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London’s iconic Gherkin tower enters receivership

Reuters, LONDON

The Gherkin, left, stands illuminated in the city of London on Sept. 4, 2012.

Photo: Bloomberg

London’s landmark Gherkin office tower has been placed into receivership by its creditors, accountancy firm and joint receivers Deloitte said on Thursday, paving the way for a possible partial sale of the skyscraper.

Germany’s IVG Immobilien, which co-owns the 40-story tower with Evans Randall Ltd, filed for insolvency last year after years of cost overruns and mounting debt.

One of Germany’s best known property firms, IVG sought protection last year from its creditors after failing to reach an agreement over the restructuring of its debt. It has since agreed a debt-for-equity swap with its creditors.

Co-owner Evans Randall said on Thursday it was ready to invest further equity into the building, but the company had been unable to agree on a new financial structure with IVG due to the German partner’s financial situation.

“The Gherkin is a strong, well-let asset and one that we are firmly minded to continue our involvement in,” a Evans Randall spokesman said, adding that discussions were continuing.

Deloitte said that adverse interest rate and currency movements had caused the Gherkin’s total debt, which is held in multiple currencies such as the Swiss franc, to increase materially since it was first issued.

“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,” joint receiver and Deloitte partner Neville Kahn said.

There were also “concerns that the borrowers’ lack of equity in the transaction had caused their incentives to become misaligned with the lenders,” he said.

An icon of London’s skyline with its distinctive curved glass shape, which gave it its Gherkin nickname, the skyscraper was built by reinsurer Swiss Re in 2004 and was sold to IVG and Evans Randall in 2007 for £600 million (US$1 billion). In 2012, IVG said it was valued at £470 million to £531 million.

The building remains well-leased and in “trophy condition,” Deloitte said.

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