Servicer pushes Treveria into secondary retail sell-off

Demand for repayment of CMBS loans may force sale of whole portfolio

German retail investor Treveria has suffered further blows to its struggle to keep control of its largely secondary portfolio.

Some or all of 154 of its assets could be sold in the next few months, after special servicer Hatfield Philips demanded on 15 October immediate repayment of the €370m Orange loan, which was securitised in Talisman-6 Finance.

The loan, known as ‘Silo E’, faces enforcement after the commercial terms put forward for a consensual work-out as part of the borrower’s business plan were turned down.

Treveria failed to meet targets  to increase occupancy and lower the loan-to-value ratio set when the loan was extended by a year in July 2011. Hatfield Philips declined to grant a second 12-month loan extension.

A further €30m of debt is secured on the properties, which were last valued at €411.74m in May, putting the whole loan’s loan-to-value ratio at 97%.

The AIM-listed company has been battling for four years to slash its debt and had divided the portfolio into a number of ‘silos’ based on the debt secured against them. Loans in Silos D and F/K also fell due in July.

Treveria declined to comment on any progress, but it was supposed to cut Silo D’s loan-to- value level from 85% to 75%, to secure a 12-month extension.

The silo contains a €217m Deutsche Bank/Citigroup loan  transferred to the Deco 10 and EMC 6 securitisations.

Silo F/K holds a €428m Eurohypo loan. Treveria was in talks over refinancing the debt  in conjunction with mezzanine lenders earlier this year, before Eurohypo quit lending.

Silo C assets set for quick cut-price sale

A portfolio Treveria has already lost needs to be sold in the next six months, at likely distressed pricing, predicted a Fitch analyst.

Deutsche Bank took over the 45 properties securing Silo C in July 2010 when it filed for insolvency against Treveria companies. The assets backed a syndicated loan originated by the bank, split 50:50 across two DB and Citibank securitisations, Deco 9 and EMC 4.

The defaulted loan’s work-out will be tough for special servicer Situs, because the EMC 4 bonds mature in April. The Deco 9 bonds mature in 2017. This means EMC noteholders will favour forced liquidation, but the Deco noteholders will want to pursue strategic disposals.

Situs is trying to sell assets and has sold five this year, but it has been slow progress.

It turned down bids for the entire portfolio in October 2011 in favour of asset sales, as it had wanted a better offer.

Vacancy rates for the assets, let for an average of four-years,  have increased and the dilemma is expected to result in big losses for both sets of bondholders.