Special servicer Hatfield Philips International (HPI) said it has restructured the loan on a EUR 940 mln portfolio of 100 German commercial offices and retail premises, thereby averting a potential fire sale of the properties.

The loan was secured on properties with a valuation deficit of around EUR 200 mln and forms part of the Talisman 7 CMBS which was securitised in June 2007. The restructuring involved transferring the equity of the borrowers along with around EUR 200 mln of debt from the Mozart loan into a Luxembourg-domiciled company called Sanchez Sarl, an orphan trust structure pledged to the lenders.

Hatfield Philips said the restructuring was achieved without having to write off any debt, thus ensuring that the various lenders all continue to participate according to their seniority. The borrowers are now secure and the restructuring was achieved without incurring taxes, the firm said.

The transfer avoided the borrowers being placed into insolvency and created the flexibility to invest income into the property portfolio, which was suffering severe deterioration in value due to a lack of investment.

Part of the loan restructuring also involved a loan extension of 3.25 years to 15 April 2015, however Hatfield Philips intends to conduct an orderly sale of the properties to be completed by the end of 2014.

Jonathan Agar, vice president at Hatfield Philips International, commented: ‘The restructuring of the Mozart loan was undoubtedly one of the most complex CMBS loan transactions ever undertaken in the European market. The portfolio of properties was already deteriorating in value due to a lack of investment by the sponsor and the consequences of a fire sale could have been quite catastrophic for their realisable value.’

Hatfield Philips is the largest independent primary and special servicer in Europe. It services over £35 bn of securitised and conduit loans across Europe.