Irish investor loses as Alburn Real Estate goes into receivership

Irish investor Noel Smyth has finally lost his long-running fight to keep control of his heavily indebted UK property portfolio, Alburn Real Estate.

The trustee to the REC 6 CMBS enforced on the properties yesterday and appointed receivers from Savills, and Moorfields Corporate Recovery on the Scottish assets.

Smyth had been trying to extend the loan which has been in default for a year. There is £195.5m of outstanding debt against the properties which have plunged in value. A CBRE valuation on 30 September 2011 put the value at £124.7m.

The primary servicer to the CMBS, Rothschild, late last year accepted advice from Brookland Partners and CBRE to enforce and pursue a managed sell down of the assets.

But another Irish investor, Pearsanta, acquired the controlling ‘out of the money’ junior debt and had the right to appoint a special servicer. Hatfield Philips was appointed but then withdrew last month. Pearsanta then tried to appoint Solutus Advisors, a move which was not ratified.

The 47-property portfolio includes 25 office assets, mainly in south east England, 13 industrial properties and the Waterdale shopping centre in Doncaster. Some 36% of the income expires this year.

In a stock exchange announcement Rothschild said that Alburn had now “indicated its willingness to work with the loan servicer, receivers and administrators in their efforts to maximise recoveries on behalf of the company’s bondholders”.

Noteholders as well as the equity and junior, now face losses. In January 2011, an offer by Smyth, backed by Highcross, to buy back the bonds, including the class As at 80p on the pound, was stymied by RBS which owned a blocking stake of the class As.

Another CMBS deal which faces imminent enforcement is CityPoint, the City of London tower bought by Beacon Capital in 2006.

A junior noteholder has blocked the attempts by Morgan Stanley Loan Servicing and the other parties to allow Beacon time to improve the letting income.

Jane Roberts, editor