Windermere XIV Noteholder Meeting - Hatfield Philips

Hatfield Philips International

HATFIELD PHILIPS 

DISCLAIMER 

This presentation has been prepared solely for informational purposes and is not to be construed as a solicitation, 

recommendation or an offer to buy or sell any securities or related financial instruments. Information has not been 

independently verified or audited. 

This material must not be copied, reproduced, distributed or passed to others at any time without our prior written 

consent. 

This meeting has not been summoned by the Issuer. 

HPI │ OVERVIEW 

2

HATFIELD PHILIPS INTERNATIONAL 

Hatfield Philips is the preeminent non-captive CMBS Servicer in Europe. 

Track Record 

→ Hatfield Philips International (“HPI”) is the longest serving non-captive commercial real estate 

loan servicer in Europe 

→ First rated servicer in the UK, currently rated by both Fitch and Standard & Poor’s for 

commercial real estate loan servicing in the UK and Continental Europe 

→ Active servicing portfolio consists of 461 loans totalling approximately €25 billion 

→ 46% CMBS Special Servicing market share and extensive experience and track record in 

working with a diverse array of structured products including CMBS, CDOs and CDS 

→ Since inception, HPI has resolved loans with over €6.5Bn of principal balance 

→ In the past 12 months, HPI completed 11 loan workouts in Special Servicing with a total 

principal balance of €626M, achieving a gross recovery rate of 78% and an average time to 

resolution of under 18 months. 4 of the 11 workouts resulted in full payoffs 

€ Billions 

25 

20 

15 

10 

5 

Active Special Servicing - European CMBS Market (1) 

Loan Market % Market % 

Special Servicer # Loans Balance * by loan by Balance 

Hatfield Philips 64 4,954 46% 30% 

Capita 40 3,659 29% 22% 

Morgan Stanley 14 1,318 10% 8% 

Solutus 7 270 5% 2% 

Hudson 6 669 4% 4% 

CBRE LS 4 4,799 3% 29% 

Situs 3 564 2% 3% 

Citibank 1 3 1% 0% 

Deutsche Pfandbriefbank 1 267 1% 2% 

0 

PS Only 

PS + Active SS 

Named SS Only 

PS + Named SS 

Active SS Only 

(1) Moody’s EMEA Servicing Report October 31, 2012 

*Securitised loan balance is in €MM as per transfer date 

HPI │ OVERVIEW 3


HPI has unparalleled experience in the European markets with over €65 billion in 

assets under management since inception. 

Scope of Expertise 

→ Unparalleled breadth and depth of experience in complex loan 

syndicates and securitisations, including CMBS, CDOs and CDS 

→ Strong track record in underwriting and working out small balance 

NPL and SME 

→ Broad expertise with all real estate asset types and extensive network 

of “Best in Class” third party service providers 

→ Senior management team has an average of over 15 years industry 

tenure in areas including Primary and Special Servicing, loan 

workouts, loan origination, acquisitions, asset structuring, 

distribution, and investor relations 

Balance 

Category 

# of Loans # of Properties 

(€ millions) 

Primary Servicing 39,991 350 6,284 

Special Servicing 16,440 129 1,206 

NPL Transactions 8,754 2,201 4,690 

Total 65,184 2,680 12,180 

Markets 

France 

Germany 

Italy 

Finland 

UK 

Luxembourg 

Multi 

Jurisdictional 

Czech Republic 

Ireland 

Spain 

Switzerland 

The Netherlands 

→ Over 125 associates with diverse backgrounds and broad loan and real 

estate expertise in 14 jurisdictions, including Germany, UK, France, 

Italy and Finland 

→ Diverse regional real estate knowledge and understanding of 

underlying loan collateral 

→ Broad pan-European client base, including CMBS issuers, balance 

sheet lenders and opportunity investors 

→ HPI associates are fluent in 21 languages covering all jurisdictions 

represented in the portfolio 

Active Primary Servicing Portfolio as of October 31, 2012 

HPI │ OVERVIEW 4


HPI FRANCE & ITALY EXPERIENCE 

Overview 

→ HPI is currently servicing French loans with a total outstanding principal balance of €1.5 billion and approximately 200 

properties. HPI is Named Special Servicer for €1.1 billion of French loans 

→ HPI’s active Italian servicing portfolio includes a total outstanding balance of approximately €1.1 billion across several 

CMBS deal structures 

→ Our Asset Management team has 15 native French and 8 native Italian speakers with extensive experience in managing 

and working out loans in these jurisdictions 

Recent 

Track 

Record 

→ HPI has extensive expertise in the French and Italian market. Within the last 18 months we have been actively managing 

and resolving loans in both jurisdiction 

→ Examples include: 

• Successfully restructured the €140M French SQY Ouest loan in Titan 2006-3. The workout entailed a process of 

conciliation, then mandat ad hoc. The restructuring allowed HPI to maintain control over the collateral disposal 

• Instrumental in achieving a full pay-off on a €40M balance sheet loan. Asset was refinanced while in a mandat 

ad hoc process. HPI successfully retained the servicing mandate with the new lender 

• Currently involved with a number of other mandat ad hoc and insolvency proceedings, acting on behalf of 

different CMBS Lenders 

HPI │ OVERVIEW 

5


Maturity Defaults - We are the Lender of Last Resort 

Primary Servicing Maturity Overview 

→ 39 HPI-serviced loans with an outstanding principal balance of €4.6 

billion matured in the last 12 months 

→ Full payoffs at maturity were received on 12 loans (31%) 

→ 19 loans (49%) were transferred to Special Servicing upon maturity 

default 

→ Only 8 loans (20%) were extended. In each case, HPI was able to 

improve the credit profile and secure additional collateral in the 

form of pay downs, cash flow sweeps, or escrow accounts 

Full Payoff 

Transfer to 

Special 

Servicing 

Extension 

Extension Philosophy 

→ No cash flow leakage to the borrower 

→ Additional collateral in the form of pay downs, cash flow sweeps, or escrow accounts 

→ Security enhancements 

→ Where possible, resolution strategies are structured as standstill agreements and not loan extensions 

→ Borrower involvement in managing the collateral only where the sponsor has unique expertise and the ability to add value 

→ We are the lender of last resort 

• An extension must be the most expensive option compared to a refinance 

• Progressive rate increase, including default interest and extension fees 

• Credit enhancements, including additional cash reserves or letters of credit 

• HPI’s workout strategies for maturity related defaults are designed to pursue payoff of the loan within the shortest possible 

time frame 

HPI │ OVERVIEW 6

Windermere XIV Portfolio Overview


WINDERMERE XIV PORTFOLIO OVERVIEW 

Portfolio Stats 

Portfolio Development 

→ The total volume of the Windermere XIV 

transaction at origination was €1,111,885,000 

and consisted of eight loans 

→ The current securitised balance of the portfolio 

is €722,200,393 consisting of seven loans (164 

properties) 

→ One loan (Harbour) paid off in full in 2010 

with a balance of €12.3M 

→ There is currently one loan in Special Servicing 

(Baywatch) with €40.8M of outstanding 

principal balance 

→ The legal final maturity date for the transaction 

is April 2018 

1,200,000,000 

1,000,000,000 

800,000,000 

600,000,000 

400,000,000 

200,000,000 

- 

2007 2008 2009 2010 2011 2012 

# of Loans Outstanding Securitised Balance 

10 

8 

6 

4 

2 

0 

Windermere XIV Asset Profile 

Loan Name 

Current Balance 

(€) 

# of 

Properties 

Jurisdiction Property Type Maturity Date Loan Status 

Net Lettable 

Area 

Weighted 

Average Lease 

Length 

Vacancy 

Q3 2012 

CMSA LTV 

Haussmann 256,219,167 1 France Office 15 January 2014 Performing 24,728 1.25 56.30% 60.72% 

Fortezza II 252,228,883 11 Italy Office 15 January 2014 Performing 106,382 2.54 6.99% 73.66% 

Sisu 110,391,053 137 Finland Various 15 April 2013 Performing 221,569 N/A 32.72% 74.53% 

Baywatch 40,763,673 7 Germany Various 15 April 2013 In Special Servicing 58,597 3.22 3.98% 92.23% 

Odin 38,930,000 1 Finland Warehouse 15 July 2013 Performing 63,671 3.88 1.05% 68.30% 

GSI 36,521,428 1 Germany Office 15 April 2014 Performing 40,530 7.75 0.00% 99.79% 

Queen Mary 6,467,767 6 Germany Various 15 January 2013 Performing 21,368 3.36 24.47% 27.72% 

HPI │ WINDERMERE XIV PORTFOLIO OVERVIEW 8

Windermere XIV Loan Reviews


Loan Stats 

UPB at Origination € 268,000,000 

Current UPB € 256,219,167 

Whole Loan initial LTV 63.51% 

Whole Loan current LTV 60.72% 

Maturity Date 15 January 2014 

Asset Stats 

Lettable area 

24,728 sqm 

No. of assets 1 

Asset type 

Office 

Valuation/Date € 422,000,000/ Jan 2007 

Location 

Boulevard Haussmann, Paris 

NRI € 8,024,205 

ERV(orig) € 18,003,700 

Vacancy 56.30% 

WALL 

1.25 years 

Strategy 

HAUSSMANN 

Modifications 

• None • The loan is currently performing 

• RBS is the French Master Servicer making day to day decisions on the loan, and HPI acts as the reporting and collection agent 

• The 1.15x Interest Covenant is currently being met at 1.69x from rental income (per the recent compliance test) 

• HPI will continue to monitor the leasing activity and engage as required with Sponsor 

Performance/Credit Events 

• There is a rent reserve account in the amount of 

€13.9M and is expected to increase by €1.2M 

each quarter to €20M at maturity 

• The Borrower has engaged C&W, JLL and 

BNP to redevelop the marketing strategy 

• The remaining tenant has a lease expiry at 31 

December 2013 with two sub tenants in 

occupancy for 30% of the space 

• The Borrower has spent approximately €3.3M 

to reconfigure the space to accommodate new 

tenants and improve marketability 

• HPI is working to remove Lehman Brothers bankruptcy estate as security trustee as relates to depository account holder / transaction party 

HPI │ WINDERMERE XIV LOAN REVIEWS 

10


Loan Stats 

Strategy 

FORTEZZA II 

UPB at Origination € 252,228,883.31 

Current UPB € 252,228,883.31 




Asset Stats 

Lettable area 

106,382 sqm 


Asset type 

Office 

Valuation/Date € 342,430,000/ Apr 2007 

Location 

10 in Rome and 1 in Pescara 

NRI € 18,029,038 

ERV € 20,394,807 

Vacancy 6.99% 

WALL 

2.54 years 

Modifications 

• None 


• Loan is currently performing in accordance with 

the facility agreement 

• The vacancy has decreased from 24% in Q4 

2009 to circa 7% in Q3 2012 

• One lease accounting for 14% of the contracted 

annual rent has a 6 months rolling break option 

from March 2013 

• Two leases accounting for 24% of the 

contracted annual rent will expire in December 

2013 

• The Borrower and the asset manager are related entities that are well capitalised and have several large Italian exposures actively managed, thereby adding value 

– if needed - to a consensual sales process 

• Enforcement is the least likely scenario as the Final Legal Maturity date is in 2018, four years after loan maturity which is considered too tight for an Italian 

enforcement process 


11


Strategy 

SISU 

Loan Stats 


Current UPB € 110,391,053 



Maturity Date 15 April 2013 

Asset Stats 

Lettable area 

221,569 sqm 


Asset type 

Retail (predominantly) 

Valuation/Date € 148,114,947/ Apr 2012 

Location 

Finland (multiple) 

NRI 

€ 16,489,056 (annum) 

ERV 

N/A 


WALL 

N/A 

• An updated valuation has been instructed by 

HPI 

• If all covenants are met at loan maturity, there 

will be an extension of one year 

• If there is a covenant breach, the loan will go 

into default and transfer to Special Servicing 

• HPI will continue to engage with the Sponsor and monitor the consensual disposition strategy / business plan assuming the Borrower meets its obligations 

under the loan covenants 

• Through the initial extension period, the Borrower has successfully disposed properties at their business plan values (on average) demonstrating an ability to 

add value to the workout process 

• The current ICR is 3.01x, all excess cash after debt service and asset management fees is reserved for capex improvements 

• To date, the Sponsor has sold in excess of 400 properties 

Modifications 

• Loan is performing 

• Loan matures 15 April 2013 with embedded 

extension options of 1 + 1 years if the 

Borrower meets the following targets: 

(i) LTV must be: below 80% from April ‘12 to 

April ‘14 IPD, and 70% as at April ‘14 to April 

‘15 IPD 

(ii) Maximum Outstanding Balance must be 

below: €103m at April ‘13 IPD, and €65m at 

April ‘14 IPD 

(iii) No other outstanding EoD has occurred 



12


Loan Stats 

BAYWATCH 


Current UPB € 40,763,673 

Whole Loan initial LTV 77% 


Initial Maturity Date 15 April 2013 

Asset Stats 

Lettable area 

58,597 sqm 

Asset Count 7 

Asset Type 

Mixed Use 

Valuation/Date € 44,200,000/Mar 2012 

Location 

Germany 

NRI € 4,609,121 

ERV € 4,193,650 

Vacancy 4% 

WALL 

3.22 years 

Strategy 

Modifications 

• In April 2012 the loan was restructured and 

extended to 15 April 2013 

• Extension terms: 

• €1.2M equity injection (free cash flow from prematurity 

asset sale) 

• Full cash-sweep 

• Hard quarterly deleveraging hurdles (maximum 

loan balance covenant) 

• Establishment of new Servicer-controlled Capex 

Reserve account 

• Other credit considerations: 

• Lengthy and costly German enforcement 

process 

• Asset Manager’s portfolio sales track record 

• Sponsor incented by potential equity recovery 


• Borrower has tripped the October 2012 target 

loan balance covenant; the loan was 

subsequently transferred to Special Servicing 

• In November, Servicer and Junior Lender 

consented to an asset disposal; €8.3M net sale 

proceeds to be collected for the January 2013 

IPD 

• Approximately €2.7M in excess cash flow swept 

to date and applied to hyper-amortize the loan 

• Maximising recovery from the sale of the remaining properties 

• A revised consensual sales strategy is under consideration to lever off the on-going marketing and disposition process for several of the portfolio properties 

• An enforcement strategy through Borrower insolvency has been prepared and can be implemented at any time 


13


Strategy 

ODIN 

Loan Stats 





Maturity Date 15 July 2013 

Asset Stats 

Lettable area: 

63,671 sqm 


Asset type 

Logistics centre 

Valuation/Date € 57,000,000/Jan 2012 

Location 

Espoo, Finland 

NRI 

€ 4,734,102 (annual) 

ERV 

N/A 

Vacancy 1.05% 

WALL 

3.88 years 

Modifications 

• None 


• Loan is currently performing in accordance with 

the credit agreement 

• There are no adverse credit events expected 

prior to loan maturity 

• Loan matures 13 July 2013 

• In the event of the Borrower’s failure to repay the loan in full at maturity the Servicer will secure control over all asset cash flow 

• Based on the current LTV full recovery is anticipated 

• The Borrower has had advanced discussions 

with potential purchasers but has not secured 

an exit strategy to date 


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Strategy 

GSI 

Loan Stats 





Maturity Date 15 April 2014 

Asset Stats 

Lettable area 

40,530 sqm 


Asset type 

Office 

Valuation/Date € 36,600,000/Jan 2012 

Location 

Halle, Germany 

NRI € 3,598,560 

ERV € 2,355,504 

Vacancy 0% 

WALL 

7.75 years 

Modifications 

• In July 2012 the Servicer approved a share sale 

and an assumption of the loan 

• Conditions to the share sale included: 

• Quarterly amortisation through loan maturity 

for a total of €1.15M 

• Payment of €0.25M toward the loan from 

Borrower-controlled reserve accounts 

• Effecting lease indexation in Q3 2012, 

increasing NRI by €334,560 

• Other credit considerations: 

• €1M new sponsor equity injection 

• New sponsor has developed the asset and 

originally retained the current tenant 

• Asset was non-strategic to old sponsor 

• The key challenge of the property is the remaining lease term of approximately 6 years at loan maturity 

• The new Sponsor’s tenant relationship may be beneficial to re-negotiate the existing lease terms 

• The Servicer will secure 100% of the increased asset cash flow for the benefit of the Lender 

• Through post-maturity insolvency proceedings the Servicer can gain the necessary control of future lease negotiations 


• TheLoanisperforminginaccordancewiththe 

Facility Agreement 

• There is no current prospect of covenant 

breach (no LTV covenant) 

• No adverse credit events expected prior to loan 

maturity 


15


Loan Stats 

Strategy 

QUEEN MARY 



Whole Loan initial LTV 75% 



Asset Stats 

Lettable area 

21,368 sqm 


Asset type 

Commercial mixed-use 

Valuation/Date € 23,330,000/Jul 2011 

Location 

Various German cities 

NRI € 1,864,880 

ERV € 2,140,061 


WALL 

3.36 years 

Modifications 

• HPI has successfully executed a one year 

extension for the disposal of the portfolio by 

overriding the B Lender 

• The loan is performing in accordance with the 

loan extension agreement requirements 

• During the one year extension, the Borrower 

has disposed of six properties 

• The disposals met the approved business plan 

and the timeframe 


• Currently there are six properties outstanding 

for sale with a market value of €23M 

• Since last IPD, the Borrower has sold one 

asset for €1.67M and is in the process of 

selling another property in excess of €4M 

• Given the lack of available financing at loan maturity, a Consensual Sales Plan was agreed with a Sponsor committed to meet approved business plan timeline 

and repayment hurdles. Full cash trap implemented 

• HPI determined Sponsor best placed to complete disposal plan given granular nature of the portfolio - Sponsor has performed as anticipated 

• HPI continues to monitor performance and expects the loan will be repaid in full early 2013 


16

Presentation Follow Up


NOTEWORTHY UPDATES 

Haussmann 

→ An Event of Default has occurred due to a period of vacancy that lasted longer than 18 months following the departure 

of the tenant (see provision below), and therefore the automatic extension condition is not satisfied at this point in time 

→ Credit Agreement Default Provision 

18. Chacun des evenements et circonstances mentionnes aux Articles 18.1 à 18.4.3 sera repute constituer un Cas de Defaut 

18.4.1 Vacance : Dans l'hypothese ou, pour quelque raison que ce soit, une Periode de Vacance serait superieure à un (1) an et six (6) mois 

→ Based upon a Borrower commissioned valuation, the current LTV is 81.17%. The Servicer does not use this valuation 

for reporting purposes as there is no reliance on this figure 

Fortezza II 

→ According to the yearly Borrower financial reports, the Borrower did not distribute any dividends to its shareholders for 

the years 2009, 2010 and 2011. As such, we believe there is cash available in the structure. These funds are outside of 

HPI’s control and we have no visibility nor guarantee that shareholder distributions will not be made in the future 

→ The Borrower requested an extension on 2 October 2012. The Servicer rejected the proposal 

Baywatch 

→ HPI has confirmed that an SPA was signed for the sale of one property. We expect proceeds in the amount of ca. €8.3M 

to be received by the lender by January IPD. The proceeds will be distributed in accordance with the post-default loan 

waterfall. The net sale proceeds will be applied at IPD at loan level in accordance with the loan agreement and the 

intercreditor agreement 

→ HPI’s credit decisions around loan modifications have enhanced the subject loan’s credit characteristics and the lender’s recovery position 

having considered all available resolution alternatives. To the extent an Investor has any further questions regarding the credit considerations 

undertaken in making these determinations, HPI encourages you to contact Investor Relations 

HPI │PRESENTATION FOLLOW UP 

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End of Presentation

Windermere XIV Noteholder Meeting - Hatfield Philips

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