JR Global REIT lost a case in the High Court in London over the validity of JLL's appraisal of the Finance Tower in Brussels, Belgium, which had acted as a catalyst for its liquidity crisis.
JR Asset Management said on the 9th that in the lawsuit filed by the Belgian local entity Tour des Finances against CBRE Loan Services, the agent for the lending syndicate, the High Court in London recognized JLL's Finance Tower appraisal as a valid appraisal under the loan agreement and ruled that the cash trap (local cash reserve) continues.
Earlier, JLL put the appraised value of the Finance Tower at 920 million euros. As a result, the Finance Tower's loan-to-value (LTV) exceeded the cash trap threshold (52.5%), leading to a liquidity crisis.
JR Asset Management judged JLL's Finance Tower appraisal to be improper and has pursued litigation over the Belgium Finance Tower appraisal to lift the cash trap and block the exercise of collateral rights.
However, it explained that this case did not recognize the fair value of the appraisal amount. JR Asset Management said, "The core question in this case was whether JLL's valuation was one that could not be recognized as a contractual appraisal," adding, "This was not a valuation trial to newly determine the asset's fair value."
It added, "JLL's appraisal had various issues, including weak DCF cross-checks, but the court found no disqualifying negative intent, malice, unfair conduct, or actual bias."
JR Asset Management said that, under this ruling, more than 20 million euros a year in Belgian dividends income will go first to repaying overseas loans before domestic debt repayment. JR Asset Management plans to communicate with stakeholders and achieve an early exit from the Autonomous Restructuring Support program (ARS) framework and a swift normalization.
Chiefly, it will proceed with normalization by refinancing the existing syndicate loan with a new lender before maturity. At the same time, it plans to stabilize the lease structure by detailing a lease extension with the tenant, the Belgian Building Management Authority, and a long-term asset operation plan.