A £520m commercial property vehicle has been forced into receivership after failing to secure the emergency funding needed to address a breach of certain debt covenants.
This is one of the first large property collapses caused purely by worried creditors in the current slump, although many fear there will be more as property prices continue to fall.
Falling prices have put pressure on the often high level of debt used to secure property assets during the boom years. The declines have left it in the hands of the bank, or in this case the bondholders, whether or not to enforce loan-to-value covenants normally in place on such loans.
Dunedin has been attempting to find short-term working capital, in addition to extra equity to cover the loan breach, but yesterday admitted defeat.
Financial Times, The Times