Property firms face high court battle over 'negligent' valuation claims

A claim has been lodged in the High Court  against two property firms, CBRE and Warwick Street, formerly known as King Sturge LLP, over valuations undertaken seven years ago.

The litigation concerns the Gemini portfolio of 36 properties formerly owned by Propinvest. The value of the claim, which concerns 26 out of the total, is not yet known.

The Special Purpose Vehicle company which issued the claim on behalf of Gemini, alleges that the properties were overvalued by more than £100m.

The claim says that the “valuers negligently overvalued 26 of the 36 properties … in that the relevant valuations fell outside the range of values at which a reasonably competent valuer could have arrived”.

The Gemini portfolio, which consists of commercial properties such as shopping centres and offices, is being run by asset managers.

In a strongly-worded joint statement, CBRE and Warwick Street said: “CBRE Ltd and Warwick Street (KS) LLP confirm that they have received notice of a claim by Gemini (Eclipse 2006-3) Plc regarding a joint valuation undertaken on a UK property portfolio in 2006.

“CBRE and Warwick Street strongly believe that the valuation, which was undertaken in accordance with industry standards and practice, reflects the market value of the portfolio at that time.

“They consider that Gemini’s claim is without merit and are confident that it will be dismissed if pursued in court.”

The portfolio was collectively valued at £1.23bn in 2006. Against the valuation, Barclays Bank extended a £850.36m senior loan and a £105.24m junior loan. The deal allowed Propinvest owner Glenn Maud to refinance debts, but shortly afterwards the value of the portfolio plummeted. The Gemini claim in the High Court says that Barclays would have extended a smaller loan.

Propinvest went into administration in November 2011.