The Persistent

2017-02-08 - 11:11 | News | Tags: , |

Already in the autumn of 2007 occurred as a result of the incipient global crisis of financial markets, which affected in particular on the financial centre of London, significant declines in commercial rents in London. The fundamental possibility of the value fluctuations, nor on the concrete development of commercial rents in London, which were also the subject of publications in the business press, and became well-known investors in the consultancy noted. Currency risk by financing in Swiss francs: that part of the loans to be recorded by the Fund was recorded in Swiss francs (CHF), has charged in addition to the Fund with a significant currency / exchange rate risk. The persistent weakening of the British pound sterling (GBP) and the concurrent power of the CHF have a sustainable increase in GBP – the currency in which the fund its rental income achieved – to calculate total credit exposure led. Also the interest payable for the CHF loans in Swiss FRANCS have converted, in GBP thus increases, which burdened the Fund. Loan-to-value – clause: both of these factors, the considerable fluctuations in the value of the London commercial property market and the exchange rate risk have led, violating the Fund value of safeguard clauses, which have been agreed with the creditor bank.

The credit contracts agreed clauses that are aimed at ensuring the preservation of the value of the debt from the Bank’s perspective. Although these were presented in detail in the prospectus, they were subject to advice from the investment advisor in any of the known cases. This includes both a loan-to-value – clause, as also the agreement of a debt-service coverage level. The ratio of loans to real estate market value (loan-to-value) at no time may exceed 67%. Done yet, for example, by a fall in the value of traffic which allowed real estate or a loss in value of the GBP against the CHF, the credit institution which Increase of reserves or a special repayment demand and contrary to distributions to investors.