REO in 'final stage' talks with investors over Battersea project
REAL Estate Opportunities, the company that is majority controlled by Treasury Holdings, is in the "final stages" of talks with investors for its Battersea Power Station in London.
It is "absolutely committed" to the £5.5bn (€6.3bn) redevelopment of the landmark site, it said yesterday in its interim results. The company is in the process of identifying and introducing a long-term investor and is talking to potential global investors.
"It is anticipated the subsequent capital injection resulting from the successful completion of this process will facilitate the repayment and/or refinancing of certain liabilities associated with the projects, together with the procurement of development finance," chairman Ray Horney said.
The first phase of construction is due to start in 2012, to be completed in 2016. The remaining phases of what will be Central London's first privately funded extension to the Tube network are scheduled for completion after that.
The company completed the restructuring of its balance sheet and signed off a memorandum of understanding with NAMA at the end of last year. The value of its property portfolio was put at £991m, down just over 1pc since February. Its Irish properties are continuing to fall in value and are down 6.6pc in that period.
It has reported property income of £72m in the six months to the end of August and an after-tax profit of £121m, compared to a £45m loss in the previous year. REO had cash balances worth £18m, down from £31m with the big reduction, mainly due to the repayment of a loan and professional fees association with the balance sheet restructuring.
Mr Horney said operation performance remained strong and its prime properties were generating stable rental income. It has an annual rent roll of €40m on Irish investments. He noted "continued market uncertainty" surrounding potential changes to the law in relation to upward-only rent reviews here.
He said the receipt of planning permission for Battersea Power Station and the successful completion of the balance sheet restructuring represented progressive steps towards securing the group's future.
"The group's primary focus is now on introducing a long-term investor into Battersea Power Station," he said.
The finalisation of binding legal terms with NAMA would secure the group's short-term funding requirement, Mr Horney said, and REO would have to sell or refinance certain assets to pay some of the money owed to various creditors.