CB Richard Ellis Loan Servicing (CBRELS) has announced that it has recovered £1.1 bn (EUR 1.2 bn), or 76%, of the failed £1.6 bn White Tower 2006-3 CMBS loan through sale of the underlying assets.

The loan servicer announced on Friday that the sale of Aviva Tower in London to an undisclosed buyer has been finalised for £288 mln (EUR 232 mln), or a net initial yield of 5.42%. The other eight London office assets in the CMBS portfolio had been sold previously.

The Aviva Tower sale takes the total recovered from the portfolio to £1.1 bn (EUR 1.2 bn), CBRELS said. The 30,000-m2 property is freehold let to Aviva with a 13-year rental agreement. The vendor was advised by CBRE, Knight Frank and Berwin Leighton Paisner. The purchaser was advised by JLL and DLA Piper UK.

White Tower has been one of the largest and most high-profile loan workouts in the UK and European real estate markets. The £1.6 bn CMBS was secured on the nine London office properties totalling around 209,000 m2. The portfolio was valued at just £929 mln when the loan defaulted in June 2009.

Two months later CBRELS was appointed as special servicer and tasked with managing the recovery of the debt and securing the maximum value for creditor.

'In just under two years and in one of the most challenging real estate environments experienced, we are pleased to have been able to secure significant recovery for noteholders,' said Paul Lewis, director of CBRELS. 'The White Tower loan workout provides a great example on how to achieve maximum recovery from loan workouts.'

Commenting on the CMBS market, Lewis added: 'While the CMBS maturity profile over the next few years remains daunting, it is reassuring to be able to demonstrate to the market that by developing and implementing new loan workout templates, significant recoveries can be achieved. With CMBS repayment rates remaining low, new models for both consensual and non-consensual workouts will have to be devised to meet the multitude of challenges facing the sector.'