Samantha McClary
A last-ditch attempt by Dawnay Day to save its UK property empire from collapse failed on Wednesday evening when one of its principal lenders called in the administrators.
Guy Naggar’s and Peter Klimt’s private equity group appointed London investment agency Lewis & Partners just two weeks ago to sell a £750m UK portfolio of properties secured against a Norwich Union loan.
However, NU – which refinanced the loan in January this year – has lost patience with the firm, and has called in accountant BDO Stoy Hayward to put two of Dawnay Day’s principal property holding companies into administration to recoup its £750m loan.
It decided to appoint its own administrator after Dawnay Day brought in Ernst & Young to conduct an emergency review of the wider business after failing to raise the funds it needed to keep the company afloat.
Despite completing the £750m refinancing at the beginning of the year, worsening market conditions have left the group in need of more capital. It has become the property sector’s first major victim of the credit crisis.
BDO has begun a revaluation of the properties to see how much equity is left in the two companies, Starlight Investments and Insureprofit. As at 31 August 2007, Starlight – the larger of the two – held £328m of investment properties but had a net debt of £306m.
A number of cash-rich investors, including Sol Zackay’s Topland and Asif Aziz’s Criterion Capital, were in talks with Dawnay Day about buying the assets prior to its collapse. The portfolio comprises hundreds of properties spread across the UK in the retail, office and industrial sectors.
A spokesman for NU said: “By the appointment of BDO Stoy Hayward as administrative receiver/administrator, we are ensuring that effective control is taken of the properties and related income upon which our loans are secured.
“Our loans can be fully serviced from the properties on which they are secured, and are of sufficient value for us to exit without loss.”
Shay Bannon, business restructuring partner at BDO, added: “We are reviewing the position of the companies over which we have been appointed in order to determine the most appropriate strategy for them.”
The group was established in 1928, and has in excess of $4bn (£2bn) of gross assets. It operates in a number of markets around the world, specialising in: property investment and fund management, principal investments and financial services.
brief history
Dawnay Day started to unravel last week when it realised an £80m loss on the sale of its 20% stake in F&C Asset Management. Since then, companies associated with the firm, including AIM-listed property funds Dawnay Day Sirius, Carpathian and Treveria, and hotel group Dawnay Shore Hotels, started to distance themselves, while DD2 – a property lending and insurance company half owned by Dawnay Day – is in management buyout talks. Last month, Dawnay Day put the Regent Street store of fashion retailer Jaegar up for sale for £41.5m (28 June, p25).
