Simon Halabi’s Companies Default on $1.9 B Debt

Simon Halabi’s Companies Default on $1.9 Billion Debt (Update1)

By Chris Bourke

June 19 (Bloomberg) -- Billionaire investor Simon Halabi’s real estate companies defaulted on 1.15 billion pounds ($1.9 billion) of bonds backed by nine London office buildings as the recession cut the value of the properties by about 50 percent.

The properties, including JPMorgan Chase & Co.’s offices at 125 London Wall and 60 Victoria Embankment, are now worth less than the value of the loans that back them, loan manager Hatfield Philips International Ltd. said in a statement today.

The buildings were valued at 929 million pounds as of June 8, down from 1.83 billion pounds in October 2006, Hatfield Philips said. Halabi’s companies borrowed against the buildings in 2006. The debt, which was packaged into bonds, expires in October. It’s the U.K.’s largest mortgage bond issue maturing this year, according to Bloomberg data.

Halabi’s companies have 10 business days to make good on the default, according to the statement. Kamlesh Bathia, finance director at Halabi’s investment company, Buckingham Securities Holdings Plc, declined to comment.

Fitch Ratings Ltd. downgraded the bonds on June 5, citing the prospect that JPMorgan would move from Halabi’s buildings. Fitch also said the notes were unlikely to be repaid when they expire.

White Tower 2006-3 Plc issued the commercial mortgage- backed securities. The properties they back have combined space of 2.2 million square feet (202,124 square meters), according to a Hatfield Philips report. Most are in the City of London, where some of the largest banks and insurers have their headquarters, and the West End. They include the U.K. headquarters of insurance group Aviva Plc, the Aviva Tower.

Sold Shard Stake

Halabi’s other assets include the Naval and Military Club on London’s Piccadilly; and Mentmore Towers, the former home of Baron Mayer de Rothschild in Buckinghamshire, England. He was one of the original backers of the planned London skyscraper called the Shard before selling his stake last year.

Halabi started as a director of real estate investment company Property Trust in the 1980s. The Syrian-born investor is worth about $4 billion, according to Forbes magazine. He bought health chain Esporta for around 460 million pounds in 2006, using 330 million pounds of debt from Societe Generale, according to Eurohypo AG research.

Halabi was among investors that banks lent money to during a property boom fueled by the growth of securitization.