Our client, a large retail property fund, was facing a material exposure to a tenant facing financial distress. We were engaged to help them better understand the potential restructuring and insolvency strategies available to their tenant and the impacts of such strategies on their ability and willingness to pay rent. Our path of work included:
- Working with our client to understand the extent of the exposure to this tenant;
- Understanding the organisational structure of the tenant;
- Analysing the capital structure of the tenant;
- Monitoring debt markets to learn about debt trading and refinancing; and
- Developing plans to respond to rent abatements in a restructuring or insolvency event.
This matter is ongoing. Our client has a greater understanding of the distressed tenant and as a result of our advice has a range of tools available to respond to any adverse events that may affect their tenant’s ability to pay rent.