Hatfield appoints FRP as receivers over Redefine’s £125m GIP portfolio

Hatfield Philips has appointed Geoff Rowley and Philip Watkins at FRP Advisors as fixed charge receivers over Redefine International’s 38-strong government-tenanted UK regional portfolio valued at £125.3m.

Two of the 38-strong Government Income Portfolio (GIP) portfolio are in Scotland and are separately now in administration, also under the purview of FRP Advisors’ Rowley and Watkins.

Rowley and Watkins, along with Hatfield, are close to appointing investment agents which will help structure the disposal of the Government Income Portfolio (GIP), formerly-owned by Wichford prior to the reverse take-over by Redefine in July 2011.

Eddisons, the property agent on behalf of Redefine, has been retained by FRP Advisors.

Both piecemeal sales and a sub or full portfolio sale of the asset are being considered, with the disposal of the portfolio expected to complete over the coming year.

Hatfield Philips published an updated valuation by Jones Lang LaSalle on the GIP portfolio yesterday which on a like-for-like basis reveals a decline of 55% to £125.3m, as at the end of August last year.

The new valuation implies an initial yield – based on net income of £16.7m – of 13.5%, up from 5.8% in the previous valuation, as calculated by Barclays Capital. The yield shift is the predominant reason for the significant value decline, in addition to a reduced weighted average lease term, from 11.6 years to 8.3 years.

This newly-released £125.3m valuation, however, is 19% lower than a separate valuation by Redefine International’s dated to September 2012.

The outstanding balance on the GIP loan – part of the Windermere VIII CMBS – was £199.67m at the end of the October interest payment date (IPD), which takes the senior LTV to 159.3%, implying principal loss potential of £74.3m.

Including the £64.6m B-Loan, the whole loan LTV on the GIP portfolio is 210.9%.

The vacancy rate on the portfolio is 2.14 %, while the unexpired lease term is 8.03 years and the annual contracted gross rent is £16.8m.

The largest 10 GIP properties comprise:

  • The 104,875 sq ft Centenary Court in Forster Square in Bradford (2006 value: £26.85m)
  • The 78,263 sq ft Castle House Lisbon Street in Leeds (2006 value: £23.9m)
  • The 57,751 st ft Unicorn House at 28 Elmfield Road in Bromley, (2006 value: £18.925m)
  • The 57,384 sq ft Clifton House in Peterborough (2006 value: £13.35m)
  • The 62,504 sq ft Woodfield House & Riverside Chambers in Taunton (2006 value: £12.98m)
  • The 59,224 sf ft Inland Revenue Call Centre in Dundee (2006 value: £12.97m)
  • The 83,445 sq ft Great Western House in Birkenhead (2006 value: £12.13m)
  • The 55,008 sq ft Atholl House in Aberdeen (2006 value: £11.7m)
  • The 63,657 sq ft Archway Tower in London (2006 value: £9.7m)
  • The 36,682 sf ft West Midlands Police Authority HQ at Aqueous 2 in Aston (2006 value: £9.07m)

Christian Aufsatz, CMBS analyst at Barclays Capital yesterday commented on the nearly 20% difference between Hatfield Philips’ instructed August 2012 valuation, by JLL, and the Redefine’s separate valuation.

Aufsatz wrote: “We think that the difference can be due to a number of factors, including different valuers having different opinions and assumptions that were used – for example, capex requirements, market rent and/or yield assumptions.

“In relation to the property sales…. we think that the special servicer [Hatfield] should also take the 2012 sponsor valuation of £155.7m into account.

“This is because the sponsor has publicly stated that it is interested in selectively buying some of the properties, given that it knows the portfolio. In our view, this implies that the sponsor sees more value in the Windermere VIII GIP portfolio than the updated valuation published [yesterday] suggests.”


About CoStar News

Finance Editor, CoStar News
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