Barclays finally sells disastrous property firm

Barclays finally drew a line under one of its most disastrous loans yesterday after it sold Imry, the property developer it has owned by default since the company's collapse in 1991. During the dark days of the recession Imry came to symbolise Barclays' hubris in becoming the biggest lender of any high street bank to the previously high-flying property sector.

Imry, which owns the Shires shopping centre in Leicester, was acquired yesterday by Dutch property company Rodamco for pounds 249m. The deal follows weeks of speculation which had paired Imry with Elliott Bernerd's Chelsfield and Capital shopping centres.

Both companies already own shopping centres, widely viewed as the property sector's hottest assets, but are understood to have been unprepared to enter a bidding war with Rodamco. The deal is the first UK acquisition for the Dutch company which launched an unsuccessful tilt at Hammerson in 1989.

Barclays has always made clear it was holding Imry solely for the purpose of selling it once the property market recovered. Banks that inherit property companies by default during recessions have gained the reputation for selling those unwanted assets at the bottom of the market after rashly lending to them at the peak of the previous boom.

Barclays attempted to buck that trend by restructuring the company in 1992 to allow its management to operate it out of recession.

Imry is Barclays' most spectacular property disaster, having cost it pounds 240m in provisions to date. In 1989, the bank financed a pounds 314m takeover of the quoted company by Marketchief, a vehicle backed by Eagle Star, Development & Realisation Trust, Prudential-Bache and Wolfgang Stolzenberg, a private investor. Barclays provided loans of more than pounds 200m to support the venture. Then, in June 1991, the bank's exposure was doubled in a restructuring to about pounds 420m.

In early 1993 Barclays revealed bad debt provisions of pounds 2.5bn, including pounds 1bn to cover its ambitious foray into commercial property during the previous five years. The property boom of the late 1980s was backed by more than pounds 40bn of bank debt and Barclays, of all the clearing banks, was the heaviest lender.

It provided large corporate loans to high-profile and aggressive property developers, such as Olympia & York, Speyhawk and Imry, much of it at the peak of the boom.

Barclays excelled at what is known as relationship banking, and backed such individuals as Gerald Ronson, of Heron International, Speyhawk's Trevor Osborne and Martin Myers at Imry. The rationale was that these men were talented businessmen and would make money for themselves and for Barclays.

A spokesman yesterday said there was no danger of Barclays repeating the mistakes of the 1980s, claiming it had sophisticated, computerised risk-assessment systems to prevent foolhardy lending. Since 1992 there has been a 37 per cent reduction in the size of Barclays' property lending book, which now accounts for 7.6 per cent of total lending compared with 12.2 per cent four years ago.