Some positive developments for a change this morning with news that Wandsworth Borough Council has approved plans for the redevelopment of the Battersea Power Station site, the most valuable single asset in the NAMA-controlled portfolio. The site is owned by Real Estates Opportunities (REO) PLC which is controlled by Treasury, one of the NAMA Top 10 developers. The approval should serve to enhance the value of the asset and increase the likelihood that the loans securing the asset will be repaid – REO itself owes NAMA nearly €1bn representing loans on its portfolio of property in the UK and Ireland.
REO has indicated that it will try to spin the Battersea site off into a new corporate entity which might attract investors, and today’s news will only boost those plans. According to REO the approval this morning will be followed by “the next stage of the process [which] will see the application referred to the Mayor of London and the Secretary of State for Communities and Local Government for their consideration.” Mayor of London, Boris Johnson, is supportive of the development though the position of Eric Pickles, the Minister for Communities and Local Government is not so clear.
With NAMA’s own funding plans suffering from uncertainty and possibly contagion from the toxicity of general Irish State debt, new investors may become vital to the future of the site. But a positive development nonetheless. There is extensive reporting on the history and current development of the site on here previously (for example here and here and here).
Separately, (and it seems almost petty to dampen the mood but) word reaching here suggests that the sale of Derek Quinlan’s car park on South Audley Street (the Audley Square Car Park) may have fallen through. The sale has served in recent times to highlight a NAMA success where the amount paid for the loan by NAMA would see NAMA making a handsome profit from the sale that might have been used in part to offset other Quinlan debt.
UPDATE: 9th February, 2011. Final approval to the planning permission granted by Wandsworth Borough Council in November has today been given by Eric Pickles, Minister for Communities and Local Government. Reuters is reporting that development of the site will commence in 2012. REO’s share price leapt 28% on the news which is also a boost to NAMA’s prospects of recovery of its lending to the Treasury group.
Project will need £5.5bn to build (£400m alone for extending the northern line) so most likely NAMA (Treasury) will end up a minority partner. Land value will be significantly reduced from outstanding debt because the cost of providing the working capital will be quite large.
I wonder if the the Quinlan deal has fallen through (alledgedly) due to NAMA rushing to tell the world they made so much money selling it….
No matter what NAMA argues, McKillen is correct. Association with the agency gives the perception that the assets can be bought on the cheap in foreign markets, and given the state of the finances at NAMA they might be proved right.