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Hedge Fund-Backed Shopping Centre Portfolio In Administration

The Market Gates shopping centre in Great Yarmouth

A trio of shopping centres owned by hedge fund Chenavari and retail specialist Ellandi has gone into administration.

Partners from Deloitte have been appointed administrators to the companies that own three UK malls: the Ladysmith shopping centre in Ashton-under-Lyne in the north west, the Market Gates centre in Great Yarmouth in the east of England and the Idlewells shopping centre in Sutton-in-Ashfield in the Midlands. 

Like most shopping centres across the UK, income at the centres has dropped as a result of the coronavirus pandemic and changing shopping habits, leading to valuation falls and debt covenant breaches.

There is a single lender to the portfolio, which Land Registry documents show is a specialist lender whose debt is managed by CBRE Loan Services. That lender has taken control of the portfolio after appointing administrators. Ellandi has been retained as asset manager to the schemes. 

Multiple lenders across the UK are now the owners of shopping centres where income is uncertain, and they must decide on whether to invest their own money to try and improve values or cut their losses and sell. 

Chenavari was one of the many private equity and hedge fund managers that bought up small shopping centres around the UK in the years following the financial crisis at what looked like historically low prices. 

Investors including Blackstone, HIG, Oaktree and Lone Star have all ceded control of UK retail assets to lenders in the past two years. 

Chenavari is run by Chief Executive Loïc Fery, who is also the owner of French Ligue 2 football team Lorient. The company invests in bonds and other types of credit as well as real estate. 

The three centres now in administration were bought in 2013 and 2014 for a combined price of almost £100M, Land Registry documents show. 

Ellandi’s capital for the portfolio came from the Ellandi Retail Fund, which raised £60M of equity in 2013. 

The company was this year appointed by lenders as asset manager to two of the centres previously owned by collapsed retail giant IntuMerry Hill in the Midlands and Intu Milton Keynes in the south east. 

Chenavari and Ellandi declined to comment. Deloitte confirmed the appointment but provided no further comment.