Final Babcock + Brown sales looming
The last remaining property assets of Babcock & Brown in the UK, Germany and the US are set to hit the market.
Final Babcock + Brown sales looming
Liquidators to Babcock & Brown are looking to offload the final $665.5 million tranche of property this year, which when complete will mark the final sale of real estate held by the failed investment bank, the biggest Australian casualty of the global financial crisis.
The sales program was revealed in the recently filed 2013 accounts of Babcock & Brown International, the group’s operating entity that has been in wind-down for several years.
The property to be sold is believed to include commercial and industrial holdings in Britain and Germany, as well as multi-family residential properties in the US.
Babcock & Brown International’s sole director, Michael Larkin, warned that the group might incur a loss on the sale.
“Given the group’s latest initiatives and its short-term debt obligations, it is expected that the group will sell a significant portion of its property portfolio over the next 12 months,” he wrote.
If successful, the 2014 sale process would whittle the assets owned by the failed group to a mere $311.8m, which would consist of mainly cash ($91m) and biofuel assets ($107m).
Babcock & Brown Limited is the ultimate holding company of the entire group but the operating entity has been effectively ring-fenced from the parent’s collapse.
Babcock & Brown International forged the group’s disastrous foray into foreign markets ahead of the financial crisis, building up a real estate portfolio valued at $3.49 billion in 2008 ahead of the group’s collapse. The bulk of the group’s real estate holdings were sold off in 2009 and 2010. Along with the group’s local and international real estate assets, the company held power and financial assets in Australia and beyond.
Liquidators were appointed to Babcock & Brown — headed by Phil Green and chaired by Jim Babcock — in 2009 after the group collapsed under a mammoth debt load.
Ahead of its collapse in 2009, the company owned assets totalling $12.49bn, against $14.58bn in debt. Since 2009, the value of the property held in Babcock & Brown has been scorched by writedowns and reduced through the sale of property in various tranches.
GPT and Macquarie Bank were also burned by their association with Babcock & Brown, with GPT’s European joint venture with the collapsed group causing it serious headaches. In recent years, it has managed to recover some of its losses on the European venture.
In 2011, Babcock won yet another reprieve from its bankers to extend the period in which it had to sell assets and repay its debt to between four years and five years to avoid a fire sale of the property.
In 2013, the group offloaded $255m in real estate, according to accounts audited by long-time company auditor Ernst & Young.
Properties sold over the period include a building in Slovenia leased to a sole tenant for€13.8m ($22m), a vacant office building in Germany for €3.125m and 10 multi-family residential buildings in the US for $US216.27m ($231m). The group also offloaded a Greek wind farm last year for €5.44.
The liquidator from Deloitte has declined requests for comment.