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Banks, Financial

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Categorized | Property

Tchenguiz nears motorway services sale

Posted on November 29, 2012

Robert Tchenguiz, the property tycoon, is close to selling £300m worth of service stations as he continues to dismantle the empire he established before the 2008 financial crisis.

M3 Capital Partners, a real estate private equity group, has been selected as preferred bidder to buy nine Welcome Break motorway service stations, said people close to the situation.

    The proceeds of the sale will be used to pay back Royal Bank of Scotland, a creditor to Mr Tchenguiz’s company, R20.

    The deal marks the disposal of one of the last portfolios bought by Mr Tchenguiz as part of an aggressive spree to buy property and property-backed businesses that spanned the decade leading up to 2008.

    As well as acquiring billions of pounds worth of real estate – from offices to warehouses, apartments and shops – Mr Tchenguiz made bets on the share prices of some of the UK’s best known consumer-focused companies, including J Sainsbury and Mitchells & Butlers pubs.

    The onset of the financial crisis sharply reduced the value of those investments, leaving R20 nursing huge losses and debts running into hundreds of millions of pounds.

    The Welcome Break deal, to be reported in Property Week on Friday, is the second acquisition in the niche property sector for M3. In October 2010, the US group bought a portfolio of eight motorway service stations from the administrators to Swayfields for £240m.

    Among its existing properties, M3 owns the 35,000 sq ft Cobham Services on the outskirts of London, the largest motorway service station in Europe.

    Mr Tchenguiz bought the portfolio for £270m in 2004 in a sale and leaseback deal undertaken by Welcome Break to raise cash and stabilise its balance sheet.

    RBS provided £241m of debt against the properties, with an interest rate swap liability taking the total indebtedness to £300m. R20’s accounts value the portfolio at £297m.

    According to Property Week, M3 beat competition from Telereal Trillium to buy the properties – the portfolio does not include the contracts to operate the service stations. The deal is expected to close within two months.

    Mr Tchenguiz and his older brother Vincent were until last month the subject of a high-profile investigation into the collapse of Kaupthing, the Icelandic bank from which both men had borrowed money.

    The two-year investigation into the brothers collapsed in October, however, after the Serious Fraud Office, the UK’s white-collar crime agency, ruled that there was “insufficient evidence to justify its continuation”.

    Mr Tchenguiz and representatives of R20 could not be reached for comment. M3 Capital declined to comment on the process.