Europe’s Rynda steps in to rescue distressed real estate
Distressed real estate has become an increasingly popular theme and the size of the problem in Europe, (thought to be around half a trillion Euros of loans requiring refinancing over the next four years), means there are many opportunities available for real estate investment specialists, according the sector specialist Rynda Property Investors LLP.
The firm is one of a number of operators shifting its focus to real estate debt recovery and distressed assets. Although not a buyer of real estate loans, it works with banks and special servicers of CMBS structures to provide advice where confidence in the original sponsor has been lost.
Although each case is unique and requires a bespoke solution, Rynda can either become the sponsor and owner of the portfolio, the adviser, or replace the existing sponsor. In H2 2011 Rynda CEO Michael Walton and his team of 31 managers won two large European mandates to manage portfolios of loans requiring asset management and liquidation.
Rynda, founded in 2005 and 100% owned by its management team and supported by 31 professionals, has offices in Paris, Lille, Frankfurt, Rotterdam and London.
Walton said Rynda’s expertise derives from an opportunity in April 2009, when an organisation that had set up a fund with its own money (without institutional investors) encountered seemingly insurmountable problems with bad loans.
One of the most significant issues it faced was that, as a publicly listed company, its debt was being consolidated back onto its domestic company’s balance sheet.
The client approached a liquidator but the bank was unhappy with both the method of sale and quality of asset management. It wanted an experienced and professional team who could pro-actively manage the assets in five countries and sell them out of the distressed situation.
Walton knew both the company and the bank involved, and intervened. He recognised that speed was critical and within days stepped in, buying the Luxemburg fund company for a nominal consideration, restructuring the debt and invested equity, and becoming the beneficial owner and purchaser of the structure.
The deal consisted of 32 assets, 18 corporate entities and six jurisdictions, and the process took place over just 21 days. Says Walton: “Rynda kept both sides apart, behaving almost like a marriage guidance counsellor. Our awareness of both parties’ positions meant that we could come up with what we believed to be the best solution for everyone.”
He says there has been speculation that most distressed real estate loans in Europe are secured on secondary and tertiary assets, with banks extending loan periods in the hope there will be some sort of recovery.