Today's FT has picked up on the fact that we working up some detailed research in respect of the amount of potentially defaulting debt secured against shopping centre assets.

We haven’t quite finished the detail yet, but as you will have read the scale is truly staggering.

Ellandi and K&L Gates hosted a restructuring lunch on 20th November. The objective was to create a forum for discussion in regards to how banks should approach distressed property loans. We were delighted to be joined by representatives of Barclays Capital, Bank of Ireland, Houlihan Lokey, National Australia Bank, Nationwide and Grant Thornton.

There was wide ranging and at times passionate debate but the general conclusion was that there is very little consensus between banks. Some organisations are taking a proactive stance and looking to enforce covenants whilst others are willing to show patience to borrowers providing that interest is serviced. Some banks view LTV as a “technical default” that can be waived whilst others take the view it is a key contractual term that must be enforced. Certain people thought that the loan servicer model applied in the CMBS market is a robust structure whilst others argued it was incapable of making decisions and would lead to paralysis following a loan default.

The only universal opinion was that we are in uncharted waters and that 2009 will be see the banking and property industries having to learn how to cope with major challenges and a new environment. Although, it seems that lenders will address these issues in very different ways.