Tuesday, 15 January 2013

Gemini: A breakdown of the 34-strong portfolio


By Paul Norman - Thursday, August 09, 2012 15:25
Administrators have been appointed to call in the loan secured against Propinvest’s Gemini portfolio. The move has heightened investor interest in a 34-strong wide portfolio that includes major malls, offices and warehouses. CoStar provides a full breakdown of the portfolio.
In a stock market announcement yesterday evening, special servicer CBRE Loan Servicing said it had appointed Deloitte as administrator to the securitised 34-strong Gemini portfolio.
The announcement brought to a head more than a year of discussions between the portfolio’s development manager Propinvest and its adviser Lazard and Special Service Provider CBRELS seeking an acceptable restructuring proposal for bondholders that avoided insolvency.
An orderly work out of a portfolio packed with significant assets spread across all commercial property sectors is now set to be pursued.
The portfolio, which was assembled by Propinvest, was most recently valued by GVA, as at March 2012, at £437.75m. It was valued in 2006 ahead of Barclays Capital's securisation in the November at £1.23bn.
The outstanding loan balance is now £850,362,550. The loan is interest only and matures on 17 July 2016.
Each of the four projected ICRs on the loan is below the required interest cover minimum of 120% and consequently the loan is in breach of its projected ICR covenant.
GVA was appointed in 2011 by special servicer CBRELS to provide six monthly revaluations of the portfolio. In the first valuation in time for the January interest payment date (IPD), on the 25th, GVA reported that, as at September 2011, the portfolio was valued at £460.6m.
The previous valuation to this was conducted more than three years ago – on 26 September 2008 – and put the portfolio at £801.4m.
The continued fall in values seen since then despite the main market rallying in July 2009 has been driven by the asset quality, which is predominantly secondary in regions and segments of the UK market which did not follow the recovery in value.
The Guernsey registered borrowers had been pursuing an alternative solution which would see private equity groups KKR and Westbrook, with the backing of Propinvest, buy out the bondholders in the CMBS at a discount to the face value of the bonds and then take over and asset manage the portfolio.
Development manager Propinvest disputes CBRELS's allegations that there are issues with HMRC over unpaid VAT and also argues that the alternative solution would offer a materially improved return for bondholders to an administration.
Yesterday however CBRELS confirmed it had dismissed the indicative offer for the loan and it is the failure of these talks that was expected to trigger an HMRC move to take action over £15m of allegedly unpaid VAT.
Based on the most recent valuation the lenders face a loss of close to £800m. On top of the collapse in values since the securitisation there is also an interest rate swap liability of £280m with Barclays, which CBRELS has reached an agreement to delay immediate repayment on.

An orderly work out

While there are no doubt further twists and turns in the saga, the latest move brings closer to fruition the potential for a string of disposals from the 34 strong portfolio.
CBRELS's latest Collateral performance and status report on the Gemini (Eclipse 2006-3) CMBS, published today, gives an indication of where values have got to on an individual basis as of March of this year, according to GVA's independent advice.
CoStar News compares and contrasts the document with Barclays Capital’s 2006 Gemini (Eclipse 2006-3) CMBS offering circular to provide an overview of each asset within the portfolio and how it has performed.
At the time of securitisation the Gemini portfolio comprised 36 properties, with 31 located in England, one in Wales and four in Scotland.
Thirteen of the properties, representing 58.7% of the portfolio value, were retail, 11, representing 20.8%, were offices, three, representing 5.5%, were industrial, two, representing 7%, were warehouses, five, representing 5.1%, were leisure properties, and two, representing 2.8%, were mixed-use.
At the cut-off date for the issuance, the portfolio was valued by King Sturge and CBRE at £1.235bn with a net rent of £63.81m, an estimated net rental value of £65.298m, a yield of 5.16% and a net internal area of 4,180,967 sq ft.
There were 386 tenants with 287 or 73.6% in the retail industry – the two largest tenants by value were EMC Europe and Eddie Stobart.
The portfolio had a diverse geographic spread with seven properties or 30.5% by value in the West Midlands, six or 16.8% in the North West, six or 16.8% in North West England 11.89% in Greater London, four or 11.2% in Scotland, seven representing 10.9% located in South East, one representing 7.5% in Yorkshire and Humberside, four representing 6.4% in South West, one, representing 4.1% in the East Midlands and one representing 0.9% in Wales.
The total loan secured on the notes, which was due in July 2019, was £918,862m.
In CBRELS’s circular, the total valuation, as provided independently by GVA, had fallen from £1.235bn to £437.75m in March 2012. One property has been sold – The Headrow shopping centre in Leeds in 2007, and two properties at The Quadrant at Bristol’s Aztec West had been incorporated to create one asset – reducing the portfolio in size to 34 assets.
While CBRELS’s circular does not provide an update on individual asset values it does update on values for each asset class. The below outlines all of the properties in the portfolio, and the change in values among asset classes between 2006 and March 2012.

Shopping centres:

In 2006, the portfolio comprised eight shopping centres valued at £612,400,000. GVA’s revaluation of the remaining seven malls – The Headrow in Leeds was sold in 2007 – put their March 2012 value at £163.35m.
The assets in descending order based on 2006 values are:

Offices

The office portfolio, which includes business parks and in-town and out-of-town assets, was valued at £257,300,000 in 2006 but had fallen in value to £109.5m by March 2012, according to GVA.
The assets ordered in terms of highest value in 2006 are:
  • EMC Tower, Great West Road, Brentford, a major headquarters building valued in 2006 at £62.87m
  • The Grange, Bishops Cleeve, Cheltenham – A modern 178,649 sq ft office headquarters on a 14.75 acre site valued in 2006 at £49.75m
  • 20 Farringdon Street, London – An eight-storey office in Midtown valued in 2006 at £27.25m (pictured third above)
  • Briarcliffe House, Kingsmead, Farnborough – Four-storey office block valued in 2006 at £22.1m
  • Sutherland House, Crawley – A 144,243 sq ft headquarters office building valued in 2006 at £19.4m
  • Helios Court, Bishop Square, Hatfield Business Park, Propinvest Helios Ltd Partnership - office complex in Hatfield Business park valued in 2006 at £17.02m
  • Gloucester Building, Kensington Village, London – A 1990s built office valued in 2006 at £13.87m
  • Nova Building, Herschel Street, Slough – A 1989 built office valued in 2006 at £11.925m
  • The Quadrant, Aztec West Business park, Bristol – Two storey office in Bristol valued in 2006 at £7.92m
  • Regus House, Highbridge Business Park, Uxbridge in West London - A 1998 built office at Highbridge Business Park valued in 2006 at £7.5m

Industrial Parks

The three industrial parks in the portfolio were valued in 2006 at £68m but by GVA’s March 2012 had fallen in value to £26.85m.
The assets in descending order of value as of 2006 are:
  • Wednesbury Trading Estate, Wednesbury – a 442,712 sq ft industrial estate valued in 2006 at £26.3m
  • Units 12 and 13 Woodside Park Industrial Estate, Forester Avenue, Dunstable - a 261,238 sq ft industrial estate valued in 2006 at £26.2m
  • Sussex Manor Business Park, Gatwick Rd, Crawley – an 140,356 sq ft industrial complex valued in 2006 at £15.5m

Logistics warehouses

The two distribution hubs in the portfolio were valued in 2006 at £86.45m. By March 2012 the figure had fallen to £59.75m.
The assets are:
  • Eddie Stobart Unit, Plot 6, DIRFT, Daventry - Distribution and logistics park comprising three separate warehouses and a small office building at the Daventry International Rail Freight Terminal logistics valued in 2006 at £50.365m
  • River Road, Barking - A 271,826 sq ft distribution hub built by ProLogis and valued in 2006 at £36.1m

Mixed-use

The two mixed-use assets in the portfolio were valued in 2006 at £34.95m. As of March 2012 GVA valued them at £8.3m.
The assets in descending order by the 2006 values are:
  • Ashwood House, Princess Way, Camberley, Surrey (pictured) – a mixed-use office and retail scheme valued in 2006 at £22m
  • Charles House, Plymouth – a four-storey mixed use retail and leisure development including a bingo hall valued in 2006 at £14.2m

Retail warehouses and high street shops

The five assets in total were valued in 2006 at 113.065m but had fallen in value to £46.65m as at March 2012 according to GVA.
The assets in descending order of 2006 value are:
  • Waterloo Street, Bolton, Greater Manchester – Thistle Bolton – a retail warehouse in Bolton valued in 2006 at £38.05m
  • Renfrew Retail Park, Argyll Avenue Renfrew, West Glasgow – 124,550 sq ft retail warehouse valued in 2006 at £34.99m
  • Springfields Retail Park, Newcastle Road, Stoke-on-Trent – a 69,955 sq ft terrace of five retail warehouses and a garden centre valued in 2006 at £27.5m
  • 138/141 Friar Street, Reading –A 1989 built shop in Reading high street valued in 2006 at £6.325m
  • Units 1-3, 160 The Marlowes, Hemel Hempstead – Retail block on Hemel Hempstead high street valued in 2006 at £6.2m

Leisure

The five leisure assets in the portfolio were valued in 2006 at £63.255m. As of March 2012 they were being valued at £23.35m by GVA.
The assets in descending order of value in 2006 are:
  • West Strand, Preston Propinvest Fitness - an 82,463 sq ft leisure unit in Preston valued in 2006 at £17.125m.
  • Marcon Way, Crewe, Cheshire – a fitness complex in Crewe valued in 2006 at £12.95m.
  • UGC cinema, Kingsway Leisure Park, Kingsway West, Dundee – a detached, nine-screen cinema complex valued in 2006 at £10.83m.
  • Stansty Road, Wrexham, Clwyd– a fitness centre in Wrexham valued in 2006 at £10.61m.
  • Gade House, 46 The Parade, Watford – a 1970s built leisure unit valued in 2006 at £10.49m.
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Grant Thornton seeks to freeze Maud’s Propinvest property empire



Posted on August 23, 2012 11:16 pmby 
Grant Thornton applied for a freezing order over Propinvest Group Limited and its subsidiary companies on Monday on behalf of creditors DNB Bank AS and Bank of Scotland, in an effort to wrest control of Glenn Maud’s property empire, CoStar News can reveal.
Monday’s application at the Royal Court of Guernsey has imposed an immediate interim order preventing Propinvest from selling any assets.
The application follows the appointment of Grant Thornton’s Jamie Toynton and Malcolm Shierson as joint administrators over a Propinvest subsidiary company which owns 64 predominantly retail properties in Sweden and Finland.
Maud has appointed Berwin Leighton Paisner in the UK and Carey Olsen in Guernsey as legal counsel to vigorously contest a lgeal order which he described as “malicious and aimed at embarrassing the parties involved”.
A Propinvest statement continued: “We are shocked and disappointed at the approach taken by Grant Thornton.
“No prior notice was given before the order was served, in spite of PGL directors having cooperated fully with Grant Thornton since they were appointed as administrators almost 12 months ago and PGL has had no communication from them whatsoever for at least the past six months.”
The application of the freezing order over Propinvest and its subsidiaries’ assets was lodged by Grant Thornton 24 hours before Deloitte’s Phil Bowers, Neville Kahn and Rick Garrard were appointed administrators over Propinvest’s Gemini securitised portfolio.
The timing of this is significant and intertwined with the recent fate of Propinvest’s enforced securitised Gemini portfolio as it allows Grant Thornton – if the freezing order application is upheld after Propinvest’s defence is heard – to claim around £3m in a surplus account held by Eagle Holdings, the holding company of Gemini, the special purpose vehicle which owns the 34-strong Gemini portfolio.
“We are concerned that the primary objective in Grant Thornton obtaining the order on Tuesday, one day before the Gemini portfolio companies were placed into administration in Guernsey, is to try to seize cash funds in excess of £3m held in the parent company of the Gemini portfolio, the monies of which are properly the property of those companies and their creditors,” Propinvest’s statement continued.
CBRE Loan Servicing enforced against the securitised UK secondary Gemini portfolio on 7 August, which GVA valued at £437.75m in March against an outstanding CMBS loan of £850.36m.
The decline in value of the secondary portfolio is exacerbated by the Gemini securitisation’s long-dated interest rate swap agreed with Barclays Capital, the investment bank which issued the Gemini CMBS, which to crystallise an early break would cost bondholders £287.2m, according to Chatham Financial, as at 17 July.
Enforcing against a securitised loan automatically triggers a break in the interest rate swap contract which normally would subject bondholders to the cost. However, CBRE Loan Servicing brokered an agreement with Barclays which agreed to waive the automatic swap contract termination in exchange for an agreed managed paydown of liabilities.
These liabilities always rank ahead of bondholders recoveries.
Maud’s plans were nulled by CBRE Loan Servicing’s 7 August loan acceleration, who had been trying to engineer the purchase of the Gemini CMBS loan from the existing bondholders with private equity firm KKR.
Propinvest’s strategy was for KKR to buy the loan for around £370m, with a further £80m set aside to maintain the interest rate swap costs. KKR would have then bought the Gemini holding company, Eagle Holdings, for a nominal £1, and maintain the existing structure without breaking the interest rate swap, while also maintaining the blended circa 50 basis points margin across the bonds which still have nearly four years to run.
The KKR and Propinvest offer was rejected by bondholders on the basis that it would “not maximise recoveries for noteholders on a net present value basis”.
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VALAD set to be appointed asset manager on Propinvest Gemini portfolio



By James Wallace - Wednesday, September 19, 2012 15:35
VALAD Europe, the asset manager majority-owned by Blackstone, is set to be appointed as asset manager on Propinvest’s 35-strong Gemini portfolio on a long-term workout, CoStar News can reveal.
CBRE Loan Servicing, the special servicer on the heavily-defaulted Gemini CMBS, is expected to appoint VALAD in the next week or two after concluding the terms of the appointment and agreeing an asset management strategy for the UK portfolio of secondary shopping centres, offices, industrial warehouses and logistics properties, as well as business and retail parks.
The appointment of VALAD is expected to be agreed with the fixed charge receivers - Deloitte’s Phil Bowers and Neville Kahn - and administrators, also Deloitte’s Bowers and Kahn, as well as Rick Garrard.
Seperately, CoStar News understands that Cogent Property Solutions, a Scottish asset manager, will be appointed to assets in Scotland, after first being recommended by CBRE in its original recovery plan three years ago.
The Gemini CMBS and junior loans mature on 17 July 2016, while the legal final maturity of the bonds is extractly three years thereafter - with the likely workout plan expected to fall somewhere between these maturities of circa four to seven years.
VALAD is not expected to sell many properties in the short-term, but instead is likely to implement a recovery strategy premised on focussed asset management to improve capital values over the longer term through the letting of vacant units, restructuring and re-gearing leases as well as repositioning assets within their particular markets.
Early asset sales are expected to be limited to where VALAD determines meaningful value cannot be recovered, or where the risk profile of attemting to increase value is deemed unacceptable.
In advance of the acceleration of the Gemini loan, Barclays agreed with CBRE to waive full crystalisation cost of the swap on loan enforcement, in exchange for an agreed pay-down of the swap over a three-year period.
The restructuring of the swap will allows VALAD to execute the asset management plan without cystralising the current £287.2m in swap breakage costs, which will ensure a greater recovery to noteholders. 
This is thought to be the first European CMBS transaction for which this kind of swap negotiation has been agreed with the counterparty.
For VALAD, the appointment will be a huge coup after missing out on the asset management mandate on the Uni-Invest CMBS to TPG and Patron Capital five months ago, in an fiercely-contested battle for bondholder votes.
CBRE and VALAD declined to comment.
The Gemini portfolio comprises 35 secondary properties, with a rising vacancy rate besieged by tenant failures and administrations. The vacancy rate was 16.7%, as at 20 July.
The tenant profile of the portfolio is very granular with more than 300 tenants, having a weighted average lease length of 7.8 years. 
The largest 20 tenants contribute 60.19% of the total rent, due largely to the inclusion of 12 single-let properties in the portfolio. As a result, the portfolio is particularly vulnerable to the failure of certain tenants.
In the nearly six years since the portfolio was valued ahead of the November 2006 securitisation by Barclays Capital, the portfolio has fallen in value by around 65% - from £1.235bn to £437.75m, at the end of March 2012 - according to GVA which is currently carrying another six-month valuation update. 
GVA’s September 2012 valuation is expected to be published next month.
The outstanding CMBS Gemini loan is £850.36m which, against a £437.75m valuation, puts the securitised LTV at 232.47%.  In addition to the £105.24m junior loan, the combined £955.5m whole loan has an LTV of 254.88%.

Chronology of events leading to Gemini loan enforcement

The chronology of events which preceded CBRE’s loan enforcement action six weeks ago are some of the most extraordinary in the entire history of European CMBS loan workouts.
Propinvest initially favoured a borrower-led insolvency, which potentially could have side-stepped swap crystallisation costs, but CBRE deemed the strategy unworkable.
Lazards was then appointed as Propinvest’s adviser, which identified a loan sale option, which would allow an asset management strategy while leaving the swap in place and preventing the erosive breakage costs.
A discreet and comprehensive marketing strategy was then undertaken to find interested buyers for the loan, which identified KKR and Westbrook Partners as a potential joint buyer of the CMBS and junior loans.
Concurrent to CBRE’s pursuance of a potential loan sale, the special servicer was informed by Propinvest that an unpaid circa £15m VAT bill was about to be enforced by HMRC.
Propinvest’s unpaid VAT bill emerged in August 2011, but dated back to 2008 when around£10m of VAT reciepts from tenants were, CBRE alleges, diverted out of Gemini’s general account and paid to a Propinvest creditor unconnected to the Gemini structure, instead of being held in a segregated account and paid to HMRC.
CBRE considered this to be a significant breach of trust.
Although the undrawn £42.15m liquidity facility could have cured the outstanding VAT bill, CBRE was unwilling to prioritise an unsecured creditor ahead of bondholders. It felt there was a  lack of clarity over where the original monies had gone as well as an absence of Propinvest’s co-operation over an independent investigation.
Propinvest vigorously disputes this.
But with a potential loan sale led by KKR and Westbrook on the table which could have resulted in the VAT bill being paid in full, HMRC agreed to waive any action against Propinvest, pending the outcome of the loan sale strategy.
The original KKR and Westbrook loan sale offer was proposed on 27 April 2012 which, according to CBRE’s analysis, was inferior to an enforcement route, combined with a swap agreement with Barclays and a targeted asset management plan.
CBRE informally proposed the KKR and Westbrook offer to class A noteholders, which CBRE said overwhelmingly rejected the deal.
A revised offer was then proposed by KKR and Westbrook on 20 July, which was communicated both by CBRE - and directly by Lazards - to the class A noteholder group.
The revised offer was for £375m, comprised of £120m for the loan as well as assuming £275m for the swap, for the outstanding £955.5m whole loan, with an option for class A noteholders to participate alongside KKR and Westbrook in the equity of the new special purpose vehicle.
The offer was again rejected. Furthermore, a loan sale would have - under the documentation of the Gemini CMBS - required trustee approval, which CBRE understood would have put the loan sale option to a vote of all noteholders.
It was CBRE’s assessment that a vote across the entire class of noteholders in favour of KKR and Westbrook’s loan sale option would have failed.
CBRE, therefore, agreed the three-year swap repayment plan with Barclays, to mitigate impact of swap, and then enforced the loan on 6 August.
Next week’s appointment of VALAD begins the next phase of European CMBS’ most eagerly-watched workout.
Maud and Propinvest are understood to be mounting a vigorous defence.
The timing of last month’s freezing order is intertwined with Gemini portfolio as a successful application would enable Grant Thornton to claim around £3m in a surplus account held by Eagle Holdings, the holding company of Gemini, the special purpose vehicle which owns the 34-strong Gemini portfolio.
“We are concerned that the primary objective in Grant Thornton obtaining the order on Tuesday, one day before the Gemini portfolio companies were placed into administration in Guernsey, is to try to seize cash funds in excess of £3m held in the parent company of the Gemini portfolio, the monies of which are properly the property of those companies and their creditors,” Propinvest’s statement said at the time. 

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Gemini portfolio in administration



By Bridget O'Connell  |   08-08-2012  |  19:00  |  Print
The heavily indebted Gemini secondary regional property portfolio has gone into administration.
Special servicer CBRE yesterday applied to the Royal Court of Guernsey for the appointment of Deloitte as administrator to four companies that own the 35-strong Gemini portfolio. The package of properties has seen value plummet from £1.2bn in the boom to just £437m this year.
The move came after borrowers to the portfolio, which was built up and is managed by Propinvest, failed to repay a £950m loan after accelerated demands from CBRE.
A statement to the stock exchange said CBRE decided to accelerate the loan and commence enforcement action in light of a dispute over a £15m unpaid VAT bill, and its view that a proposed sale of the loan would not “maximise recoveries”.
It said that the borrowers and their advisers, Lazard, had explored the possibility of a sale of the loan which resulted in an indicative offer being made.
However, when compared with enforcement action the special servicer concluded that a sale of the securitised loan would not be the best option to pursue to recovery money for bondholders which invested in the debt.
It added that it had informally consulted with a number of bondholders, whose support would be crucial to any sale, and found “an overwhelming majority….indicated that they do not favour a sale of the loan”.
CBRE has also struck an agreement with Barclays to prevent the immediate crystallisation of a £230m interest rate swap, which would need to be repaid ahead of any bondholders, in favour of repayment “over an agreed period”.
This agreement and the prospect of a winding-up petition by HMRC to recover the unpaid VAT led CBRE to conclude that its decision was the best route to recoup the most money for bondholders and protect them from any action by HMRC.
The four companies now in administration are: Thistle Investments Limited, Palace Investments Limited, Eagle GP1 Limited and Eagle GP2 Limited.  The Companies are the general partners of each of the Borrowers. 
Alongside this application, the Special Servicer also applied for the restoration of Eagle GP 2 Limited to the Register of Companies, as it had previously been struck off the register. 
A statement from Propinvest said: “We are both surprised and disappointed with CBRE’s decision, particularly as it was taken before bondholders had been given the chance to consider the very credible alternatives at the meeting that was due to take place on 5 September, and that it has resulted in the irretrievable loss of the £80m of value that KKR/Westbrook placed on the maintenance of the existing corporate structure and the preservation of the swap. 

“In contrast, CBRE’s deal with Barclays (which was not necessary, as CBRE is well aware that HMRC had no immediate intention of enforcing any repayment as it hasn’t done since 2008) seems to involve a time-constrained sale of the properties that will entitle Barclays to be paid a swap termination fee (which, at today’s rates, would be £280m) before bondholders receive anything.

“It will also entitle CBRE to continue to be paid its substantial special servicing fee, other professional fees and a further fee on the liquidation of the assets. Indeed, Barclays seems to continue to be the main beneficiary of the opaque swap, securitisation and intercreditor structure that it put in place in 2006 and which, even when CBRE’s highly optimistic portfolio valuation of £440m is used, is likely to result in a recovery to bondholders (who have suffered no loss as a result of the VAT shortfall) of less than £100m of their £950m investment after super-senior creditors have been paid.

“Finally, it is worth remembering that HMRC is merely an unsecured creditor ranking way behind the secure creditors including Barclays, the liquidity facility provider, the bondholders and, of course, CBRE as servicer of the bondholder loan.” 

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£5bn ‘banana king’ files for UK bankruptcy


14 January 2013

Accountancy firm Mazars has been appointed as bankruptcy trustees to Russian tycoon Vladimir Kekhman, whose wealth has been estimated at £5 billion.
Kekhman, 44, who founded the fruit importing company JFC Group and calls himself the “banana king”, came to the UK in October to petition for a bankruptcy order against him. He is believed to have declared personal liabilities of around £400m.
Heath Sinclair, a partner at Mazars, and senior manager Tim Hewson were appointed as Kekhman’s trustees in bankruptcy.Hewson said: “This is going to be a complex matter and it is important that we gain a full understanding of all the issues, to ultimately maximise returns for creditors.”
JFC Group went into insolvency last year.
Frances Coulson, head of insolvency and litigation at Moon Beever, told Credit Today the UK’s bankruptcy regime has proved attractive to other nationals due to its one-year discharge period.
Stephen Allinson, insolvency practitioner and consultant at law firm Lester Aldridge, said: “This case has received a lot of industry interest, both because of the size of the debts and the fact that there is concern the bankrupt may use Britain’s apparently ‘softer’ bankruptcy laws to ease his plight.
“However, this man has substantial assets in England so the order is properly made.”
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Jessops camera chain in administration



Jessops storeJessops has faced competition from online retailers

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Troubled High Street camera retailer Jessops has gone into administration, with PricewaterhouseCoopers (PwC) appointed as the administrator.
In recent years, it has been hit by increasing competition from supermarkets and internet retailers.
Jessops, which was founded in Leicester in 1935, has 192 stores in the UK and employs about 2,000 staff.
The administrators said that it was "inevitable" that some stores would have to close.
PwC said that while Jessops was a well-known brand with a strong reputation for service, its core marketplace had seen a significant decline in 2012, which was forecast to continue in 2013.
Despite additional funding being made available, Jessops had not generated the profits it had planned, PwC added.
In 2009, Jessops managed to avoid administration by agreeing a debt for equity swap with its lender HSBC.
Jessops becomes the first High Street casualty of 2013, following a raft of firms falling into administration in 2012 including Comet, Clinton Cards, JJB Sports and Game Group.
'Critical'
Closing down sale
Rob Hunt, joint administrator and partner at PwC, said: "Our most pressing task is to review the company's financial position and hold discussions with its principal stakeholders to see if the business can be preserved.
"Trading in the stores is hoped to continue today but is critically dependent on these ongoing discussions. However, in the current economic climate it is inevitable that there will be store closures."
PwC added that at present Jessops would not honour customer vouchers or accept returned goods.
However, supermarket Tesco said that it would give a full refund to any customer who had recently exchanged Clubcard vouchers for tokens to spend with Jessops.
Ronnie McQuillan, a film and TV production student from York, won £1,500 worth of Jessops vouchers in a competition and is unsure whether he will be able to get a new camera now.
"I've been ringing the prize company today to see if I can get an alternative prize from another electrical store. I wasn't sure what the situation was," he told the BBC.
"The company say they're going to let me know. They seemed to say it could be resolved, so hopefully I will get a voucher for somewhere new. I'm disappointed because I've been looking at cameras online. It's a real shame."
'Yet another blow'
Neil Saunders, retail analyst at Conlumino, explained the root of Jessops' problems.
"The amateur market collapsed because people who once bought cameras found that they had these things on their smartphones and they used those instead, and the professionals found that they could use online niche specialists who were cheaper and often had more extensive ranges," he said. "So both migrated away from Jessops."
Julie Palmer, a partner at business recovery group Begbies Traynor, said Jessops' administration was "yet another blow" for the UK High Street and showed that January was a high risk month for retailers.
"With substantial cash outflows on the 25 December quarterly rent day combining with fierce pricing competition during the January sales, it puts significant pressure on finances.
"The administration of such a household name can only serve to damage consumer confidence further in the months ahead."

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