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Mountgrange Capital calls in administrators

UK-focused real estate firm Mountgrange Capital is considering funding options as Deloitte is appointed as administrator. However, Mountgrange Investment Management, the separate independent fund management operation, is still fundraising for an opportunity vehicle.

Mountgrange Capital, a London-based real estate firm, has appointed Deloitte to act as administrators for the company together with a number of its subsidiaries controlling development projects in the UK.

The decision follows withdrawal of funding support from Halifax Bank of Scotland, the Scottish bank that was taken over recently by Lloyds TSB.

Though Mountgrange Capital and subsidiaries have been placed into administration, investors in a separate opportunity fund remain unaffected.

In a statement, Mountgrange Investment Management LLP, the manager of Mountgrange Real Estate Opportunity Fund (MOREof), said events at Mountgrange Capital had “no impact” on the opportunity fund, the “application of its investment strategy” or the “day-to-day running of its business.”

MOREof has held a number of closes and extensions over recent months and is expected to fully close before the summer.

In a separate statement, Mountgrange Capital said it was considering alternative funding options for its projects located in Edinburgh, Linwood and Maidstone. Options potentially include the opportunity fund acquiring some of the assets out of administration.

The firm explained: “The problems surrounding the UK property industry in the current financial environment have been well-documented. Mountgrange Capital has not been exempt from these pressures. The industry’s current problems have been further exacerbated by the scale of banks’ exposure to commercial property lending. And UK banks now seem to be significantly scaling back their involvement in the sector.”

Myers and Chande added in the statement: “Despite our best efforts, continued funding from existing banking channels is no longer a feasible option. We are, therefore, examining other alternatives including making an offer to buy the assets out of administration and are uniquely placed to do so”.

Halifax Bank of Scotland has been one of the most active lenders to property investors in recent years, but it has been reassessing funding arrangements of late.

Its new owner, Lloyds TSB – which has been renamed Lloyds Banking Group – announced on March 7 that it was participating in the UK government’s Asset Protection Scheme. It is putting into the scheme £260 billion of assets and exposures in order to strengthen its capital position.