London & Regional is to start selling assets from its Leonardo II portfolio after agreeing restructuring proposals for the underwater £256m LoRDS 2 CMBS.
A three-year business plan earmarks the sale of £68m of assets in 2014, followed by a further £86.9m in 2015, in order to reduce the £265m senior loan to around £72m by 2016.
While some of the 24-strong mixed-use portfolio will be offered to the market immediately (see table below), others will be asset managed or redeveloped before being put up for sale.
The business plan restricts the sale or refinancing of two key assets in the portfolio, the Green Park and Trafalgar Square hotels, unless the net proceeds are 20% more than the value of the properties.
Both assets are currently on the books at around £50m each.
The comprehensive debt restructuring plan, which has been approved by an ad hoc group of investors made up of the majority of each class of notes, is expected to be rubber- stamped by bondholders on 20 December.
The majority of each of the three classes have agreed to or will enter into a lock-up agreement with L&R, which gives them a fee for early approval.
The proposals come after 12 months of negotiations with investors over the future of the portfolio, which has fallen in value by 31% to £305.2m since the completion of the Morgan Stanley securitisation in July 2006.
The Livingstone brothers’ firm, advised by AgFe, has proposed three 12-month extensions to the matured £256m senior loan in exchange for increasing the margins paid to bondholders and deleveraging debt through asset sales.
Brookland Partners advised the ad hoc group of investors.
Leonardo II assets: A selection
| Asset | Location | Value (£m) | Strategy |
|---|---|---|---|
| Shopping centre | SURREY | 13.8 | Immediate sale |
| Elgin House (office) | Edinburgh | 11 | Immediate sale |
| Derwent House (office) | Sheffield | 5.8 | Immediate sale |
| Stratford shopping centre | W Mids | 13.8 | Sell or redevelop |
| Bewlay House (office) | London | 12 | Sell or redevelop |
| Epworth House (office) | London | 11 | Sell or redevelop |
| Camden indoor market | London | 29.2 | Sell or refinance asap |
| Casino & cinema | London | 60.4 | Sell or refinance in two years |
| Live Music venue | Leeds | 4.8 | Sell or refinance in two years |
Source: L&G
