What a pickle. Deloitte has just announced that it’s been appointed as receivers for the Gherkin, formally known as 30 St Mary Axe.
Phil Bowers and Neville Kahn, both of Deloitte, have been appointed Joint Receivers.
They’ve said that adverse interest rate and currency movements have seen the senior liabilities secured by the property increase “materially” since closing.
The Senior Lenders were reluctant to appoint a Receiver but felt they had no choice due to the ongoing defaults, which have remained uncured for over five years, and concerns that the borrowers’ lack of equity in the transaction had caused their incentives to become misaligned with the lenders.
The Gherkin is a truly exceptional building, a landmark recognised around the globe. Our priority is to preserve the value of this asset. We are in the process of communicating with all tenants and working with the property manager to ensure the continuation of all property management services with no interruption to tenants.
Just last month, a poll carried out by Ipsos Mori found that one in three Londoners think the Norman Foster-designed Gherkin's is the best skyscraper in the city.
Glyn Mummery, who's a partner at restructuring firm FRP Advisory, says the multi-currency financial arrangements the Gherkin has in place "aren't uncommon" in the capital's large, prime commercial property investments.
The firm expect "similar crunch times" to come for overseas investors who have "misjudged their currency arrangements" when it comes to servicing debts on UK property and other assets "given the recent strengthening of sterling over a basket of foreign currencies".
With property prices in the city heading towards pre-crisis levels, and worries about overheating in the market from purchases made on low initial yields, further stress for investors could be just around the corner, he added - it'd only take the market suffering just a fairly small correction in values once interest rate hikes come into play.