Real Estate & Construction
Real Estate & Construction
In the global economy, those operating within the real estate sector have arguably seen the largest impact on their operating margins since the start of the worldwide recession in 2008.
Although market conditions within the real estate sector have improved since the global recession of 2008, it is not a consistent picture with commercial and residential asset classes in selected regions benefiting from double digit growth. However, the past seven years having left financial scars with many investors, developers and landlords have endured a perfect storm of plummeting asset values, poor yields, vacant premises, rates liabilities and insolvent tenants. Combined with difficultly obtaining competitive finance facilities, this has led even the best run real estate businesses to the edge of insolvency.
Our significant advice includes the following:
Portfolio Appraisal
We can review property portfolios in the cold light of day so that lenders are able to fully consider solutions such as debt forgiveness, in the realisation that values may not return to their pre-recessionary levels. Having acted within the market to support lenders and borrowers in this regard, we work carefully to match the realistic expectations of lenders by designing in a premium if the property is eventually sold at a higher price.
Valuations
Stimulating transaction flow has never been more important for real estate companies; our advisory services are delivered from a position that is independent of your assets and the bank lending in place. As a result, we are increasingly called upon to help provide a more realistic impression of valuations which can help attract potential investors.
Debt Refinancing
In a challenging market, we have acted as a trusted intermediary by negotiating favourable repayment and debt management programmes devised to achieve mutual benefit for both sides. Support from the banking sector remains weak; however, through early intervention when portfolios are under strain, coupled with our teams experience in sustaining businesses through the decline, means we have received a sympathetic ear from lenders so that the underlying weakness of assets can be collectively addressed.
Risk Management
Situations where investors have been deceived into dubious or non-existent property and rental opportunities overseas can significantly impact on the overall health of a business. Our forensic real estate experts are able to uncover frauds and help recover lost investments.
Related Case Studies
Real Estate & Construction
Gewa Tower
GEWA 5 to 1, a project company established for the construction of the Gewa Tower, had to file for insolvency during the construction of the structural shell. When completed, the 107- metre-high tower was to be the third highest residential block in Germany. The company had issued an SME bond to finance the project. After considerable negotiation with various investors, the PLUTA insolvency law experts were able to find a solution for the Gewa Tower. The CG Group, with operations throughout Germany, has acquired the tower near Stuttgart. Instead of the originally planned owner-occupied flats, compact rental apartments are now being created on a floor space of approx. 10,500 square metres. This is not only a good solution for the tight rental market, but also for the bondholders, who will receive a higher-than-average recovery rate.
Real Estate & Construction
Ritter & Kyburz GbR
The insolvency proceedings for the real estate project company Ritter & Kyburz GbR were the talk of the Kempten region in southern Germany. The property is known as the “Big Hole” there since the construction project had come to a standstill for several years after the excavation work had been completed and parts of the underground garage had been built. The underground garage has since been completed. The PLUTA team was able to sell the property with a plot measuring 2,031 square metres. The buyer is a bidder consortium from southern Germany that prevailed in the two-stage bidding process and won the tender as the highest bidder. The property is situated in a prime location in Kempten. Student apartments will be built there. With more than 6,000 students, Kempten is an ideal place for such a project.
Real Estate & Construction
Treveria Silo-C real estate portfolio
The retail investor Treveria had to file an application for insolvency for 36 German companies. The purpose of these companies was to own and manage the properties held. The real estate portfolio mainly consisted of large retail properties. The PLUTA experts were able to successfully conclude the sale of the Treveria Silo-C real estate portfolio in 2017. At the beginning of the proceedings, the PLUTA team made the right decision to sell the retail centres and stores successively, rather than the portfolio as a whole. This meant that the team was able to achieve considerably higher proceeds in the interests of the creditors.
Real Estate & Construction
SCI Les Deux Villages
Zalis was asked to provide a senior restructuring executive to manage a French property company that was in receivership and owned a recently constructed pharmaceutical laboratory. The shareholders of the property company had been put into receivership following a U.K. High Court Order, and Zalis was asked to intervene by the court-appointed receivers of these shareholders.
The assignment was to manage the ongoing day-to-day activities of the company with a view to maximising the realisation of its assets for the creditors of its shareholders. Zalis took the company into voluntary liquidation with the agreement of its receivers, who were appointed liquidators, and oversaw the sale of the assets and the settlement of the remaining liabilities, against the background of ongoing conflictual and contested court proceedings in the U.K. between the shareholders of the company and their creditors.
Zalis also conducted a forensic investigation into the historical cash flows of the company, as the U.K. High Court Order had been issued as a result of evidence presented to the court of the fraudulent obtention and use of funds by the company and its shareholders.
Our Other Industry Experience