Nama and UK bank to decide fate of Battersea

 

STATE ASSETS agency Nama and Lloyds Bank are likely to decide within weeks on the future of Battersea Power Station, the landmark London property bought by Irish-backed Real Estate Opportunities (REO) for €600 million.

Nama and Lloyds yesterday rejected a £262 million offer from Malaysian investor, SP Setia, to buy out secured debt due on the property for 85 per cent of its original value.

The pair were said to be unhappy with the price and also had some concerns about the bidder’s ability to execute the deal.

They are understood to be in touch with a number of other parties who have expressed interest in the property, but who have not made any firm offers.

Sources yesterday said that the process is reaching a crucial stage and added that Nama and Lloyds were likely to decide on the property’s future within the next few weeks.

Neither would comment yesterday. SP Setia announced that the pair had rejected its offer in a formal statement to the Malaysian stock exchange.

“Nama and Lloyds have informed SP Setia via a letter dated November 23rd, 2011, that they do not intend to engage further on the preliminary offer at this stage,” the company said.

Treasury Holdings-backed REO owns Battersea. It owes them £250 million, which is secured against the property. The loan matured in August, meaning that it is repayable on demand.

However, Nama and Lloyds agreed to hold off on seeking repayment as REO planned to seek a partner or partners to invest in redeveloping the property.

Their rejection of SP Setia’s offer revived the interest of Russian oligarch Roman Abramovich, the owner of Chelsea football club.

The club yesterday hired consultants to look at the possibility of designing a new stadium on one section of the site.

Mr Abramovich, Nama and Lloyds had previously discussed the possibility of Chelsea buying Battersea.

However, before it could make any offer for Battersea, Chelsea would have to sell its own grounds at Stamford Bridge in London.

This would necessitate the club buying the site on which the stadium is built from a supporter-led club which owns the land, but not the buildings, and then selling it on.

REO bought the iconic power plant in Battersea at the end of 2006 for €600 million, using loans from a number of finance institutions, including Bank of Ireland and Bank of Scotland.

Nama now owns Bank of Ireland’s portion of the debt while Lloyds has taken over that which belonged to Bank of Scotland.

The British bank is said to be leading the lenders’ negotiations relating to Battersea, as it is owned the larger sum of money.

REO has secured planning permission to redevelop Battersea as a mixed residential and commercial complex.

The mayor of London Boris Johnson recently endorsed the proposals.

The redevelopment is likely to cost in the region of €5 billion, and REO intends bringing in a partner to invest in the project.