Lloyds ponders its next move after
Kenmore collapse

By Simon Bain

The property industry was awash with speculation yesterday about the intentions of Lloyds Banking Group towards Kenmore, the Edinburgh-based property empire it put into administration on Wednesday.

The toppling of the debt-laden group prompted one London newspaper to dismiss Kenmore as "absurdly hubristic", but elsewhere there was more sympathy. "John Kennedy was a popular man in the market, he had a growth strategy that was backed by the banks," said David Hunter, property consultant and adviser to similar companies in Scotland. "John had interesting ideas and I liked what Kenmore was trying to do."

Iain Wotherspoon, chairman of the Kilmartin property group, which was also backed by Bank of Scotland, said: "There are a number of very strong commercial property companies that have led the way in their fields not only in the UK but also abroad, and it is very sad to see Kenmore not being able to survive."

Dan Macdonald, founder of Macdonald Estates, said it "marks a further shift out of our Scottish region of important decision making, into an environment where local matters are less well understood".

Hunter said Kenmore had clearly "for some time been owned by the banks", adding: "None of us understands what the banks' thought processes are at the moment."

Wotherspoon added: "We are working constantly with the bank and have been for the last year, reducing overheads, maximising returns, generating income, reducing voids."

Administrators Grant Thornton said Lloyds is providing funding to support continued trading while it explores "potential restructuring opportunities" with the group's stakeholders.

Hunter said it would be "a strange time for the bank to try to cut their losses".

He added: "They might be prepared to go with a new private equity partner and strike a deal. A large number of property funds have been raised and are out there trying to buy just now, they are not finding value in the direct market, they might like to take over a company."

Bruce Cartwright, recovery specialist at PricewaterhouseCoopers, said: "As an administrator you are looking at it to see how you can get the best return for creditors, as opposed to shareholders. They will look at particular assets and decide whether to sell them, hold them, or test the market, and they will do it in conjunction with property advisers."