Bloomberg News

Tchenguiz Trust May Sell Residential Unit on Kaupthing Deal

September 20, 2011

(Adds commercial real-estate assets in last paragraph.)

Sept. 20 (Bloomberg) -- Tchenguiz Family Trust, one of the largest investors in U.K. real estate, may sell all or part of its residential unit after settling a claim against Iceland’s Kaupthing Bank hf.

“We are going to bring in one investor soon, a sovereign wealth fund,” Vincent Tchenguiz, who advises the trust, said yesterday in a telephone interview. “How much I sell depends on the price,” he said, declining to identify the possible buyer.

The trust, which Tchenguiz advises through closely held Consensus Business Group Ltd., owns what are known as freeholds on 250,000 U.K. residential properties, mainly apartments. The trust collects annual rent in return for selling a lease, often lasting 100 years, on each freehold.

The business had effectively been frozen since 2008, when Kaupthing collapsed. Tchenguiz, 54, filed a 1.5 billion-pound ($2.4 billion) claim against the Reykjavik-based bank, which had lent 100 million pounds secured by some of the rents. The dispute was settled on Sept. 17 and announced yesterday, Tchenguiz said. Details of the settlement weren’t disclosed.

“It constrained the business and made life difficult,” Tchenguiz said. “We are now able to do what we want with all our assets, which could result in a new financial model.”

The purchase of the freeholds was financed with 2 billion pounds of debt, backed by a similar amount of inflation-linked swaps.

“It is a question of how you value the cash flows over 100 years and what they are worth,” said Tchenguiz, who is being advised by Lazard Ltd. That sort of asset could be attractive to a cash buyer, he said.

U.K. Investigation

Tchenguiz and his brother Robert, 51, were arrested in March by the U.K.’s Serious Fraud Office, which is investigating the bank’s collapse. Both were later released without charge.

Vincent Tchenguiz hired Ben Emmerson, the lawyer defending Wikileaks founder Julian Assange against extradition proceedings. Tchenguiz said the Serious Fraud Office breached his human rights by misrepresenting facts about him to obtain a search warrant, the Times of London said Sept. 7.

In documents filed in the High Court in London last month, Tchenguiz stated that the SFO had said it had reasonable grounds to believe he had secured the Kaupthing loan fraudulently. In a separate statement in June related to Tchenguiz’s civil case against it, Kaupthing said it knew about the valuation of the rents and contradicted other SFO allegations, the Daily Telegraph said Sept 6.

Kaupthing has yet to reach a settlement with Tchenguiz Discretionary Trust, which is advised by Robert Tchenguiz.

In addition to the residential freeholds, Tchenguiz Family Trust also owns commercial real estate including stakes in some supermarkets operated by Tesco Plc and hotels managed by Hilton Worldwide Inc.

--Editors: Larry Edelman, Andrew Blackman.

To contact the reporter on this story: Peter Woodifield in Edinburgh at pwoodifield@bloomberg.net.

To contact the editor responsible for this story: Colin Keatinge at ckeatinge@bloomberg.net.


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