This is London’s Centre Point tower, a (cough) architectural icon from the 1960s that sits at one end of Oxford Street.
The problem is that Targetfollow can’t meet the interest payments on a £700m loan facility, according to the Times. Although the company come up with turnaround plans, state-controlled Lloyds is insisting the company sell as much of its assets as possible to repay the loan.
Understandably, Targetfollow’s founder Ardeshir Naghshineh is angry. So angry he’s gone public with his feelings on Lloyds, which in its defence is still dealing with the legacy of the billions of duff loans made by Peter Cummings and his gung ho colleagues during in the glory years of the mid-noughties.
Let the battle commence.
“The first thing to say is that the negotiations between the parent company and Lloyds Bank do not involve or affect day-to-day operations of our businesses, which are performing extremely well despite the difficult conditions. Our unique portfolio has had four successive quarters of rental growth and we have completed 188 lease transactions with another 65 under offer. We have also concluded planning negotiations for more than two million sq ft of development and outperformed the letting marketplace in a number of our locations.
So at ground level it is business as usual and will remain that way. However, at corporate level we are being charged 6% for our bank loans when the government has driven the base rate down to 0.5% specifically to help businesses through the recession. The Bank of England has just criticised the banks for their interest rate ‘mark-ups’ to homeowners and the truth is that the same thing is happening to commercial property companies.
The situation is not helped by the fact that Lloyds took out a hedge facility – in effect, a spread bet – against interest rates going up and that bet has gone wrong, but they didn’t cancel it in time, despite the government making it clear that low interest rates are here to stay for some time. This has created a £200m liability which we are expected to pay.
Of course, we understand that Lloyds is under pressure from the government to raise the funds to pay back its bail-out, and we want to do what we can to help and maintain a positive relationship with our bankers. But the way they are handling this makes no sense to me. The bank’s insistence on immediate sales of assets, under the permanent threat of administration, has naturally driven down their value, whereas a fair and orderly sale process, with a reasonable amount of time to market the properties, would maximise the value and be far better not just for us but also for the bank and ultimately the taxpayer.
The whole UK property industry is watching the situation very closely because Lloyds has in excess of £80bn of property assets on its books and any indication that it is starting a process of offloading them at fire-sale prices will hit the property market very hard indeed, just as the recovery is underway.
We have presented a large number of viable solutions to Lloyds but they have all been rejected out of hand. Still, we have no intention of giving up, particularly as the independent valuations of our properties far exceed those put forward by Lloyds’ valuers. Sales and offers in the past few months show that, if anything, the independent valuations were on the conservative side”.
We await Lloyds’ riposte.
Targetfollow seeks MPs’ help – FT