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Billionaires default could lead to property portfolio sell-off

Simon Halabi, one of London's best-known property entrepreneurs, could be forced to sell off his property portfolio to cover a £1.15 billion debt secured against it. Listed as the 14th richest person in the UK in a recent Forbes poll this is just a further reflection of how difficult the UK economic environment has become and how quickly the property market has turned.

It is believed that the property portfolio, which includes the offices of JP Morgan and Aviva Tower, has fallen from a value of £1.8 billion in October 2006 to just over £900 million today. This has breached the loan to value covenant and debt associated with the billionaire, and creditors now are pushing for a liquidation of the property portfolio. While it is unclear as to whether the debt will be repaid immediately, or perhaps there is some leeway, it seems that at some stage in the near future we will see a sale of prominent London properties.

In many ways this is a reflection of how many business people of today built up their significant wealth using the low-cost debt facilities which were available in the 80s, 90s and into the new millennium. Many are now starting to pay the price for overstretching themselves in what had been seen as a win-win situation with property values increasing year on year for some time.

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