Noteholders in a CMBS dating back to before the financial crisis have cut their losses and agreed to a £120m sale of the underlying properties.

Towards the end of last year, a group of noteholders in the DECO 11 – UK Conduit 3 CMBS expressed concern to the special servicer Solutus about the outlook for commercial property values.

It was then decided to sell the properties securing the Mapeley Gamma, Northpoint and CPI loans in the securitisation ahead of business plan, according to updates to noteholders.

In a series of updates earlier this month, Solutus announced that the properties had been sold for £120m.

“The discounted pay-off has been structured as a disposal of the properties to certain affiliates of the current obligors,” it said.

The disposals mean about £116.5m has been recovered after costs, well below the outstanding total loan amount of £260.6m. 

The portfolio consists of a range of commercial properties, including a number of office blocks and two shopping centres.

FI Real Estate Management, a sister company of the special servicer, has been redeveloping some of the properties including Leon House in Croydon (pictured) and Nelson Gate in Southampton in an effort to boost their value.

Progress on various asset management initiatives was hampered last year by the slowdown in the property market. “While execution of the business plan has been successful, the progress of strategies for certain assets has slowed significantly over the last 12 months, primarily due to market conditions,” Solutus said last August.

Moody’s analyst Benjamin Bouchet said the prices achieved on some of the properties reflected the weak retail market environment.

The £1.8m received for The Maltings in Ross-on-Wye, which is the retail property behind the CPI loan, implied a yield of around 15%, and the £7.7m for the retail property securing the Wildmoor loan implied a yield of around 10%, he added.

Last year, an extension to the existing standstill period was agreed beyond the legal maturity date of January 2020 in order to help maximise recoveries.