Receivers have been appointed to the iconic Gherkin tower in the City of London, EC3.
Phil Bowers and Neville Kahn of Deloitte have been appointed joint fixed charge receivers of the 516,000 sq ft 30 St Mary Axe, known as the Gherkin.
The building is jointly owned by Evans Randall with a 50% stake, and Deutsche Immobilien holdings, the real estate arm of Zech Group, which in March obtained the remaining stake of the building via its purchase of IVG Private Funds Management.
Kahn said: “The senior lenders were reluctant to appoint a receiver, but felt they had no choice due to the ongoing defaults, which have remained uncured for more than five years, and concerns that the borrowers’ lack of equity in the transaction had caused their incentives to become misaligned with the lenders’.”
He added: “The Gherkin is a truly exceptional building, a landmark recognised around the globe. Our priority is to preserve the value of this asset. We are in the process of communicating with all tenants and working with the property manager to ensure the continuation of all property management services with no interruption to tenants.”
IVG and Evans Randall bought the building in 2006 for £630m, using a £396m loan from a five-bank consortium.
CBRE has been advising on the restructuring, with fresh equity required to make up for the fact that IVG’s unhedged share of the loan has risen thanks to the change in the value of the Swiss franc, the currency in which principal tenant Swiss RE pays its rent.
The latest annual valuation report puts the total debt secured against the building at £509m and the building’s value at £530m, putting the LTV at 96% against a 67% covenant on the loan.
However, the building’s value is thought to have jumped in recent months thanks to a major re-gear with tenant Kirkland Ellis and improving market conditions.
A spokesman for Evans Randall said: “As widely reported previously, the default has arisen largely as a consequence of the IVG tranche of the loan being denominated in Swiss francs and has been exacerbated by the insolvency at IVG.
“These factors have so far impeded Evans Randall’s ability to restructure the financing on the asset, including the injection of new equity. Evans Randall has equity ready to invest and has been unable to do so because of the inability to agree a consensual solution with IVG, given these uncertainties. We will be continuing the constructive discussions to date on a new financial structure.
“The Gherkin is a strong, well-let asset and one that we are firmly minded to continue our involvement in.”
joanna.bourke@estatesgazette.com
