Herbies helps Resolution snap up debt and restart hotel plans

Herbert Smith has helped fund manager ­Resolution Property restart the development of a 220,000sq ft central ­London site after it acquired the loan secured against it at a knockdown price.

Simon Price
Simon Price

Resolution has purchased a e36.1m (£31.7m) debt facility secured against three buildings in the City for e6m.

The original loan was provided by Lehman ­Brothers as part of a e3bn collateralised debt obligation (CDO) called Excalibur, with ­Resolution advised by ­Herbert Smith partner Simon Price.

Resolution had planned to build a luxury hotel at the location, which is in the vicinity of St Paul’s ­Cathedral, and had obtained a development agreement from the Corporation of London.

However, the ­market slump meant plans for the hotel had to be shelved and once income fell on the office blocks on the site, ­special servicer Hatfield Phillips was appointed as loan servicer.

Resolution has since been in protracted negotiations to purchase the debt. The fund is a longstanding client of Price, who has also acted on acquisitions for the UK-based fund in Germany. He was assisted in the restructuring of the debt by finance partner Simon Chadney.

The fact that the development is now debt-free means that Resolution can progress with its plans.

It is likely that Resolution will focus on a mixed-use development including not just a hotel, but also ­residential and office ­property.

Hatfield Phillips was advised by BLP property finance partner Eleanor Hunwicks, assisted by ­Stefania Maulucci.

Gibson Dunn & Crutcher partner Wayne McArdle advised Lehman.