Dutch property manager Uni-Invest has failed to repay bondholders in a €603m securitisation which is set to become a test case for debt workout.
The CMBS bonds matured on Wednesday – the first time a European securitisation issued during the boom has reached legal final maturity.
Although Uni-Invest has a three-day window to repay investors in the debt, analysts expect the bonds to go into default. The debt was provided by Eurohypo in 2005 to refinance a 201-strong secondary office portfolio.
A committee representing around 90% of the senior noteholders is exploring options which, according to ratings agency Fitch, include foreclosure.
Fitch expects that any enforcement process will result in “significant recoveries” for the senior noteholders, after sales and workout costs.
“The failure to repay at legal final maturity should now mean that the class-A noteholders have complete control of the enforcement process,” it said.
Fitch added that the timing and recovery amount of any such enforcement remains difficult to assess, although the removal of the time pressure associated with the approach of the legal final maturity should allow noteholders to extract the highest possible price for the assets.
Separately, Fitch also warned that investment-grade European CMBS ratings are becoming increasingly vulnerable to downgrades as legal final maturity approaches.
Barclays Capital securitisation analyst Christian Aufatz also warned that there could be an increase in legal final defaults as CMBS maturities build.
“It’s the first time senior bondholders in a European CMBS deal have been hit by a non-payment on the maturity day”, he said. “We could see deals facing similar situations in the coming years.”
The legal final maturity date on which bondholders must be repaid typically occurs two years after the loan matures in a single-loan CMBS. In this case, a two-year loan extension had been granted to allow for the workout of the debt through a failed sale of the business for around €600m last year, which resulted in the loan and bond maturing on the same day.
bridget.oconnell@estatesgazette.com
