Tishman Speyer is in talks over the workout of a £93m loan secured against two Midtown office buildings after the firm failed to repay the debt before it matured.
The loan, secured against the eight-storey, 64,000 sq ft CAA House and the 141,000 sq ft Kemble House on Kingsway, went into default yesterday after it matured on Friday 13 January.
It has now been transferred to special servicing with Hatfield Philips.
It is understood that Tishman is in talks with the servicer over workout options including refinancing, although a sale of the buildings, which are fully let to the Civil Aviation Authority until the end of 2019, has been mooted by analysts.
The US investment manager bought the 0.9-acre site from an Irish investment group in 2007 for £153m, reflecting a yield of around 4.5%.
In Fitch’s January Loan Maturity Bulletin, the ratings agency said: “The interest-only loan continues to meet all debt service obligations, although its lack of amortization exposes it explicitly to property value fluctuations.”
It added that given there was eight years left on the lease, “residual value remains an incentive for a potential refinancing, although this will diminish the longer the loan remains outstanding”.
However it said that because the loan’s LTV is in excess of 100% “refinancing will prove challenging”.
Analysts at Chalkhill Strategy said: “The portfolio benefits from a lease to CAA with in excess of eight years to run. Our view is that the demand for this type of building differs from other more sought-after Midtown office buildings such as 90 Long Acre.
“Therefore, while the property benefits from a long lease, re-letting would require significant capital expenditure should the tenant decide to relocate.
“Our base case analysis sees the loan requiring an 18-month period to undertake a disposal of the portfolio, realising a loss of circa 5%.”
bridget.oconnell@estatesgazette.com
