Special servicing case study

DECO 6 loan: Brunel Shopping Centre

Successful work out at Swindon’s Brunel fuels future investment

Brunel

The 550,000 ft² Brunel Shopping Centre which occupies over half of Swindon’s town centre retail area.

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.