Deloitte have been appointed as receivers to the iconic building known as the Gherkin, a familiar landmark in the City of London skyline for the past ten years, which has got itself into a financial pickle over its complex funding arrangements
Phil Bowers and Neville Kahn of Deloitte have been appointed joint fixed charge receivers of 30 St Mary Axe, London, the Gherkin’s official name.
The receivers said the 41-storey tower ‘remains in trophy condition’ and was still in strong demand among tenants. The first 15 floors are occupied by insurer Swiss Re, with Sky News at the top.
However, the building has been defaulting on its debts since 2009 due to ‘the asset’s complex, multicurrency capital structure’ which left it vulnerable to ‘adverse interest rate and currency movements,’ Deloitte said. It is funded by a loan that is denominated in Swiss francs and sterling, and the building is valued in sterling. A currency liability has arisen because the Swiss franc has risen strongly against the pound.
Neville Kahn, joint receiver and restructuring services 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.'
Swiss Re originally spent about £238m building the Gherkin on the site of the Baltic Exchange, which was badly damaged by an IRA bomb attack in 1992. The building, which was designed by the British architect Sir Norman Foster, was sold to IVG Immobilien of Germany and Evans Randall, a London-based investment bank, for £630m in 2007. A 15-year loan was provided by a consortium of banks led by Bayerische Landesbank; the others are Helaba, DekaBank, ING Real Estate Finance and LBBW.
IVG Immobilien filed for insolvency last year and Evans Randall said it was willing to buy a bigger stake in the tower but has been unable to agree a new ownership plan with IVG.
Kahn said: ‘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.’
