Australia's Valad restructures Europe properties

LONDON, July 2 (Reuters) - Australia-listed property fund manager Valad Property Group (VPG.AX) said on Thursday it has restructured its European properties business, through the creation of a joint venture with creditor Bank of Scotland.

Valad said it contributed 230 million pounds ($378 million) in UK and European property assets to the 50:50 joint venture, along with 373 million pounds in associated liabilities, and 187 million pounds of net equity in joint ventures and investments.

The joint venture, along with all its existing debt, will have a three-year term, Valad said in a statement.

Bank of Scotland will provide new undrawn facilities of 66 million pounds to the joint venture, and any cash or profits generated by the venture will be used to pay down its debt, Valad said.

Valad shares fell 17 percent to A$0.083 each on Thursday, a fraction of the stock's A$2.20 peak in May 2007, and against the Australian benchmark index .AXJO, which rose 0.1 percent.

Bank of Scotland, a unit of part-nationalised Lloyds Banking Group (LLOY.L), is among a group of European lenders burdened by 225 billion pounds of UK commercial mortgages that are breaching loan-to-value requirements as real estate values fall close to 45 percent below a June 2007 peak. [ID:nLT433017] Valad said it will continue to fully own its UK and European funds management business, which has A$9.1 billion ($7.3 billion) in assets under management and which will also provide management services to the joint venture. (Reporting by Daryl Loo) ($1=.6082 Pound) ($1=1.244 Australian Dollar) (See www.reutersrealestate.com for the global service for real estate professionals from Reuters)