2012
Cromwell is pleased to announce that distributions for the Cromwell Ipswich City Heart Trust have been increased by 0.25%.
The increase takes the distribution from 1 July 2012 to 8.00% per annum. Forecast distributions for the remainder of the forecast period in the PDS have also been increased by 0.25% pa.
Cromwell’s decision to increase distributions by the Trust was underpinned by the recent moves to lock in current low interest rates until 2018 and increased certainty around project delivery timeframes following the ahead-of-schedule achievement of major construction milestones to date.
Any savings achieved on debt repayments from the lower than expected market interest rate will benefit unitholders. The market interest rate is fixed by entering into an Interest Rate Swap* with the bank.
*An Interest Rate Swap is a financial instrument that allows a party that has borrowed money at a variable interest rate(in this case, the Trust) to lock-in a fixed interest rate for a defined period. If they can be secured at the right price, fixed rates are preferable to variable rates as they provide certainty around cash-flow requirements regardless of how interest rates rise or fall.
The swap itself is a tailored agreement through which the Trust agrees to pay the bank, in cash, the difference between a fixed interest rate and a series of variable interest rates over an agreed period of time.
The parties do not, in reality, make these two corresponding payments – instead, a single, net payment is made in one direction or the other at an agreed date.