Fresh plans mooting a sale of the securitised EC3 office building, or a sale of the equity interest in the joint venture that owns the property, were presented to bondholders earlier this month.
The plans are the latest attempt by owners – including Invista Real Estate Investment Management, Tishman International and transport firm Stobart Group – to deleverage the property’s debt.
In a stock market announcement today Invista said that at today’s noteholder vote, the proposal received a “very high level” of support with 81% of Class A, 74% of Class B, 97% of Class C, 82% of Class D and 100% of Class E voting in favour of the proposal.
However, “despite these significant levels of support, the proposal was ultimately not formally approved as the required 75% threshold was not reached in respect of the Class B Notes”.
In fact 74% of the Class B Noteholders voted for the proposal with a single noteholder – understood to be Delancey – voting against, whose Class B position represents less than 2.5% of the total Notes outstanding.
Delancey is understood to want to take control of the British Land-developed office complex.
Overall, 82% of all Noteholders who voted on the Proposal voted in favour. The Junior Lender, whose debt is held outside the CMBS structure, also provided its consent to the Proposal.
Invista said that OPPUT intends to ask REC Plantation Place Limited to convene a second meeting of the Class B Noteholders to enable further consideration of the proposal in “light of the overwhelming level of support received across all tranches and the approval of the Proposal by each of the Class A, C, D and E Notes and the Junior Lender”.
The latest move comes after a reduction in the cost of breaking the interest rate swap agreements, which must be paid before the securitised senior and junior loans.
These costs, and the conflicting interests of bondholders, have been major stumbling blocks in previous attempts to restructure debt on the building. It was one of the first European assets to breach its loan-to-value covenant in August 2008, following the downturn.
The break costs at 30 October were calculated to be £42.3m after falling by 9% over the past quarter. They will continue to fall as the swap agreement gets closer to its expiry, and if interest rates rise.
The fully let prime building is expected to attract investors keen to buy into City stock and could fetch around £450m. However, funding the purchase of such a large lot size would be challenging in the current debt financing drought.
Brookland Partners advised on the proposals; GM Real Estate is understood to be advising on the potential sales process.
paul.norman@estatesgazette.com
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