REO searching for partner in Battersea power station revamp
REAL Estate Opportunities, the property developer that hopes to have its loans taken over by the National Asset Management Agency (NAMA), is searching for a partner to help with the £4bn (€4.6bn) redevelopment of Battersea Power Station in London because the developer believes it cannot fund the project alone.
The listed property company, which is 67pc controlled by Dublin-based Treasury Holdings, wants to find an equity or debt-financed partner to take a stake in the south-London project.
REO warned last week that it faces "material uncertainties'' that could cast doubt on its ability to continue. It reported a loss of nearly €371m last year, largely as a result of writedowns in the value of its UK property assets. The value of its UK property tumbled 14.5pc in the six months to June.
UK press reports this week suggested that a number of sovereign wealth funds are interested.
REO and Treasury Holdings submitted new plans in late July to convert the Battersea site, made famous by Pink Floyd's 'Animals' album, into 3,700 new homes, 650,000 sq ft of offices and a 2,000-seat conference centre. REO's first designs for the site were rejected by London Mayor Boris Johnson.
REO admitted last week that it had been unable to renegotiate a £226m loan with Bank of Scotland and Bank of Ireland. Bank loans amounting to £556m and £201m are due for repayment by the end of this year and 2010 respectively, the company added.
The company admitted it is relying on its lenders, including the as-yet non-existent NAMA to renew those facilities on similar terms.
"In the event that property values were to fall significantly, resulting in reduced net asset value, the group could breach its banking covenants in the future," it added. "We also need to complete a transaction, which would raise funds of £35m to £40m to support the company's working capital requirements."
Peter Byers, the REO finance director, said last week that REO's banks may seek to transfer some of treasury's loans to NAMA.