Consultant's new division a response to current credit crunch and property market slowdown
Consultant Cluttons has formed a property asset recovery service to advise clients in the commercial and residential sectors on distressed property assets.
The move is in response to the current economic downturn.
The team is led by commercial partner and LPA receiver Michael Dix, and supported by residential partner Tim Glover and project and building partner Paul Chilton.
It also includes Ed Stollery and Ian MacGruer, two former corporate and property bankers, who worked through previous property recessions.
Stollery has over 25 years experience working for major companies in financial analysis, capital restructuring and debt workouts in the UK property market.
MacGruer worked in previous downturns with major institutions on distressed loan portfolios and development and investment property workouts.
Dix said: “Cluttons is ideally placed to assist banks and insolvency practitioners in the current market.
“With RICS registered LPA Receivers on board and, an experienced multidisciplinary team that has worked through the property recessions of the 1970s, 1980s and 1990s, we have hands on experience of how best to maximise value in a falling market.”
The service will offer strategic advice and practical solutions for both the commercial and residential sectors with a view to realising maximum asset values while minimising losses.
Key services include market appraisals, financial analysis, recommendations on commercial options, formulating and implementing property and financial strategies, which includes project monitoring, equity for debt exchanges, debt restructuring, joint ventures and the introduction of new equity.
Bill Siegle, head of commercial at the firm, said: “The rationale behind the property asset recovery service team is simple. Since 2006 many loans have been at loan-to-value ratio above 80% and in that time commercial property values have fallen 20%.
“As a result we have been taking enquiries from a number of financial institutions concerned about their exposure to property and protecting their loans against the possibility of default by borrowers.
“With insolvencies rising at their fastest rate for five years this is all about optimising asset values in a falling market.
“Any prudent organisation, be it a lender, developer or investor, should be taking a close look at their property assets at the moment and making contingency plans to service debt and minimise losses.”
According to figures from the Bank of England, corporate Britain owes its banks in excess of £545bn, a figure comparable with the total annual spend of all government departments.
In property terms, Cluttons says, bank lending to the real estate sector at the end of 2007 was £213bn of which approximately £20bn matures this year and £22bn next year.