Wrather’s Arkwright House on the market after Lloyds loan sale

TWO large grade II-listed office buildings once owned by Manchester’s Wrather Group are on the market after it defaulted on a £19.5m loan.

The 90,000 sq ft Arkwright House in Parsonage Gardens and the 61,000 sq ft Dock Office in Salford Quays were acquired by US-based Kennedy Wilson earlier this year when it bought a portfolio of distressed debt from Lloyds TSB, backed by Deutsche Bank.

Wrather Group director Patrick Franks said the business offered Lloyds more than Kennedy Wilson but its offer was knocked back. GVA in Manchester was appointed the Law of Property Act receiver over the buildings in April and it is now looking for buyers.

Mr Franks said: “We tried to restructure with Lloyds over a period of two years and in the end they sold the debt for less than we were offering to buy it out. We felt we were offering to buy them out at a healthy percentage and they decided to clear the lot out as part of a £200m-plus debt sale.”

The buildings were held within a Wrather group company called Garhurst. Its most recent figures, for the year to January, show the properties originally cost £25.8m but their value has since been written down to £11.4m. Mr Franks believes they are being marketed at a combined value of £13m.

He added: “Both of these properties will be a damn good buy at that price. It’s been a reflection of the short-termism the banks have adopted rather than seeing the assets through.”

The Lloyds TSB loan was one of three flagged up in Wrather Group’s accounts last year, the others being a £1.2m loan due for repayment in October 2013 which has been renewed, and a £50.3m syndicated facility due for renewal in October 2011. The latest accounts show the £50.3m loan has been refinanced by NM Rothschild and Santander with 5% due for repayment in May and a further 15% in May 2015. The balance must be paid back by the end of 2015.

In the year to the end of January the group recorded income of £4.2m, compared with £7.2m in the 18 months to January 2012. The company made a pre-tax loss of £683,000 compared to a £12.9 loss last time due to exceptional charges linked to property write-downs.

Mr Franks said the office market was improving with, “more inquiries, and more tenants signing on the dotted line”.