Westbrook Partners has acquired a whole loan secured by three regional UK shopping centres for a combined price of around £31m from an entity wholly-owned by Ellandi, the UK property investment manager.
CoStar News has learned that Westbrook Partners has bought Waterbourne Walk in Leighton Buzzard, Gravesend’s Thamesgate Shopping Centre, and Wellington Way in Waterlooville from Firedog Moss, a special purpose vehicle owned by Ellandi and set-up to buy the then out-of-the-money £2.6m junior loan beneath the securitised CPI Retail Active Management senior loan.
Firedog Moss exercised its right to acquire the securitised senior loan in the Deco Series 2005 – UKC1 CMBS, with an outstanding balance of £26m, at par and has sold on the whole loan to Westbrook Partners for just under the whole loan’s current outstanding balance of £31.4m, as at the April interest payment date (IPD).
CoStar News understands Firedog Moss paid pence in the pound for the junior loan and agreed with loan servicer, Hatfield Philips International (HPI), to roll up all interest payable on the junior loan in favour of a faster amortisation of the senior loan.
As a result, in the almost four years since the acquisition of the junior loan, the outstanding balance has ballooned to £5.4m, while the senior balance has shrunk from £35.2m to £26m.
This fast amortisation of the senior loan, aligned with the improvement in value for regional UK shopping centres over the nearly four-year period and Cordatus’ asset management programme, appointed in 2011 by HPI, has aligned to almost entirely cover the whole loan’s outstanding balance, based on Westbrook’s purchase price of circa £31m.
For Hatfield Philips, this has concluded a loan workout in the full interest of all creditors, including Firedog Moss’ B-loan, for whom strategy back in October 2010 has now paid off substantially marking a return on capital – based on its undisclosed pence in the pound purchase – in the order of 1,800% in three years and nine months.
While this is a significant success for, ultimately, Ellandi, had values not recovered into the B-loan balance, the UK property investment manager could have lost its speculated capital, illustrating how the success or failure of so many deals – beyond the complexity of capital structures and competing creditor rights – comes down to timing.
The three shopping centres were formerly owned by Stockland and Apollo Global Real Estate Management, after Apollo’s acquisition of Citi Property Investors in November 2010.
The five largest tenants across the three shopping centres are: Wilkinson, Waitrose, Lloyds Bank, Poundland and Poundstretcher, which together account for 31% of the three shopping centres’ combined £2.06m annual total net income for 83 tenants. The weighted average lease term is 5.26 years.
All parties declined to comment.