Special servicing case studyDECO 6 loan: Brunel Shopping Centre
Successful work out at Swindon’s Brunel fuels future investment
- The 550,000 ft² Brunel Shopping Centre which occupies over half of Swindon’s town centre retail area.
The loan – DECO 6
- Packaged and securitised as a CMBS loan, its value dropped from £111m to £87m at the end 2011 and it went into Receivership and then Special servicing.
- Eight retailers had gone into administration contributing to the loan default.
- Uncollected rent and service charge arrears totalled £598,000 accruing over three years.
- The Centre had an 11 per cent void rate with 58,494 ft² of empty retail space.
- There was no asset and property management strategy.
- An immediate plan of action to collect and reduce the arrears.
- Long term plan put in place for asset and property management looking for new development opportunities in retail and leisure.
- Consultation and negotiation with retailers to agree repayment plans and ‘write offs’. In some cases, this meant re gearing existing leases to secure and assist current retailers.
- A proactive approach to reducing the void rate with new national, regional and local agents.
- A £400,000 national, regional and local marketing campaign to promote the Centre, increasing foot fall and attracting new retailers as well as a new marketing team.
- Rent and service charge arrears stood at nil at the end of 2012.
- In the second half of 2015, Brunel had achieved a footfall of 14.3m per annum with a reduced void rate.
- In late 2015, Solutus advised the investors in the CMBS loan package on their intention to bring the Centre out of receivership through a refinancing of its loan and to identify a Sponsor for a new loan which achieved an investor-driven refinancing in early 2016.