Glenn Maud’s Propinvest has reached agreement with its lenders for the restructuring of an £801m portfolio of UK assets.
In an announcement to the Stock Exchange this afternoon the Gemini (Eclipse 2006-3) commercial mortgage-backed securities vehicle that securitised the debt said Propinvest, the special servicer to the CMBS Barclays Capital Mortgage Servicing, and most of the junior lenders had agreed an ‘in principle’ restructuring proposal.
The proposal involves the following:
- waiver of existing breaches and exit from special servicing;
- junior loan to value and junior interest cover testing removed;
- senior interest cover testing reset at 1 times for initial three year period; thereafter reset at 1.1 times;
- Senior loan to value testing suspending for initial five year period; thereafter reset at 100% (of senior loan);
- All payments to junior lenders and borrowers suspended until the maturity of the senior loan (unless transaction returns to original thresholds);
- All junior lender escrowed funds (and certain other funds) to be available to meet senior loan interest, non-recoverable costs and capital expenditure (including capital contributions to the extent available);
- Propinvest Asset Management to continue management of properties (and to waive the fee due to it under the management agreements) subject to monitoring of Jones Lang LaSalle
The key objectives of the restructuring plan are to maximise the recovery of funds under the senior loan and the special servicer said this proposal would achieve this by:
- maximising cashflow and income revenue;
- building reserves to assist in meeting senior loan interest payments, non-recoverable costs and capital expenditure through a period of further economic stress;
- avoiding a fire sale of the portfolio in the short term that would crystallise losses;
- avoiding crystallising super senior termination payments on (junior and senior) hedging arrangements (presently estimate to be around £119.5m on present estimates it would take over two years to satisfy this liability from the cashflows);
- reducing the solvency risk for the borrowers;
- ensuring active property and asset management so as to maximise revenue and allow realisation of the portfolio in the long term at a higher value, or to facilitate a refinancing upon maturity of the senior loan.