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Superquinn sites fund in talks on debt restructuring

A property fund that holds three Superquinn sites as its main assets has breached its loan agreements, forcing it into negotiations with its lender to restructure its debt.

The Corinthian Irish Retail Portfolio, which has hundreds of Irish investors, owns Superquinn sites in Walkinstown and Finglas, Dublin and in Bray, Co Wicklow.

Due to the collapse in the property market the fund is now breaching its loan-to-value conditions, which stipulate the maximum percentage of an asset's value that the associated loans must represent.

The sites were purchased at the peak of the market, in mid-2007, and have fallen in value by about 46pc.

Brian O'Neill, sales and marketing director of Friend's First Private Investment said yesterday that negotiations on the loan should be concluded by late spring.

An investor's note has explained to the hundreds of investors behind the fund that higher interest charges are likely to result from talks with the unnamed lender.

"It is most likely that any new loan terms will involve an increase in loan-interest costs and an obligation on the fund to make increased capital repayments to pay down the debt,'' the note warned.


Mr O'Neill said that, while the value of the sites was hit by the property downturn, interest payments were up to date and rent from the sites was coming in as normal. It is understood the loan-to-value test was set at 70pc, but the properties now have a loan-to-value ratio of 85pc, causing what Mr O'Neill described as a soft breach of the agreements.

He said the intention, when buying the assets, was to re-develop them but the collapse in the market made this impossible. With interest rates potentially rising across Europe, the new agreement is likely to see the debt fixed.

"The talks are progressing satisfactorily,'' said Mr O'Neill.

The original deal involved €37.5m of equity and €53.5m in bank debt.

Mr O'Neill stressed that the loans were non-recourse to the holders of units in the fund.

The investor's note, issued late last year, said: "This fund was initiated in June 2007 and is now only circa two years into a five-year term with the possibility to extend the term by up to two years."

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Mr O'Neill said the situation with the fund was different to that of development land as the Superquinn sites were producing income and there were no indications of problems from Superquinn, which is the main tenant at each site.

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