Kennedy Wilson buys Ruby portfolio for £57.5m

Kennedy Wilson has emerged as the winning bidder for the 29-strong Ruby portfolio paying £57.5m, bringing to a closure the fate of the widely-contested former Alburn Real Estate portfolio.

Savills, the LPA receiver appointed by primary servicer Rothschild on the defaulted Alburn REC 6 CMBS, has sold Ruby to Kennedy Wilson at a 12.8% discount to the £66m guide price, which reflects a net initial yield of 14%, according to Debtwire’s Dan Cunningham who broke the story yesterday afternoon.

Kennedy Wilson beat competition from at least four finalists, including Irvine Sellar’s Sellar Property Group, Isle of Man-based Praxis Real Estate, Legal & General Property and Threadneedle Investments.

CBRE acted for Kennedy Wilson.

Ruby comprises office properties in Guildford, Doxford, Birmingham and central London and industrial assets situated in Northampton, Fareham, Wimbledon and Swanley.

The deterioration of the wider Alburn portfolio is due to limited capex spent in the years since the portfolio financed with securitised debt, which resulted in long-running uncertainty over the portfolio’s fate, as well as the collapse – and lack of recovery – of the UK secondary property market.

The Ruby portfolio was assembled from the bulk of Alburn’s securitised portfolio in the REC 6 CMBS, after the loan was enforced by Rothschild in May.

Prior to enforcement, there were several suitors seeking to buy either the debt, in either loan or bond form, including Lone Star while Alburn founder Noel Smyth attempted to negotiate both a bond extension and asset management contract.

More than two years ago, in October 2010, Smyth attempted a debt buyback which was blocked by majority bondholder, the Royal Bank of Scotland. The failed tender offer would have delivered a better recovery for REC 6 CMBS bondholders than will now be delivered.

The protracted fate of the entire Alburn portfolio even briefly sought a legal judgement, after the Vincent Barratt’s Pearsanta, who bought the out-of-the-money £11.7m junior loan for £100,000, attempted took Rothschild and US Bank Trustees CMBS trustee to the High Court to win the appointment of Solutus Advisors as special servicer.

Prior to which, Hatfield Phillips neared an appointment as special servicer by Pearsanta before opting to walk away.

The balance of the Alburn portfolio will be sold piecemeal by Savills, for the remaining UK and Wales properties, and Moorfields Corporate Recovery for the Scottish assets.

All parties declined to comment.

jwallace@costar.co.uk

About CoStar News

Finance Editor, CoStar News
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