independent

Wednesday 16 April 2014

Nama 'lost a fortune' on power station sale

Battersea set to generate billions

artist’s impression battersea development and paddy mckillen (inset)

Nama was last night accused of losing a vast amount of money for Irish taxpayers through the sale of London's iconic Battersea power station, which the agency sold for €600m but is now expected to generate profits of up €10bn.

In an interview with the Sunday Independent, the head of property research at CBRE – the UK's biggest property firm – described the purchase of Battersea by Malaysian investors as "the deal of the century".

His comments come just days after Nama chairman Frank Daly told the Sunday Independent that the agency had secured a "very good deal" for taxpayers.

"We think we got a very good deal and remember, we weren't the only ones involved in that syndicate. I think everybody involved in it at the selling site thought we got a good price at the right time so we have no concerns. No regrets about that," Mr Daly said.

However, developer Paddy McKillen, who is one of Nama's most vocal critics, this weekend hit out at the agency's handling of the sale of the Battersea station, which was the most lucrative asset held by Richard Barrett and John Ronan's Treasury Holdings.

He told the Sunday Independent: "The untimely and impulsive sale of the Battersea site – one of the world's finest, was probably one of the most devastating decisions for the Irish economy.

"My view is that the site was sold for a steal and the new owners probably made a billion within a few months and will most likely make billions on the development.I feel the sale also caused catastrophic damage to Treasury Holdings, an Irish company."

Treasury Holdings, the company behind the Convention Centre and the Ritz Carlton Hotel in Co Wicklow, was immediately put into receivership following the sale of the Battersea power station, which the future of the company ultimately rested upon.

It appealed, but lost its judicial review proceedings against Nama.

Battersea was not a 'bad loan' on Nama's books because the agency was repaid 100pc of the loan and made a 20pc profit on the deal. But it is still billions off what experts believe the newest investors will make on the deal. At the time of going to print, Treasury Holding developers John Ronan and Richard Barrett were unavailable for comment. In June 2012, the 40-acre site with full planning permission for 8.5 million square feet on the South Bank of the Thames was sold for €600m (£495m) to a group of Malaysian investors led by SP Setia. However, property experts predict the development will generate profits of €9.7bn (£8bn) once complete.

The first phase of apartments in a building alongside the power station sold out before the first brick was laid and Jennet Siebrits, Head of Residential Research at London's CBRE described it as "one of the fastest-selling schemes in London".

It has been reported that penthouses in the second phase of the development, which will go on sale in April, are set to attract price tags of €30-36m (£25m-£30m) where wealthy Asian buyers are clambering to "own part of an icon". A 10 per cent year-on-year growth in London marks the first time the English capital has seen a double-digit increase since 2010.

Kevin McCauley, Senior Director of Research & Consulting at CBRE in London said: "It was the deal of the century.

"Hindsight is a wonderful thing.

"The deal was done two years ago – but the London property market is a different place now. If you look at the recent deals in that area, they went well above what people expected."

Commenting on Nama's decision to sell the asset, he added: "I suppose everyone does what they have to do to bring in revenue and reduce debt. But if you tried to sell the land at today's value I suspect you would get a lot more."

When asked how the (€600m) £495 price tag that Nama sold it for, could jump to in excess of €9.7bn (£8bn) profit once developed, he said: "It should be seen as a long- term development. You have to factor in the new northern line extension, the fact that planning permission has been received for a pedestrian bridge linking Battersea power station with the northern part of London; it is a wonderful location."

Irish Independent

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