Receivers appointed to $1.8 billion property trust

The pain for the commercial property sector continues, with receivers appointed to Record Funds Management, manager of the Record Realty Trust which controls 39 commercial properties with $1.8 billion.

The trust, which has debts of around $1.76 billion, is an offshoot of Allco Finance Group, which collapsed last year at the height of the credit crisis.

But the value of the company’s holdings, which includes 10 office buildings in Australia, seven in Europe and 22 in the United States, remains unclear. At June 2008 the assets were valued at $1.6 billion, but property values have tumbled since then.

The receivers, Craig Shepard and Mark Korda of KordaMentha, were called in by HBOS, which has a direct debt of around $186 million and is believed to have a total exposure of around $400 million.

Commonwealth Bank and Allco Max Securities & Mortgage Trust are also secured creditors.

Shepard says his first job will be to review the property portfolio and start casting around for potential buyers.

Some property analysts fear the decision by HBOS to call in the receivers may indicate lenders are becoming fed up with debt-laden property companies.

If financiers have hardened their stance, there is a concern that the market will be flooded with commercial properties, further depressing prices and placing more companies under stress.

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