UK property firm falls to receivership

Bloomberg

Pinton Estates, a U.K. property company controlled by Leo Noe, was forced into receivership by its creditors after failing to collect enough rent to make bond payments.

Deloitte was appointed as the company’s joint receiver and manager by at least 20 percent of Pinton’s bondholders, the required minimum, Nigel Letheren, a spokesman for the bond’s trustee Prudential Assurance Co. Ltd., said by telephone on Tuesday. "Discussions are continuing and we are hoping to be able to resolve this matter quickly," Shimon Cohen, a spokesman for Noe, said in an e-mail.

Estates & General and Ashpol, two other companies controlled by Noe’s family investment company, also have breached bond terms, according to Regulatory News Service statements. Noe, 55, used debt and equity to acquire real estate companies and individual properties worth more than 3 billion pounds ($4.5 billion) over the last decade. Some of the assets were linked to debentures, bonds that allow properties to be removed from the secured asset pool and sold as values rise.

"We’re seeing commercial property stressed to the point where some of these debentures are starting to default," said Richard Smith, a credit strategist at Royal Bank of Scotland Group in London. "They made it through the last downturn largely unscathed. Obviously, you could argue we’re in the kind of market that’s unprecedented."

U.K. commercial property values almost doubled in the five years through mid-2007. Those gains have since been wiped out. Pinton Estates, which has a 70 million pound debenture, couldn’t pay the whole of its half-year coupon in March because it failed to collect rent from some tenants, according to a May 1 statement. Estates & General, which Noe bought in 2004 for 71 million pounds, is trying to refinance a 3 million pound debenture that expired on 31 December, according to a Regulatory News Service statement on Jan. 16.

Ashpol breached the terms of its 75 million pound debenture after the properties it was secured against fell in value, according to a Jan. 23 statement. The debenture’s trustee, Law Debenture Trustees, asked Ashpol to provide more equity to meet the terms of its agreement.

Noe is chairman and part owner of F&C Reit Asset Management, a London-based company that owns real estate worth 8.5 billion pounds, according to its Web site.

Trafalgar Overseas, a company registered in Gibraltar, is the parent of Pinton, Estates & General and Ashpol, according to Companies House, where U.K. private companies are required to file their accounts. Trafalgar is controlled by Leo Noe’s family, according to F&C’s Web Site. The debentures pay interest of 10.75 percent to 12.4 percent.

Pinton reported a 6.1 million-pound loss and Ashpol an 11.3 million-pound loss for the year ended March 31, 2008, according to accounts filed at Companies House. A director of both companies withdrew 1.5 million pounds from each one for charitable donations that period, according to the accounts.

Noe was a director of all three companies until he resigned from their boards in the last quarter of 2008, according to Companies House accounts. Noe is a philanthropist and founder of the Rachel Charitable Trust.

Noe was chief executive officer of Bourne End Properties, a publicly traded U.K. company, from 1989 to 1997. Last year he combined his investment vehicle, REIT Asset Management, with the property arm of F&C Asset Management. The transaction gave Noe and his business partner, Ivor Smith, 60 million pounds in cash and loan notes and a 30 percent stake in the merged company, according to F&C’s Web Site.