Islington News: Estates Gazette | King's Cross Railway Lands Project | Bank | Loan | Deutsche Postbank

Publications by New Journal Enterprises

Home

Archive

Competition

Islington Tribune - by PAUL KIELTHY
Published: 31 October 2008

£2bn project hit by banks pull-out

DEVELOPERS of the £2billion King’s Cross railway lands project had to step in earlier this month to fund the first £400million phase of work when a consortium of banks pulled out of loan talks.
According to Estates Gazette, the weekly property magazine, long-term talks to arrange financing for the first phase with a consortium of banks, including Deutsche Postbank and Eurohypo, fell through as the global credit crisis intensified.
Developer Argent, backed by Hermes-managed BT Pension Scheme, has arranged emergency financing for work that must proceed if the eight million sq ft project is to hold onto its flagship tenants – the University of the Arts London and supermarket chain Sainsbury’s.
Argent has agreed with landowners London & Continental Railways and DHL Excel that the money it will pay them for the 67-acre site will be reinvested in the development.
The agreement means the finalisation of a limited liability partnership – in which Argent will invest around £160million of equity in the first phase while LCR and DHL contribute their land – has been delayed, the magazine says.
New funds will be raised when the banking markets reopen for business.
The Gazette also reports that it is the 350,000 members of the BT pension scheme whose money is behind the scheme, which has now been on the books for two decades.
It adds: “This week, Hermes faced the considerable embarrassment of being forced to stump up undisclosed millions to get work under way. This happened after a group of German bankers took fright at the very last minute and refused to provide the £400million of development financing for the first phase of the work.”
The magazine says Argent must either build the 250,000sq ft HQ for a waiting Sainsbury’s and the art college – or abandon 10 years’ work and write off £35million in costs.
“Not much choice, really. No doubt someone will lend Argent some money,” it adds. “And in someone’s lifetime it will all be finished and the mortgage paid off.”

Comment on this article.
(You must supply your full name and email address for your comment to be published)

Name:

Email:

Comment: