Planning approval for REO in Battersea

A LONDON local authority has paved the way for listed property vehicle Real Estate Opportunities (REO) to refinance its Battersea Power Station project by giving planning permission for its proposed redevelopment.

Treasury Holdings-backed REO bought Battersea four years ago for €600 million. State agency Nama owns part of the debt as Bank of Ireland was one of the institutions that loaned the company money for the purchase.

REO has since said that as part of an overall restructuring of its finances, it intends to float off Battersea and bring in a strategic partner or partners to help finance the project, which will cost £5 billion to complete.

Yesterday the company announced that Wandsworth Council has approved its planning application to redevelop the landmark power plant for residential and commercial use.

The proposal has to go to the Mayor of London, Boris Johnson, and to Britain’s secretary of state for communities and local government, Eric Pickles for final approval. The Greater London Authority has already signalled its support for the plan, as have a number of local bodies and English heritage organisations.

Treasury Holdings’ UK managing director, Rob Tincknell, said yesterday that Battersea was “95 per cent there to a final decision”.

Planning permission means that REO can put a value on the site, and, while Wandsworth’s decision goes for final approval, the company intends beginning a parallel due diligence process with prospective partners.

Mr Tincknell said yesterday that there had been a lot of interest internationally and added that prospective partners included sovereign wealth funds, private equity groups, property developers and wealthy families. The first phase of the development is due to start in early 2012, and should be completed by 2016. The project will be completed in 2024.

Battersea was a coal-fired power plant built in two phases in the 1930s and 1950s. It was decommissioned in 1983 but the distinctive, four-chimneyed plant is listed. The property has passed through a number of owners since the 1980s. The John Ronan- and Richard Barrett-owned Treasury Holdings is the biggest shareholder in REO.