Iconic Battersea site primed for flotation

City A.M. Reporter
DEBT-LADEN property firm Real Estate Opportunities (REO) will pursue a de-merger of London’s deteriorating Battersea power station, it said as it reported losses of almost £1bn yesterday.

The landmark, Europe’s largest brick building, has been derelict for more than a quarter of a century and is in need of financing for redevelopment.

REO said it had agreed new lending terms for Battersea with Lloyds Banking Group and Nama – Ireland’s “bad bank scheme” – thereby extending the current facility and waiving all outstanding breaches.

It said it would launch a roadshow to attract a long-term equity partner into the project ahead of the expected receipt of planning permission for redevelopment, and that it hoped to list the project before the end of the year.

Potential partners are thought to include sovereign wealth funds and large real estate investors.

“Due to the quality of the development, the location and the strengthening real estate investment market in London, interest has been very encouraging and we hope to announce significant progress in this regard later in the year,” REO said in a statement.

Shares in REO fell 15 per cent yesterday to 14p, valuing the company at just £47m.

The company made an underlying pre-tax loss of £929m for the 14 months to 28 February, reflecting an £811m fall in valuation due to the troubled property market in Ireland, where REO has extensive holdings.

“It has been an exceptionally challenging period for the company,” said Real Estate Opportunities chairman Ray Horney. “However, the company has worked hard and is confident that it will be able to strengthen the balance sheet.”