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The future of Battersea Power Station was in doubt today as crippling debts and the slump in the property market left its owner fighting for survival.
Real Estate Opportunities, which plans to redevelop the London landmark, was told by its auditors at KPMG that its £1.62 billion debt pile and the collapse in property values could sink the company.
It came as losses at REO increased from £66.5 million in the first half last year to £200.5 million this time around after its property portfolio in the UK and Ireland fell 15% in value to £1.62 billion. The value of Battersea Power Station also fell 15% in the first half.
“There are a number of material uncertainties which may cast doubt on the ability of the group to continue as a going concern,” KPMG said.
The warning raised fresh doubts over the future of the power station which has seen ideas for redevelopment come and go ever since it stopped generating electricity in 1983. The latest master-plan by REO, an offshoot of Irish property group Treasury Holdings, includes 3700 new homes, 1.5 million square feet of office space, and 500,000 square feet of shops, restaurants, a hotel and leisure facilities.
Initial plans also involved a 984-foot glass tower — an eco-friendly funnel designed by Rafael Vinoly — but this has been scaled down after opposition and Vinoly's revised plans ensure that no building on the site will be taller than the shoulders of the power station.
It is hoped the scheme will act as a catalyst to the regeneration of the Nine Elms area.
REO is in talks with its banks over its debts. Analysts expressed hope that the necessary deals can be struck, particularly when the Irish government's National Asset Management Agency — which will buy property loans from lenders — is finally up and running.
Chairman Ray Horney said: “We remain confident that in the event there are any breaches, we can renegotiate or receive waivers with our banks if required.”
But he added: “The short-term outlook for the company is one of caution as uncertainty regarding its debt position remains.”
A “financial plan” has been set up to ensure it can continue as a going concern. However, it assumes borrowing can be renegotiated.
Horney said the last 18 months have been “an extremely difficult period” for the company and added that he was “cautious” about the rest of the year.
Reader views (7)
I am rather interested in the proposal to built "3700 new homes", an average 22 storey London tower block has 5 flats per floor or 110 flats per block,is it the developers intention to build 33.64 new tower blocks on the site.
- Tara Masalata, London
This pathetic saga has been going on for decades. I have lost count of the number of "artist's impressions" of the "redeveloped" Battersea Power Station I have seen in The Standard over the years.
Give it up and order English Heritage or whatever bureaucracy is flaffing on about its non-existent "historical importance" to pack it in and go annoy someone else. And then knock the monstrosity down.
- Steve, London, UK
Here we go again! Yet another plan turns out to be nothing but a dream. There is no demand for a project this big - all over London much smaller projects are being mothballed. With any luck it will fall down soon.
- Trevor, London
Hei Melvyn. It's not an eyesore... It's the cover of my fav album!! Cant image lnd without it!
- Tom, Napoli - Italy
So much for the recovering property market
- Andrew Nicholls, Ely ,England
Knock it down and make a park.
- Never Eat Tuna Again, London
The time has surely come to remove this eyesore from the London landscape lets face it it was only a power station so let it die with dignity.
That way a fresh start can be made on this site and much less cost that trying to put makeup on this old elephant.
- Melvyn Windebank, Canvey Island, Essex
