Malaysian owners’ refinancing arrangement delayed for third time as costs climb
A refinancing arrangement has been delayed for the third time; the cost of labour and materials is increasing; the developers have more than halved their expected returns and there are disputes with Transport for London over the cost of the Northern Line Underground extension to the area.
Contractors working on the project, which will include Apple’s new UK headquarters and a viewing platform on one chimney, told the Financial Times that the renovation was months behind schedule, which would probably push costs higher.
The Grade II-listed power station was built in two phases, the first in Art Deco style in the 1930s and the second in the more austere form of the 1950s. Restoring it has proved more difficult than expected, partly because of strict heritage rules and complications with asbestos.
This has already seen the price of the renovation rise from £750m in 2012 to at least £1.15bn in 2017.
Simon Murphy, who took over as the company’s chief executive in May, insisted the project would be completed on time and that the financial strain had been resolved.
“We’ve generated more value and revenue to compensate for the costs going up,” he said. Indeed, he said the biggest risk was that, with some European labourers deterred by Brexit and the weak pound, “the workers will go home for Christmas and won’t come back again” — although he doesn’t expect this to happen.
But a deal to transfer a stake in the building between Malaysian investors has been delayed for a third time. A Malaysian consortium bought the 42-acre site for £400m in 2012 and has invested £1bn in the development. The proposed deal would transfer ownership of a stake from the developers, Sime Darby Property and SP Setia, to the asset manager Permodalan Nasional Berhad and the Employees Provident Fund, Malaysia’s biggest pension fund, while providing a cash injection to the site.
Mr Murphy said 90 per cent of all 1,600 apartments that have been put on sale across the whole development, including the 255 apartments inside the power station, had been sold. All 100 shops inside also “have names by them”, he said.
Despite the uncertainties, Mr Murphy pointed to the hubbub of strolling walkers and diners streaming into this part of the Thames’ south bank as an indication that, ultimately, his project would succeed. “The power is truly back on,” he said. “This will be one of London’s most exciting new destinations.”
Source: https://www.ft.com/content/c0afbbb2-ef2 ... 6339d835c0
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