White Tower CMBS Sale Good For Senior Noteholders - Moody's

14th Jun 2010 16:21

LONDON (Dow Jones)--Private equity firm Carlyle Group's planned purchase of six properties from entrepreneur Simon Halabi's former GBP1 billion property portfolio, will be positive for senior noteholders in the high profile commercial mortgage-backed securities deal, White Tower 2006-3, Moody's Investors Services said Monday. "The execution of the sales bid would be a credit positive for senior noteholders in the transaction because the sale proceeds would help to pay off nearly the full balance of White Tower's senior notes," Moody's said in its Weekly Credit Outlook. It added that Carlyle is in advanced talks to buy six properties in Halabi's portfolio for around GBP700 million. The senior notes have a current balance of GBP632 million. However, Moody's said holders of around GBP300 million of junior ranking debt face the possibility of significant losses. White Tower is a widely-watched deal because it was the first U.K. CMBS to be placed in liquidation since the start of the financial crisis, after the falling value of the property portfolio caused the breach of a loan-to-value covenant. CMBS are bonds serviced with the payments made on one or more commercial mortgages. The White Tower CMBS are backed by a GBP1.45 billion loan, which Halabi took out to buy nine London properties. In March, eight properties in the portfolio--including J.P. Morgan Chase & Co.'s offices at Victoria Embankment, Leadenhall Court and Millennium Bridge House, all in central London--were put up for sale. Last week, real estate investor Hammerson PLC (HMSO.LN) said it had agreed to buy the Leadenhall Court building for GBP65 million. Carlyle declined to comment on the purchase of the properties. -By Ainsley Thomson, Dow Jones Newswires; 44 20 7842 9318; [email protected] (END) Dow Jones Newswires June 14, 2010 11:21 ET (15:21 GMT)