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JZ Capital Partners Limited Announces Material Write Downs in Real Estate Portfolio

Strategic Insights

— 1 min read

JZ Capital Partners Limited, a London-listed fund investing in US and European micro-cap companies and US real estate, has received appraisals for most of its real estate portfolio assets as at 31 August 2020. The appraisals indicate materially lower valuations, with the Company expecting a net write down of approximately $80 to $100 million. This write down will result in the Company breaching its minimum asset coverage ratio, requiring a waiver under its senior facility with Guggenheim Partners to avoid missing an interest payment due on 30 September 2020 to the holders of its Convertible Unsecured Loan Stock due 2021 (CULS).

Key Takeaways:

  • JZCP has received appraisals for most of its real estate portfolio assets as at 31 August 2020, indicating materially lower valuations.
  • The Company expects a net write down of approximately $80 to $100 million, subject to receiving and reviewing all appraisals.
  • The write down will result in the Company breaching its minimum asset coverage ratio, requiring a waiver under its senior facility with Guggenheim Partners.
  • The Company expects to receive a waiver to avoid missing an interest payment due on 30 September 2020 to the holders of its CULS.
  • The Company is working towards amending its current lending arrangements in a favourable way, with discussions ongoing between the Company and its lenders.
  • The Company's US micro-cap portfolio is performing well, with positive progress being made on the secondary sale of certain US micro-cap assets.

Statistics:

  • $80 to $100 million: approximate range of net write down expected by JZCP.
  • 31 August 2020: date as at which the appraisals were conducted.
  • 29 February 2020: date of the Company's annual results stating the expectation of potentially significant and adverse effects of the Covid-19 pandemic on its real estate investments.
  • 30 September 2020: due date for interest payment under the CULS.

Sources:

  • JZ Capital Partners Limited, London Stock Exchange plc, Announcement.
  • Guggenheim Partners, unnamed source.
  • Unnamed source, statement regarding the Company's US micro-cap portfolio performance.
  • Unnamed source, statement regarding the secondary sale of US micro-cap assets.

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