The listed property investment vehicle controlled by developers John Ronan and Richard Barrett is set to buy a London landmark for almost €600 million. Barry O'Halloranreports.
Real Estate Opportunities (REO), the quoted company controlled by the developers' Treasury Holdings, has agreed to buy Battersea power station in London from Hong Kong property player, Victor Hwang, for £400 million (€593 million).
Situated on the south bank of the Thames River and known for its four distinctive "table leg" chimneys, Battersea power station covers six acres of a total 38-acre site which includes 380 metres of waterfront.
It is one of London's largest urban renewal opportunities.
Under the terms of the deal, REO has agreed to buy 100 per cent of the shares in the companies that own the freehold title to the site.
The Irish company is buying the property from Mr Hwang's business, Oriental Property, which controls Parkview International London plc, which owns Battersea.
REO will pay £250 million in cash, funded by its own money and debt from Bank of Scotland Corporate.
It will pay the balance through the issue of £150 million in loan notes to Oriental. That loan is to be repaid over 12 years.
But if REO issues new shares for either cash or assets, Oriental will have the right to exchange the loan notes for REO shares at whatever price they are issued.
According to a statement issued yesterday, this option is subject to a number of conditions, in particular that Oriental's stake in REO cannot exceed 10 per cent.
Rob Davies, Treasury's development director, told The Irish Times yesterday that the option clause was not an indication that REO intended issuing new shares in the near future.
The deal is conditional on approval from REO's shareholders and Treasury Holdings, which controls 58.5 per cent of the company's ordinary shares.
The London Power Company built Battersea in the 1920s. It began operations in 1933 and finally shut in 1983.
It is a grade two listed building and is classed as an endangered world monument.
This means that REO faces tight planning restrictions in what it can do with the structure and the site.
Mr Davies said that the company did not foresee any major difficulties.
"We're fully briefed on them," he said. "We will talk to the relevant authorities, those responsible for protecting listed buildings, those responsible for national policy, and for city and regional policy. None of this is unusual to us."
The existing masterplan for the site allows for a mix of housing, hotels, shopping and leisure.
Mr Davies said that REO intended doing "something along those lines".
REO is the second Irish developer to get involved in Battersea. Seán Mulryan's Ballymore Properties paid €580 million for a stake in the project last year.
However, it and Parkview parted company in February, reportedly as a result of a rift over the level of housing required to make any development at the site viable.
