Asian banking consortium leads £790m Battersea Power Station syndication

A consortium of four South East Asian banks have together provided the owners of Battersea Power Station with a two-tranche funding package of £790.2m to finance the re-development of the iconic 39-acre scheme and refinance nearby land.

CIMB groupCIMB Group, the largest Asia Pacific investment bank excluding Japan, and Oversea-Chinese Banking Corporation (OCBC) Bank, Standard Chartered and Maybank have between them held the majority of the £790.2m and led the wider syndication of a minority debt stake to a small number of debt investors.

The two-tranche facility comprises:

  • a £532m five-year development facility to support Phase 1 of the development and the refurbishment of the Power Station itself over the next three and a half years;
  • a £258.2m land facility, which refinances the initial loan used to fund the acquisition of the site onto a longer period of five-years.

SP Setia, Sime Darby and EPF agreed to acquire Battersea Power Station at the end of May 2012 for £400m from Ernst & Young, the administrator of the £324m defaulted debt held by Lloyds Banking Group and Ireland’s bad bank NAMA as well as an additional £178m of debt held by Oriental Property.

CoStar News revealed the EPF acquisition first back in May 2012, despite public obfuscation at the time.

This financing is one of the largest bilateral UK real estate lending deals this year and underscores the willingness of overseas banks to follow their clients into UK property deals, even where it falls outside banks’ core business lines.

In January, CoStar News revealed that Standard Chartered closed a five-year £400m senior loan to finance the £750m sale-and-leaseback of a portfolio of 12 Spire Healthcare hospitals, which was acquired in a joint venture 79% owned by Employees Provident Fund (EPF).

The new owners – SP Setia, Sime Darby and EPF – have committed up to £1bn of equity finance to the overall development.

The consortium would not disclose the terms of the facilities but said in a statement that the terms of the financing reflect the strong pre-sales of property.

Simon Murphy, chief financial officer of Battersea Power Station Development Company, said: “The financing agreements are a key step in the development of Phase 1 and the restoration of Battersea Power Station and in bringing the iconic building into public use after 30 years.

“The agreements are a demonstration of both the level of confidence in this project, in London and internationally, and the strength of the relationships between the shareholders of Battersea Power Station and the banks.”

Work started on Phase 1 of the development, named Circus West at Battersea Power Station, in July 2013.

The consortium’s statement added that the funding package will also support the refurbishment of the Power Station itself.

This includes the reconstruction of the chimneys to the original designs, which will begin next year. Under these proposals the Power Station will comprise a mix of shops, restaurants, cafes and bars, plus a state of the art events space, offices, a hotel and new homes.

Norton Rose Fulbright provided legal advice to the borrowers and Baker & Mackenzie provided legal advice to the lenders. CIMB and OCBC Bank were lead bookrunners.

jwallace@costar.co.uk

About CoStar News

Finance Editor, CoStar News
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