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Bank of America sells debts in Foxtons in latest twist

06 October 2010
Written by rosalind renshaw

Loans made by Bank of America Merrill Lynch to London estate agency Foxtons have been sold on to Haymarket Financial LLP, reportedly at less than 90 pence in the pound.

The US lender is also selling £20m of Foxton’s debt to BC Partners.

BC Partners is the private equity firm which bought Foxtons for £360m at the height of the housing market in 2007, but then saw its investment turn sour.

Last year, it had to go back to the banks which backed its spectacularly ill-timed purchase and ask for a debt-for-equity deal.

The result was that Bank of America and Japan’s Mizuho Financial Group became majority owners of Foxtons. Last year, Foxtons had losses of £900,000.

However, in the latest twist to the saga, BC Partners said Foxtons was back in profit to the tune of £16.7m for the first half of this year and was planning to open 20 new offices as part of a major expansion, and that it wanted to buy back some of the debt.

Bank of America is said to be retaining shares in Foxtons, whilst Mizuho is retaining its share of the debt. It is believed that BC Partners has also been negotiating with Mizuho to buy back some of its debt.

Haymarket Financial was set up in 2009 with backing from Towerbrook Capital Partners, and has offices in London and Luxembourg. It describes itself as a “patient long-term lender”.

Comments

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    Right, ive read alot about Foxtons on this site and in the wider media - granted, I dont personally compete with them any more but I think ive got a handle on the wider view of them amongst my fellow agents...............its not good;

    Fair enough, if you work there then you are one fo those people that a mother would struggle to love and no one really wants to talk to you unless they want a cheeky line in a West London wine bar bog.

    If you put your house up with them the the chances are they will do naff all with it but a tiny percentage of clients will do okay and be quite pleased.

    To top it they are arguably more marketing spin than substance but do have great offices and are as much a 'London Brand' as the big plumbing firm (Pimlico?)and the cab firm with the million black Ford Galaxys.

    So - 'all fur coat and no knickers' as my Nan would say, but my god, theese Yank investors / banks arent daft so say what you like, they do know how to make a few quid and for that I admire them enourmously

    Jonnie

    • 09 October 2010 23:58 PM
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    Been next to Foxtons for ten years, we are still in business and each year our turnover increases. Agree with all the above, but please don't let them change their business model. All the greddy vendors round here finally get fed up with them and then drop in 'next door' willing finally to accept a sensible asking price. It works for us and a number of other agents. The previous owner knew what he was doing, the current bunch haven't got a clue. Staff turnover proves they have a problem and with the downturn in sales who can survive on £12,000pa in London?

    • 08 October 2010 09:52 AM
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    ......but not in GX - never :)

    • 06 October 2010 14:55 PM
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    Foxtons business plan;
    Over value everything by 10%, monopolize the market, sell around 30% of their stock through weeks of price drop recommendations, dissapoint the remaining 70% of vendors who have had their property on at over inflated prices for the duratiion of the 12 week sole agency agreement and who don't want to sell at realistic prices,charge 2.5% promising the higher price then end up selling for the same as what every other agent would have got for it.
    And then people wonder why every agent hates them and a website called www.wehatefoxtons.com has been set up to vent their anger!I think BC will sell within two years.

    • 06 October 2010 14:23 PM
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    I wonder if that 16.7m excludes debt interest which must be horrendous on £360m

    • 06 October 2010 12:52 PM
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    Why would someone like Foxtons buy out Mr. Kent's establishment? When they could open up next door and grind him into the ground within a year. Clearly chrome, glass, coffee and minis darting around all over the place are exactly what today's demanding vendors want.

    • 06 October 2010 12:33 PM
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    How much net profit does someone like Foxton's make on each sale?

    I guess with insane London prices - where every other property seems to be over a million, even a 2% fee (resulting in 1% net?) would mean that only 1670 £1m houses would need to be sold to make 16.7 million.

    Wow! My background is in major construction project management. Our margins used to be in the 1% to 3% range. We'd put up a £20 million office block and be pleased if we made half a million profit.

    In any industry (as opposed to service industry) you have to turnover hundreds and hundreds of millions to make 16.7 million.

    We should all be estate agents I think

    • 06 October 2010 12:30 PM
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    Trev I cannot believe you are even considering selling your shed in slough? I cant see GX residents standing for the bright light cafe culture and British racing green minis being "hotted" round the common can you? Please tell me that you are leaving to lobby the government for EA reform and full implementation of the EA Act '79?

    :)

    • 06 October 2010 10:05 AM
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    All this high finance is completely above my head, all I really want to know is if Foxtons will still be able to afford to buy me out and take over the Gerrards Cross market. Big T

    • 06 October 2010 09:46 AM
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    Bc Partners are not doing their research properly. The £16.7m profit was based on a fairly strong sales market for the first six months of this year, however the market has now dropped for the last three consecutive months and they think it a good time to open 20 offices and buy back some debt, clearly these guys don't spend a lot of time in London!

    • 06 October 2010 09:39 AM
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