Malaysia's SP Setia Bhd and Sime Darby Bhd's property arm have won the right to redevelop the Battersea Power Station site in central London in a £400 million (€495 million) deal, beating a rival bid from Chelsea Football Club.
About 15 bidders submitted plans last month to buy the protected 15 hectare site on the south bank of the River Thames, the subject of repeated failed redevelopment attempts in the three decades since it shut.
The site was once lined up for a £5.5 billion redevelopment by the Irish firm Treasury Holdings. Last December, Nama and Lloyds went to the High Court in London to have Ernst Young appointed as administrators to the property, following the breakdown of negotiations with Treasury.
It owes £324 million to Lloyds and Nama, and £178 million to Oriental Property. The most recent valuation on the site estimated it is worth just under £500 million.
The Malaysian companies have signed an exclusivity agreement with Alan Bloom and Alan Hudson of Ernst & Young LLP, the joint administrators and receivers of the property, SP Setia and Sime Darby said in a joint statement today.
In a statement, Treasury Holdings said the outcome of the deal would see Nama recover a maximum of the full amount of the original loan plus interest but that this was "vastly inferior" to a deal it proposed in 2011, which also involved SP Setia Bhd.
Treasury claimed that, in addition to full repayment of the loan, it had agreed a 10-year management contract with Treasury Holdings involving a 10 per cent share of the profits from the scheme.
"Neither Treasury nor NAMA will not now share in the £400 million of potential fees and the substantial profits generated by the development of Battersea Power Station which would have gone to Treasury Holdings, and would have ultimately gone to pay down debt owed to Nama," it said.
"Nama has spent much time and a substantial amount of money on appointing administrators and getting a vastly inferior deal for the taxpayer than the one that was available just a few months ago."
Chelsea said it was disappointed not to have been chosen as preferred bidder but indicated it was not giving up all hope of acquiring the site.
"We will all be able to speak with more confidence about the site's future once the exclusivity period is over and the preferred bidder has been able to assimilate their risks properly and confirm the bid," the club said in a statement.
Chelsea has played at Stamford Bridge in west London since 1905 but the stadium's capacity of 42,000 is limited when compared with other top European clubs. Chelsea wants to expand the stadium or find a new home.
The deal marks SP Setia's first foray into Europe and adds to its residential schemes in Vietnam, Singapore and Malaysia.
The Malaysian companies said the redevelopment of the site will regenerate a corner of southwest London.SP Setia and Sime Darby will build a new underground train station as part of the proposed extension of the northern line of the London network, according to the filing.
The crumbling riverside edifice - Europe's largest brick structure - and its quartet of art-deco white chimneys have been part of the London skyline for 80 years.
