The lenders to the 34-storey Citypoint Tower in the City of London have appointed Brookland Partners to advise on one of the largest and most complex debt restructurings in the market.
Specialist debt advisory firm Brookland was today appointed by Morgan Stanley Mortgage Servicing to advise it on the workout of the £535m of debt secured against the 706,000 sq ft building, which is owned by US private equity firm Beacon Capital Partners.
Morgan Stanley advises a group of investors that bought bonds secured against the income from the building, which was bought by Beacon for £650m in 2007.
Morgan Stanley provided a £429m loan to fund the deal, which it then securitised to these bondholders, and there is also a £106m syndicated junior loan.
As revealed by Property Week (news 10.6.11), Beacon has brought in its own advisers, AgFe and PWC, and the parties will now look for a restructuring solution.
The main difficulty with the loan is that the income from the building’s rent is not sufficient to pay the interest on the loans. It is currently being topped up by a reserve account provided by Beacon, but this account is due to run dry before the end of the year.
One of the largest tenants in the building, Macquarie, has now moved to British Land’s Ropermaker Place, and Beacon has appointed JLL and CB Richard Ellis to let up 50,000 sq ft of vacant space left by the Australian bank.
In April this year a new valuation of the property came in at £447m – £88m less than the level of the debt, which matures in 2014.
Beacon has been putting its UK portfolio and debt in order over the past year. It sold 200 Grays Inn Road, the headquarters of ITN, to Great Portland Estates for £133m; sold a 50% stake in MidCity Place to Oxford Properties for £142m; and extended the maturity £300m of debt on Milton House and Shire House, the City HQ of Linklaters, to October 2012.