» Real Estate Opportunities (REO) valued Battersea Power Station at £388m at the end of February, down 4% since the end of 2008. However that valuation is based on a number of factors "which are all material to the valuation of the property". Chief amongst the "special assumptions" is that the extension of the London Underground's Northern Line to the site goes ahead. Other assumptions include that debt funding is available on commercially acceptable terms and that the "public gain" conditions imposed if and when planning is granted are not overly onerous. These conditions can include affordable housing, infrastructure works and payments to the council.
REO has secured an extension of its lending terms on the loan for the power station from Lloyds and Nama whereby the existing facility is being extended, albeit by less than six months to August of next year. All outstanding breaches are being waived. The facility had been due to expire in March 2011 and the expectation is that the new terms will be broadly similar. This has been approved by the banks' credit committees and is now subject to legal documentation.
Battersea is being spun out into a separate vehicle as part of a plan to attract additional investment into the project. An international roadshow is likely to commence next month, with meetings taking place in the Middle East, the US, North America and the Far East. A number of pension funds and private equity players have already expressed interest in the project but it would be no surprise if a Middle Eastern sovereign wealth fund emerged as the eventual partner given the number of purchases in London by the Qataris in particular in recent years. REO hopes to conclude the process by year end.
» A buyer has finally been found for Heather Cottage, the house developed by REO on Upper Cliff Road in Howth in north Dublin. In the final note to its accounts, Real Estate Opportunities revealed that the property was sold for £2.5m in May and contracts are currently being exchanged.
"The proceeds will be used in part repayment of the outstanding debt amounting to £2.7m", suggesting the house lost the company at least £200,000. The house was built in 2005 and sits on 0.85 acres. It has views of Lambay Island and Ireland's Eye. It was designed by the late Andrzej Wejchert of AD Wejchert & Partners. REO had put the house on the rental market last year seeking €4,000 a month but eventually opted to sell the property.