Commercial Property News

Max Property Group, set up to invest in bargain UK property assets, is in talks to make its first acquisition since floating in May, the Financial Times reported  today.

The paper said Max Property has entered talks to buy a £270million portfolio of industrial properties.

The Aim-listed property company, which became the largest initial public offering in the UK this year after raising £220million, is in negotiations to acquire the 10million sq ft Industrious portfolio of properties out of receivership.

Difficulties over the timing of the deal have led to setbacks this week, although the talks are continuing in a bid to find a resolution.

Max Property’s investments will be closely scrutinised by the property industry for a reading on the value of distressed real estate.

The company was set up to make opportunistic purchases by two respected property investors: Nick Leslau, the millionaire entrepreneur, and Mike Brown, the former investment head at Helical Bar.

The Industrious portfolio comprises 120 properties. It was valued at more than £530million when it was put into receivership last year, but has subsequently fallen sharply in value.

The debt behind the properties was securitised by Royal Bank of Scotland and analysts expect only the senior bondholders to see returns.

If completed, an Industrious deal would be the first time that a solution has been found for the billions of distressed securitised debt. Many such loans are heading for default owing to breaches of loan-to-value covenants.

The process has been complicated by Ernst & Young, the administrators, which intends to sell some properties through auction next month, which Max needs to pre-empt.

Max Property declined to comment.