PROPERTY FIRM Real Estate Opportunities (REO) said yesterday it will seek a partner for its Battersea power station project in London as it reported a pretax loss of £900 million (€1.09 billion).
The company reported an underlying loss of £929 million, which included a fall of £811 million in the value of its properties in Ireland and Britain to £1.1 million.
It plans to put Battersea into a separately listed vehicle by the end of the year and will try to attract a long-term equity partner through a global roadshow.
The landmark property on the south bank of the Thames, which has been derelict for over a quarter of a century, was valued at £388 million on February 28th, a 4 per cent fall in the 14-month period since December 31st, 2008.
John Bruder, managing director of REO’s biggest shareholder, Treasury Holdings, said yesterday that a number of potential investors have already shown some interest in getting involved in the project. He is optimistic that the flotation can be completed in six to eight months.
REO lodged the largest planning application ever submitted in central London in September 2009 regarding the project and it said it was optimistic that it would be determined favourably this year. This would boost the site’s value.
New lending terms have been agreed with Lloyds Banking Group and the National Asset Management Agency (Nama) to extend the existing bank facility for Battersea power station and waive all outstanding breaches.
Nama has taken over £815 million worth of loans from Irish banks to REO. The company has submitted a business plan to the agency, which has since passed it on to a panel of consultants for independent review.
REO said the plan assumes Nama will renew the loans on the same terms as those offered by the banks, and that the agency will provide it with working capital.
The plan also depends on a number of creditors, owed a total of £371 million through various instruments, agreeing to a restructuring of these debts before they fall due next May.
A spokesman for Nama said the agency does not comment on individual cases. He pointed out that a review of business plans submitted by the first group of creditors whose loans the agency took over is not yet complete.
REO chairman Ray Horney said the 14-month period to the end of February had been tough for the firm. “It has been an exceptionally challenging period for the company, as unprecedented conditions in the UK and Ireland impacted real estate valuations, and credit and liquidity remained very limited,” he said.
The company said net financial expenses of £112 million were incurred in the 14 months.
REO’s loss after tax was £828 million.
