SCENARIOS-What next in UK REIT Brixton's survival fight?

By Daryl Loo and Sinead Cruise

LONDON, June 2 (Reuters) - UK industrial landlord Brixton (BXTN.L) has less than a month to sober up after a heady cocktail of aggressive acquisitions and high borrowings buried it under a 862.2 million pound ($1.4 billion) debt pile.

Brixton's loan covenants for its bank debt and unsecured bonds are due to be tested on June 30 and the group is in danger of becoming the first UK real estate investment trust (REIT) to be swallowed up by a savage two-year property slump.

Unsecured bondholders will have little to gain if the company -- which owns large chunks of logistics and warehouse property around London's Heathrow Airport -- falls apart, experts say.

Brixton's survival could hinge on positive outcomes to its problems, sketched out below:

DEBT EXTENSION, CONCESSIONS

Creditors might agree to concessions on loan covenants or extend refinancing dates, similar to those achieved by Quintain Estates (QED.L) this month, given Brixton's underlying strength.

"The banks will have to provide some flex, but ... they will only do this if certain precedents are met, i.e. asset disposals within a certain window, pay-down of debt, fees, etc," said Michael Burt, analyst at Noble Group.

These are short term fixes which can give Brixton some breathing space, but the company will still need to find other solutions to reduce its debt burden.

DEBT-FOR-EQUITY SWAP

Brixton's current predicament mirrors the troubles in the UK housebuilding sector, which earlier this year saw lenders to Crest Nicholson [CRTNC.UL] and McCarthy & Stone write off much of their debt in exchange for control over the firms.

JPMorgan analysts say a similar debt-for-equity swap deal could be the most likely outcome for Brixton, even though this would likely wipe out value for shareholders.

PROPERTY SALES