Bloomfield shopping centre in Bangor could soon go on the market after Ulster Bank appointed a fixed charge receiver to the asset.
The shopping mall is part of the portfolio of Donegall Place Investments Ltd, a joint venture company between Michael Herbert's Lebreh Ltd and Pat McCormack.
Mr Herbert is one of Northern Ireland's richest people. He is the owner of the KFC franchise here and also has a host of other property interests.
Mr McCormack is also a publican, and Belfast's Cafe Vaudeville is his best-known venue.
Neither was available for comment.
The value of the Donegall Place Investments' assets has dropped in the downturn, with an exceptional charge of £52.2m deducted for impairments in 2011.
But financial results have been improving, with the company recording a loss of £373,000 in the year to the end of September 2012, compared to a £53.6m loss a year earlier.
As well as Ulster Bank, the company also has borrowings with Bank of Ireland, which registered a charge on a deposit account against Donegall Place Investments in October last year.
Agency Colliers was appointed by Ulster Bank to manage the centre last month, though neither the bank or agents would comment on the appointment.
It's understood its agents are now managing the centre and will ultimately prepare it for sale.
The extent of the debt to Ulster Bank is not clear. Receivers have the power to manage assets and collect rent but do not have to be insolvency practitioners.
Bloomfield is the main centre in Bangor and retail chains such as Tesco, River Island, Boots and Marks & Spencer all act as a major pull to shoppers. Swedish clothes retailer H&M opened a new unit at the centre in September.
The centre is still operating.
Nicky Finnieston, a director and retail agency specialist at Lisney, said: "A lot of retail schemes across the province took a large hit through the course of the downturn in the economy, and particularly at the height of the crash.
"Rents went down, and retailer demand has been thinner. Retail trade and consumer confidence have also fallen, making administrative receivership a function of the wider economic problems.
"Hopefully it will improve as consumer confidence improves."
Mr Finnieston said the Bangor centre was likely to attract "a lot of interest" once on the market.
"It has a high level of footfall with a number of good lets. The scheme was also recently extended, and it's the prime pitch for retailing in Bangor," he added.
Sale may safeguard future of the centre
Bangor in Co Down has seen plenty of upheaval in its retail offering since the downturn began. A report on the state of the commercial property market in 2013 by agents Lisney found Bangor's shop vacancy rate had gone up from 21.8% in 2012 to 25.7% in 2013.
However, Ballymena had suffered the biggest jump in vacancy rate, from 17.2% to 27.2%.
Kenneth Sharp, president of the Bangor Chamber of Commerce, said Bloomfield had suffered the effects of retailer collapses, with Peacocks going into administration in 2012 shortly after the centre had completed an extension to house it.
The centre also lost occupants last year after homewares firm Hanna and Browne went into administration, and when shoe chain Barratts went out of business.
Mr Sharp said there had been proven enthusiasm among buyers about shopping centres in Bangor.
"Two other centres have sold in Bangor in the last year. They have changed hands for considerable amounts of money, and significant investment has been planned for those. Hopefully a sale of Bloomfield will also safeguard its future."
Springhill Retail Park in Bangor, which had been part of the Jermon group of companies, was sold to specialist retail fund Pradera in September for £10.45m.
In July, Threadneedle Investments bought Clandeboye Retail Park, also in Bangor, for £7.13m. It was formerly part of Turnstile Developments.
And in Londonderry in 2010, Richmond Centre was sold for £24m to West Register, a company set up by Ulster Bank parent Royal Bank of Scotland to manage distressed assets.
Process puts specific assets under control to ultimately realise value, writes Stephen Armstrong
A fixed charge receivership is an insolvency procedure whereby a fixed charge receiver is appointed to take control of specific assets of an individual or company.
The appointment of the fixed charge receiver is made by the holder of the fixed charge over the specific asset or assets.
In most cases the fixed chargeholder will be a bank or other financial institution. The assets will predominately relate to either land or property assets with the fixed charge being put in place by the bank to secure monies owed.
The reason for the appointment taking place will most commonly be due to the non-payment of these monies to the bank.
Upon appointment, the fixed charge receiver will take control solely of those assets subject to the appointor's fixed charge.
For example, if a fixed charge receiver is appointed over a shopping centre held within a company, the receiver will control solely the shopping centre.
As such the fixed charge receiver won't control any other company assets or have to deal with any other company matters.
The fixed charge receiver will take over the role of landlord of the shopping centre and manage the asset to ensure that the property is properly maintained.
The appointment of a fixed charge receiver will not affect leases with existing tenants, whose businesses will continue to operate within the shopping centre.
The value of the shopping centre will be driven not only by the physical location and condition of the property, but more importantly by the quality of tenants, length of leases and level of rental income produced by the property.
The fixed charge receiver may take a period of time to attempt to let vacant units or renegotiate terms, where leases are nearing their end or have break clauses.
This will secure future rentals and enhance its value.
During this period of time the fixed charge receiver will continue to collect all rent due.
Whether it is the short, medium or longer term, the ultimate strategy of the fixed charge receiver is to realise the assets under his or her control. With respect to a shopping centre it is likely that the property will be marketed and sold as a property investment asset with tenants in place.