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SP Setia expected to buy Battersea Power Station at third time of asking

By Paul Norman - Monday, May 28, 2012 13:24

Malaysian property developer SP Setia in partnership with Germany’s RREEF, advised by Jones Lang LaSalle, is expected to enter exclusive talks this week to buy south London’s iconic Battersea Power Station at the third time of asking.

Administrator Ernst & Young acting as joint agent alongside Knight Frank’s residential team called best bids on Friday 4 May and is understood to have received more than 10 bids.

Lloyds Banking Group and Ireland's National Asset Management Agency gained consent in the High Court on 12 December last year to appoint Ernst & Young as administrators to vehicles that owned the site.

The creditors are trying to recover the entire £502m owed by the project’s owners by selling the site.

Last week there was strong market speculation that the Setia consortium had edged ahead of its closest bidding rival, a Godfrey Bradman-led syndicate called London Riverside Development Corporation.

A decision was understood to have been delayed however while the administrators explored how it would be affected by an exclusivity deal already struck between the Bradman consortium to buy £180m of debt from the junior creditor and former owner Victor Hwang's Parkview International.

Bradman is thought to have also teamed up with Derrick Beare, nephew of South African financier Jonathan, for the bid.

According to accounts filed at Companies House Bradman and Beare set up a joint venture called London Riverside Development Corporation two months ago.

However, on Friday The Times reported that billionaire brothers David and Simon Reuben had withdrawn their £50m backing for Bradman’s bid as part of a syndicate of investors each taking a significant stake.

The news is thought to have further strengthened SP Setia’s circa £400m bid.

Chelsea FC’s rival bid is believed to be for significantly less than SP Setia's and is understood to have been weakened by Wandsworth council and the Greater London Authority’s preference for a town centre scheme without a football stadium.

The club has already appointed Mike Hussey’s Almacantar to look at options for development that would include a major new football stadium.

Knight Frank is selling the site with no conditions attached in terms of development going forward but Wandsworth council has already said it is keen that the new buyer follows three guidelines.

Nick Cuff, chair of planning at Wandsworth council, said: “We are aware that whoever comes in may not wish to stick to the previous consent. We are also aware that there will be need to be some compromise with the Power Station but we would like to work on retaining its physical presence. However, we don’t want it to be an encumbrance to the development of the site so we will look for flexibility.

“We have set out three things we would like the new owner to embrace. One is that the Power Station forms the heart of a new town centre for the Nine Elms. Secondly, the new owner should be committed to the northern line being delivered into the site. Finally we would like to see some sort of restoration of the power station.”

The special purpose vehicle in which the property is owned, Battersea Power Station Shareholder Vehicle, was 54% owned by Treasury Holdings subsidiary REO. BPSSV’s expired debts comprised £324m to Lloyds and NAMA as well as £178m to Oriental Property, against the site’s recent value of £498m, putting the LTV at 100.8%.

Malaysian property developer SP Setia has previously had two offers to buy off Lloyds and NAMA’s debt at a discount rejected.

The power station, which has been dormant since 1983, has planning permission for a £5.5bn scheme with 3,400 new homes and 10m sq ft of commercial space.

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