28 June 2010 News last week that Real Estate Opportunities is to try to spin off its giant regeneration scheme at Battersea Power Station, SW8, was met with interest in the property and financial markets, but little enthusiasm among REO’s shareholders – the shares dropped by 42% on the news.
Why? Because by diluting the company’s ownership of the scheme, which has an estimated end value of £5.5bn, there is little potential future upside in the company’s UK and Irish portfolio.
Many REO shareholders seemed to be holding on to shares in the hope that Battersea would eventually pay out. Without that option, they have now checked out.
While the debt secured against Battersea has been transferred to Ireland’s National Asset Management Agency, REO’s management is going to be spending a lot of time on other debt negotiations over the next year, as well as on a global roadshow designed to find new investors in Battersea.
The company has £371m of convertible loan notes and zero-dividend preference shares which must be repaid by May next year, and it said that these all need to be restructured and extended as it cannot currently pay.
Spin out Battersea, and that’s what’s left at REO.
Mike Phillips contributes to estatesgazette.com/blogs
