Third shot at UK job for SP Setia

KUALA LUMPUR: SP Setia Bhd may still have a shot at securing the project to redevelop London's Battersea Power Station. Although the developer appeared to have written off its chances last week, another window of opportunity is set to open soon, according to news reports.

The Telegraph reported Irish company Real Estate Opportunities (REO), which has a 54% stake in a vehicle that owns Battersea Power Station, as saying lenders Lloyds Banking Group and Ireland's National Asset Management Agency (NAMA) had applied to have administrators appointed to certain subsidiaries.

Once they had taken control of the sale process after appointing administrators at the end of next week, Lloyds and NAMA planned to run an open-market auction process to off-load the power station, the Financial Times reported.

This will give SP Setia a chance to put in a bid its third for the Battersea Power Station project, and this time it will be contending with other international parties for that site.

When contacted by StarBiz, the developer said: “At this point, we are unable to comment further.”

On Nov 18, SP Setia instructed its investment adviser to submit a 262mil (RM1.3bil) offer to Lloyds and NAMA to buy debt linked to the power station. The offer was rejected on Nov 23.

Last week, the developer submitted a second bid of 324mil to take control of the site and to buy up the bank debt. The Telegraph reported that this was also rejected “on the grounds that they were not satisfied with the conditions attached and also wanted a meaningful' deposit.”

In a Nov 24 announcement to Bursa Malaysia, SP Setia confirmed the rejection by the lenders but added that it believed property development prospects in London were positive.

“Accordingly, the group will continue to look out for and assess other possibilities to invest, via strategic partnerships and land-banking opportunities, in this exciting market,” it added.

Despite the bleak British economy and the overall weak sentiments swirling around in Europe, global real estate service provider Savills said London continued to put in many interested buyers from around the world.

“This is due to the cosmopolitan nature of the city. It is an old city and there is a lot of interest there. Compared to other cities like Frankfurt and Geneva, international businesses continue to view London and its real estate favourably,” said Savills director (research) Yolande Barnes. Barnes was on a speaking engagement in Kuala Lumpur.

She said the Battersea Power Station was part of a larger regeneration project that had been ongoing in London for some time. Located south of River Thames, the larger Battersea area has been promising.

Generally, real estate north of River Thames are viewed more favourably.

“The Battersea Power Station is a controversial site. When it was made available, it was of low value. As Battersea area begin to be regenerated the old buildings done away with and replaced by new ones its appeal began to grow. But that power station is a difficult site to develop because it is a heritage site,” she said.

The power station has four tall structures or towers. Since it is a heritage site, the authorities will probably not allow it to be demolished, although the land around that area may be developed.

“So from the point of cost it is difficult to preserve and for re-use (or redevelopment) it will be expensive for whoever owns it,” she said.

“The Battersea Power Station project is a bit like the Tate Modern gallery. That site was also formerly a power station.” The Tate Modern today houses Britain's national art collection.

By The Star