REAL Estate Opportunities (REO) – the international property development company in which Treasury Holdings owns a majority stake – is planning to spin off its Battersea Power Station site in London and float it as a separate listed business.
The idea behind the proposed move is to attract more investors to the Battersea project by not having the asset directly linked with REO’s Irish property portfolio.
REO bought the iconic 30-acre site for €595 million at the end of 2006 and, last year, lodged the largest ever multi-purpose planning application for retail, leisure, business and residential use in London’s history.
REO management said yesterday that they are “optimistic” of approval being granted for the site sometime in the autumn.
Before that, however, the company is looking for at least one additional investment partner on the project and will spend the next month conducting an investor roadshow.
The company also published its financial results for the 14 months to the end of February, yesterday, a period in which, it said, market conditions remained difficult.
REO made a pre-tax loss of £929m for the period – up from £399m (€485m) the previous year – and saw its total property portfolio valuation, across Ireland and Britain, fall by 43% to £1.09bn.
The company saw continued decline in the value of its Irish portfolio, but believes the worst has passed. Most of its commercial property is rented out on long leases of over 11 years and rent roll, here, actually increased by nearly €2m to €48.3m over the period in question.
“While uncertainty remains with regard to the economic outlook, the board remains confident that the quality of the company’s portfolio and the commitment of management will ensure the company is on a solid footing as markets recover,” said group chairman Ray Horney.
The value of its chief British asset, the aforementioned Battersea site amounted to £388m as of the end of February.
The company’s total cash balances, at year’s end, amounted to £39m – boosted by the £28m sale of shares in its far-eastern sister company, China Real Estate Opportunities (CREO).
Also, with regard to its balance sheet restructuring efforts REO is in discussions with “key holders of the many loan instruments supporting the business” – loans held by NAMA and non-NAMA banks included, regarding security provision for future cashflow.
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