The real estate private equity arm of Australian bank and fund manager arm Macquarie has offered to inject equity into the troubled Plantation Place City of London office scheme.
A £435m loan that has been securitised against the 550,000 sq ft City building has breached its loan to value covenant, and its owners, an Indian family, Stobart Group and a listed trust managed by Invista Real Estate Investment Management, have declined to inject more equity into the deal.
The deal is contingent on the loan to value covenant being removed from the debt structure. It aims to pay back some of the existing debt and improve cash flow in the deal.
Financial advisory firm Houlihan Lokey was drafted in to restructure the deal’s debt, and at a meeting today investors who had bought bonds secured against Plantation Place were told that MGPA Europe was willing to inject £45m of equity into the deal.
However, the debt investors do not necessarily want to see fresh equity introduced.
Some bought the debt at less than face value, and would profit if a sale of the building were forced, as they would be repaid at the full value of the debt.
A group of bondholders, lead by Fidelity International, is seeking to gain ‘negative control’ of the property by blocking the proposal for new equity, which they feel would eventually lead to a sale.
Both sides, the building’s owners and the debt investors, feel they have a watertight legal position that means they can decide on whether the equity raising goes ahead. However, the complex offer document that accompanied the sale of the bonds is ambiguous, and the matter may end up being decided by arbitration or legal proceedings.