Friday 20 April 2018

Nama's former Battersea site project sold for a record £1.6bn

The Battersea PowerStation scheme in London comprises 42 acres, with 4,364 homes planned
The Battersea PowerStation scheme in London comprises 42 acres, with 4,364 homes planned
Donal O'Donovan

Donal O'Donovan

Two funds backed by the Malaysian state will buy Battersea Power Station and help finance the struggling redevelopment project in a transaction that values it at around £1.6bn (€1.8bn) - a record for a UK property deal.

The deal will provide a cash injection to help fund completion of the vast Battersea Power Station in London which has been notoriously difficult to complete for a succession of owners.

The station was bought before the crash as a development site by Richard Barrett and Johnny Ronan's Treasury Holdings.

Nama took over loans linked to the property in 2011 and, along with other lenders, sold the debt tied to the site for the equivalent of €600m a year later.

Nama says it got full value for the loans, but the agency has been heavily criticised with claims it could have netted even more if it had held on to the property and allowed it to be developed.

In the latest sale, one of the funds buying into the project is already majority owner of the main existing investor.

Restoration of the station has been hampered by increased costs and delays. Under the latest deal Malaysian state pension manager Permodalan Nasional Berhad (PNB) and private sector pension manager Employees Provident Fund (EPF) of Malaysia will buy a stake in the project from Malaysian developers Sime Darby Property and SP Setia.

The new investors are already heavily exposed to the project. Permodalan Nasional Berhad is already a major shareholder in both firms, and Employees Provident Fund also owns 20pc of the entire development.

Planning documents released last year revealed that due to rising and unexpected costs of restoring the Grade II listed building, and lower demand for luxury homes, the developers were forecast to make less than half of their original return target.

This also led to the development slashing the number of affordable homes it would build as it claimed that due to financial pressures they were "unviable". For their fresh investment, PNB and EPF will own phase two of the development project, including the existing power station which has to be restored, new UK headquarters for Apple, and 250 apartments that are mostly sold.

The entire project consists of 42 acres and includes 4,364 new homes.

Sime Property and SP Setia remain the developers of the other five phases of the development, which is due to be completed by 2028.

Battersea Power Station Development Company (BPSDC) said that the reorganisation of the ownership of the development would "create a long-term asset management and ownership structure".

A spokesman said: "The Battersea Power Station building will provide both investors with a unique investment opportunity to own an iconic development in the heart of London.

"With the conclusion of the proposed transaction, BPSDC will remain the active manager of the development.

"This creates a solid platform that will ensure the protection, active management and control of the historically important building are maintained." (Additional reporting The Telegraph)

Irish Independent

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