Look Mervyn it’s not all doom and gloom out there we’ve just concluded our 17th letting/lease renewal in Nailsea, and its a good one too.
We have managed to secure a letting to WH Smiths to the town that will help lift the town that was recently boosted wit the arrival of Waitrose.
We’re pleased to announce that HSBC today received planning permission for their proposed relocation within Colliers Walk. Not only will this result in their new premises being 50% lager, which shows their commitment to the town, but releases their existing premises that will hopefully form part of a larger town centre redevelopment over the medium term.
Having worked solidly on a financial restructuring since the autumn, we are delighted to have successfully closed a financial restructuring on behalf of the Soroya Family.
Ellandi worked very closely with the family, its existing bankers and a new senior lender to structure, fund and close a simultaneous restructuring and refinancing.
The deal saw HSBC provide a new £16.6m loan facility secured on a portfolio of hotels and retail assets. The proceeds of this loan were used to partially refinance the existing senior lender who also made available a new subordinated loan facility. The new financial structure will significantly reduce the borrowers funding costs, make free cash flow available for refurbishment of their hotel portfolio and replaces maturing loans with new term loan facilities. Furthermore, this was achieved without the need for the borrower to commit significant additional equity.
Ellandi acted as restructuring adviser to the Soroya family and were able to work closely with the banks and their advisers to achieve a restructuring that worked for all parties.
Well it looks like in the case of losses on commercial property loans it does.
I’ve known John Fraser-Andrews for about 15 years, and I hope he would not be too offended to hear me say that he was a pretty average agent and a very average scrum-half.
However about 12 years ago, he quit surveying to “do something in the city”.
It is only fairly recently that I realised that he is actually of of the country’s leading equity analysts at HSBC, strangely enough covering the REIT sector. He is also one of the industry’s main bears, billions seem to be wiped off the value of British Land et al., whenever he puts pen to paper.
His latest prognosis can be downloaded here, it is not quite as rosy as Mike Prew’s analysis that I commented on below.
There is one statistic, hidden away on page 33, that really is worth focusing in on. That following an expected further fall of 32% in values (which is not much worse than the consensus view) that £91bn “of UK bank commercial property debt” will be in negative equity, that’s out of a total of £247bn.
Now obviously this loss would only be generated once the debt becomes non-performing; either the interest not being paid or the full amount not being repaid on expiry, as most banks are not obliged to mark to market.
However, given the likely unprecedented level of tenant default and the fact that 80% of this debt will have to be refinanced by 2011, it doesn’t bode well.
These losses will either take the form of further write offs at banks, or may be covered by the governments “insurance” scheme, that hopefully will be announced within the next few weeks.
Makes rescuing the car-makers look cheap.
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