Valad Europe, the asset manager majority-owned by Blackstone, has been awarded the property asset management contract to run the majority of the 35-strong Gemini portfolio, formerly owned by Glenn Maud’s Propinvest.
CoStar News first revealed Valad’s appointment back in September and is set to take over the management from Propinvest of all Gemini assets, with the exception of six English shopping centres – with an estimated market value of around £130m – and four Scottish retail assets, with a combined current value of around £34.1m.
Vale Asset Management has been appointed as asset manager to the English shopping centre portfolio, while Cogent Property Solutions has been appointed asset manager to Gemini’s Scottish retail assets.
Vale’s mandate includes asset management for The Paisley Shopping Centre and Falkirk’s Callendar Square Shopping Centre. Valad will take over the remaining 25 industrial, office, retail and leisure assets located throughout the UK.
CBRE Loan Servicing, the special servicer on the Gemini CMBS, also appointed CBRE Property Asset Management, which has been responsible for oversight and shadowing of the property management arrangements since 2009, has now been appointed to the mandate removing Propinvest from all asset management responsibilities.
Deloitte’s Phil Bowers and Neville Kahn, Gemini’s fixed charge receivers, and administrators, also Deloitte’s Bowers and Kahn, as well as Rick Garrard, together with CBRELS are putting the final touches to an asset management strategy and business plan for the workout of the portfolio with Valad, Vale and Cogent.
CBRELS will update bondholders with a more detailed strategy outline, and scenario forecasts for the different classes of noteholders, in the first quarter of 2013.
Valad said its mandate will involve the implementation of a focussed strategy with detailed asset-by-asset business plans, to protect and increase rental income, reduce void levels and running costs and reposition the 25 assets in order to build sustainable value.
Marty McCarthy, chief executive of Valad Europe, said: “We have been appointed with a clear remit to improve income and capital values throughout the portfolio in preparation for an orderly disposal programme to maximise capital recovery.
“Our intensive asset management strategy will primarily focus on existing tenant customers, letting vacant units and repositioning the assets. Our UK asset management team will provide best-in-class tenant management using their local knowledge and skills to attract and retain a strong mix of tenant customers across the portfolio.”
For Valad Europe, which manages more than €4bn of assets across Europe, the mandate is a coup after missing out on the asset management mandate on the Uni-Invest CMBS to TPG and Patron Capital five months ago, in a fiercely-contested battle for bondholder votes.
Across the entire Gemini portfolio, the value of the assets have fallen by a staggering two-thirds in six years – from £1.23bn, in November 2006, ahead of the sale of the CMBS bonds, to £414.03m at the end of September, according to the latest six monthly GVA valuation.
GVA’s end of September £414.03m valuation was driven by the grant of the long leasehold interest in the Martineau Place offices, as well as the administrations of JJB Sports and Clinton Cards, for which there were one and three units affected, respectively.
In advance of the acceleration of the Gemini loan, Barclays agreed with CBRE to waive full crystallisation cost of the swap on loan enforcement, in exchange for an agreed pay-down of the swap over a three-year period.
The restructuring of the swap will allow Valad to execute the asset management plan without crystallising the now £264.9m in swap breakage costs, which will ensure a greater recovery to noteholders.
Barclays agreed to waive the right to seek the full swap liability repayment in exchange for a pay down over the next three years and three months, which will be financed by the net disposal proceeds from asset sales. Additionally, there are intermediate disposal hurdles after 15 and 27 months each requiring repayments of between £40m and £70m by each date.
This is thought to be the first European CMBS transaction for which this kind of swap negotiation has been agreed with the counter-party.