British Property Tycoon Very Likely to Default

One the UK’s largest property tycoons, Simon Halabi appears to be in the position of being unable to refinance over £1.4 billion ($2.07 billion) of outstanding loans on his property portfolio this year.

IN and OUT Club

Mr. Halabi rode the recent property boom long and hard, leveraging again and again to build an impressive portfolio of high end London property which includes the famous “In and Out Club” or  Naval & Military Club in Piccadilly, which boasts members such as Lawrence of Arabia, and Scott of the Antarctic;  Mentmore Towers and JP Morgan’s head office.

Commercial property prices in London have fallen an estimated 40% since their peak in 2007 and Mr. Halabi is one of many commercial property tycoons needing to refinance loans falling due between 2009-10. The Financial Times estimates that over £76 billion ($113 billion) in commercial property loans will need refinancing between now and end-2010 and there simply is not a willingness on the part of the lending institutions to do so.

Mr. Halabi has already disposed of his interest in the “Shard of Glass,” which will be London’s tallest Tower when completed, and is seeking refinancing. According to the Telegraph, “Mr Halabi is unlikely to be able to meet his obligations. “It’s very likely the loan will default,” said Alexander Zeidler, an analyst based in London. “We don’t think too many institutions will be willing to lend the amount of money needed to refinance.”

Mr Halabi is thought to be in discussions with Hatfield Philips, the company that specialises in managing property loans, about loan refinancing. In a recent report, Hatfield Philips said Mr Halabi’s loans, had been put on the “watch list” but was still meeting all its agreements.”