London & Regional has tabled comprehensive debt restructuring proposals for its underwater £256m CMBS.
The firm is expecting to get bondholder approval for a three-year business plan calling for a parallel strategy of asset sales and debt restructuring for the 24-strong mixed-use portfolio, after winning support from an ad-hoc group of investors.
The Livingstone brothers’ firm, advised by AgFe, has proposed three 12-month extensions to the matured £256m senior loan.
In exchange for the extension it will pay higher margins on the debt while it uses the time to improve the value of the portfolio and deleverage debt through asset sales.
It has earmarked £68m of assets to sell in 2014, followed by a further £86.9m in 2015 in order to reduce the senior loan to around £72m by 2016.
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 value of the properties.
Both assets are currently valued at around £50m each.
The proposals also include the restructuring of a £128m junior loan, the use of a £29m facility for capital expenditure and the appointment of APAM as an independent third-party adviser.
The loan extension will be contingent on L&R paying the senior loan balance down to £190m by October 2014, and to £115m the following year.
The margins on the class A’s would increase from 21 to 300 basis points; from 30 to 425bp for the class B’s and from 50 to 530bp for the class C’s.
Since the completion of the Morgan Stanley securitisation in July 2006, the portfolio has fallen in value by 31% from £443.8m to £305.2m in August 3013.
The proposals follow a similar format to those agreed with bondholders in another securitisation, LoRDS 1, and have already been accepted by an ad-hoc group of investors, advised by Brookland Partners.
They are expected to be rubber-stamped by noteholders at a meeting on 20 December.
bridget.oconnell@estatesgazette.com
