Uncertain future for Union Hanover portfolio after failed MBO

George Sell By George Sell
30 October 2015 | Updated 30 October 2015

UK: Real Estate Debt Securities has taken control of Union Hanover Group, and is reviewing its portfolio of serviced apartment and hotel developments.

Guernsey-based lender Real Estate Debt Securities Limited (REDS) has announced that it has taken control of the Union Hanover Group.
The transfer of ownership occurred after a proposed management buy-out (MBO) by the management team of Union Hanover Securities, the group's UK service agent, fell through. A successful MBO would have resulted in REDS being repaid its investment into the group.

Four of the Union Hanover Securities management team, Eric Jafari, Andrew Fowler, Merzak Kaddour  and Charles Cresser have since joined SACO.
EquityBridge Asset Management, through its Secured Fund, a fixed income fund and part of the EquityBridge PCC was the major backer and capital provider to REDS through an asset-backed bond purchase programme.

The Union Hanover Group owns a portfolio of UK leisure investments, which includes a number of hotel development projects in London, Edinburgh and Aberdeen.

These include the Penny Brook boutique hotel and Adagio aparthotel development in Stratford, east London, and Urban Villa aparthotels in Brentford, west London, and Edinburgh.
REDS is undertaking an audit of the assets within the portfolio to consider whether strategic disposals or restructuring "will best align with the investment profile of its capital providers". This will also enable it to settle bonds that were delayed as part of the proposed MBO.
Warren Malschinger, managing director of EquityBridge said: "We are clearly disappointed that the exit strategy we had envisioned did not transpire. However it is clearly a particularly attractive portfolio and our being able to negotiate directly with interested parties and potential partners facilitates a greater tactical alignment with the fund's strategy. We will now consider how the portfolio can best be asset managed to blend repayment of shorter-term loans while delivering the continued upside in the current market of being invested in longer-term projects, in line with the fund's investment goals".


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