REO drums up interest in €6.5bn Battersea project
NAMA-linked firm seeking investors for plan to develop former power station area
Real Estate Opportunities (REO), a NAMA-linked property business founded by Johnny Ronan and Richard Barrett, said last night that it had received significant interest from potential investors in its £5.5bn (€6.55bn) proposal to develop the area around Battersea Power Station in London.
The comments were made in a scheduled update to investors in the company, which is controlled by Treasury Holdings.
Despite the interest, a spokesman for the company said it was not close to agreeing any deal with new partners. The source said a global marketing exercise had drawn significant interest from prospective investors but that agreeing a deal was unlikely before planning permission for the project was finalised.
REO's plans have been approved by the local Wandsworth Borough Council in London and by the London Mayor.
The final step in the planning process will be approval from the UK's Secretary of State for Communities and Local Government Eric Pickles, who has until the end of the month to consider the proposal.
If given the final go-ahead, the project could still take more than a decade to complete, according to REO. The project could create more than 15,000 jobs and provide 500 affordable homes
NAMA is a key lender to REO, which has debts of €1.8bn. NAMA and Lloyds Bank have agreed to roll over loans to allow the scheme to go ahead. NAMA has approved a business plan submitted by REO.
REO paid €600m in 2006 for the site but development has yet to begin and REO has been forced to restructure its debts since then.
In December the company agreed an outline deal with debt junior lenders under which it will hand a stake in the future development to lenders in exchange for writing off part of their debts.
Finalising that deal is also understood to depend on winning final planning approval for the Battersea development. Planning permission will boost the value of the site massively, making it more attractive to take a stake in REO.
The planning proposal currently being considered is for the largest-ever development in central London, including 3,400 new homes, office space, hotels, shopping and leisure facilities and a new underground tube station.
REO bosses Mr Barrett and Mr Ronan want to transfer ownership of the Battersea site to a new company to move ahead with the development.