In response to the decline in property sector asset values and the difficulty proprietors are facing in securing or extending finance, Deacons has combined the expertise of four practice groups to create a distressed sales unit.
Partner Lee Verios, who leads the distressed property group in Western Australia, told Lawyers Weekly that staff will remain in either the financial services, corporate, commercial or property and environment group but will work more closely together in anticipation of property failures.
"If you get, for example, a national property owner running into difficulties or being managed by the bank to reduce its assets and sell off properties, you've got to move fairly quickly and in a concerted way," he said.
"It's not in a financer's interest to promote any project as being a distressed sale, that's why a lot of the activity will be well managed activity. Put the things on the market in a nice, quiet, sensible fashion and hopefully that's the case. We don't want to see the market totally destroyed by wholesale liquidations or actual distressed sales."
Verios said that while Australia is yet to see massive failures such as the US mall proprietor that had 200 malls and $US27 billion ($37 billion) of debt, there were many investors who were managing debt. However, he predicted that banks would be unlikely to attempt to sell commercial property wholesale.
"It's going to be a managed sale or asset reduction - as distinct from wholesale liquidations. I think that's what we're going to see particularly in desperate circumstances," he said.
"[The unit] is a positioning process. I'm imagining that in the next 12 months there will be more. You can expect as debt rollovers continue that there is potential for that to occur."
- Sarah Sharples