Thursday 17 August 2017

Nama in spotlight as €2bn Battersea profit predicted

Battersea Power Station is acknowledged as the best undeveloped land on London's riverside
Battersea Power Station is acknowledged as the best undeveloped land on London's riverside
Ronald Quinlan

Ronald Quinlan

Nama's decision to sell its interest in London's iconic Battersea Power Station has been called into question once again, with the revelation that its new owners expect to make a profit of Stg£1.8bn (€2.02bn) from its development.

The eye-watering projection is contained in an assessment of Battersea's potential conducted in 2008 by BNP Paribas Real Estate for Wandsworth Council, the local authority with responsibility for the area.

While the £1.8bn figure has been met with anger in London, owing to Wandsworth Council's approval of an application from Battersea's owners to reduce the number of affordable homes on the site, the predicted profit will also invariably serve to fuel criticism of Nama's decision to dispose of its interest in 2012.

That criticism has, unsurprisingly, been led by developer Johnny Ronan whose former company, Treasury Holdings, controlled the site prior to its acquistion out of receivership by a Malaysian consortium of SP Setia, Sime Darby and the Employees' Pension Fund of Malaysia (EPF).

Nama, for its part, has consistently argued that it sold out of Battersea Power Station at the right time, and for the right price. Defending the decision in 2014 against claims that Nama should at least have held out for a higher price, Nama chairman Frank Daly said: "We didn't sell early, we sold at the right time. We sold that loan for Stg£500m [€600m]. So we got back the full value of the loan."

Mr Daly added that the idea that Nama should have held on and developed Battersea and other London sites with a view to recouping billions of euro down the road for the Irish taxpayer "misses the reality". He claimed the Battersea development alone would amounted to a "€6bn property play in London with no guarantee of a return".

Wandsworth Council, meanwhile, has sought to downplay the Stg£1.8bn profit projected for Battersea, with a spokesman saying that the estimate dates from a viability study conducted for the site in 2008.

Notwithstanding Nama and Wandsworth Council's respective views on Battersea's potential, the site is acknowledged by the property industry globally as the best undeveloped land left on London's riverside.

Only recently, PropertyEU magazine recognised Battersea Power Station's acquisition out of receivership by its current owners as the 'Development Deal of the Decade'. Commenting on the progress of the Battersea's regeneration to date, the jury said: "The redevelopment is proving a success, with the first two phases breaking records for the number of apartments sold and prices achieved. Phase 1 saw the most successful sales event ever in London, with over 850 apartments sold in just four weeks for Stg£750m, while Phase 2 generated Stg£600m of sales in four days."

Last week, Battersea Power Station Development Company CEO Rob Tincknell secured 43rd spot in Property Week's 'Power 100'. The magazine recognised Mr Tincknell (the former managing director for the UK and international arm of Treasury Holdings), for having landed the biggest deal of 2016 when Battersea signed up Apple as tenants. The 46,500 sq m (500,000 sq ft) deal will see 1,400 of the US tech giant's employees based at Battersea when it opens in 2021.

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