Early bidders have emerged for the property assets of beleaguered property and financial services group Dawnay Day.
Property Week has learnt that Topland Group, the London-based investor headed by entrepreneur Sol Zakay, has opened talks with Dawnay Day’s advisors Ernst & Young and BDO Stoy Hayward with a view to making a bid on selected assets.
This comes after corporate raider Laxey Partners bought an 8% stake in a listed German property investor managed by Dawnay Day, following a forced sell-off of shares by Dawnay Day directors Peter Klimt and Guy Naggar.
Corporate finance teams and investment banks are contacting clients encouraging them to bid for both the Dawnay Day group’s direct portfolio and consider offers for the listed companies it manages, which are currently reviewing their future, advised by JP Morgan Cazenove.
Topland declined to discuss the matter but is said to have amassed a £1bn equity war-chest which will be used to finance a purchase. It is thought Topland is seeking an agreement with Dawnay Day’s lenders over taking on the debt currently outstanding against any assets bought.
Sources close to the matter suggest it will bid on at least one of the AIM-listed property companies externally managed by Dawnay Day; Sirius, Treveria, or Carpathian, which this week terimated its contract with Dawnay Day.
It could purchase the management contracts or take the companies private. It is thought that it would look for a discount of at least 40% to net asset value. The three companies currently trade at a discount of between 60% and 70%.
Sirius has a market capitalisation of €130m (£103m) and its German mixed-use portfolio was valued at €376m (£298m) at 31 March, but the biggest company within the Dawnay Day empire is Dawnay Day Treveria which has a market capitalisation of €174m (£137m) and a portfolio of German retail assets valued at €2.3bn (£1.82bn). Carpathian which has a market capitalisation of £92m and a portfolio of central and eastern European properties valued at £310m at 31 December 2007.
DTZ was today appointed valuer for the receiver to two of the property subsidiaries of the Dawnay Day group, Starlight Investments and Insureprofit. The portfolios are thought to have a combined value in excess of £300 million.
Appointed by receivers BDO Stoy Hayward, DTZ’s corporate recovery team will advise on the sale of both portfolios, which consist of 64 individual properties. The properties are mostly retail assets as well as some industrial and office buildings.
Richard Stanley, DTZ’s director of corporate recovery and restructuring, said: ‘This is the biggest single property insolvency to come to light in the downturn so far. These casualties further illustrate the extreme stress being felt in the property sector.
'We are seeing similar difficulties with highly leveraged investment vehicles struggling in the current market.’