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View the article online at http://citywire.co.uk/wealth-manager/article/a747855

Currency losses push the Gherkin into receivership

by James Phillipps on Apr 25, 2014 at 09:56

Currency losses push the Gherkin into receivership

The City’s iconic Gherkin tower has been put into receivership following five years of defaults.

Deloitte was brought in by debtholders after ‘adverse interest rate and currency movements have caused senior liabilities secured by the property to increase materially’, the company said.

IVG Immobilien, which runs the fund that owns part of the Gherkin, went into bankruptcy last year. It partnered with private equity group Evans Randall to buy the building for £600 million in 2007. However, part of the loan to pay this was in Swiss francs, the value of which has since risen by over 60% against sterling. This resulted in covenants being breached as the loan to value increased.

Neville Kahn, joint receiver and restructuring partner at Deloitte, 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 over five years, and concerns that the borrowers’ lack of equity in the transaction had caused their incentives to become misaligned with the lenders.

‘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.’

The buildings tenants include Standard Life, but it is not known what percentage of the building is currently let.

1 comment so far. Why not have your say?

Andrew Tyrtania

Apr 25, 2014 at 10:57

Were the laws of economics suspended in 2007?

With 241,482 Sq ft of space to rent surely paying £600m you were looking at a minimum of 30 years to recoup the cost, at 100% occupancy - let alone cover maintenance or make any money out of ownership.

Property and ego make people do some silly things.

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