Deloitte Gets Gherkin as Owners Have Their Chips

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25 April 2014 | Updated 01 January 1970

A poll by Ipsos Mori only last month found that one third of Londoners chose the Gherkin as the best skyscraper in the city. Sadly it is now in trouble with Deloittes appointed Official Receivers.

“The Gherkin is a truly exceptional building, a landmark recognised around the globe,” said Mr Neville Kahn of Deloitte. 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 process will be a 'light touch' receivership and tenants, which include reinsurer Swiss Re, will operate as normal."

When ThisWeekinFM rang, no tenants were available for comment.

The Gherkin, officially known as 30 St Mary Axe, is owned by German real estate company IVG Immobilien, which has struggled with debt issues in recent years. The company went into bankruptcy in 2013 and recently announced the sale of its Private Funds Management business.

Deloitte’s Phil Bowers and Neville Kahn have been appointed joint receivers, and Mr Kahn said placing the tower into receivership was the only option. “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,” said Mr Kahn.

Deloitte said defaults on the building were due to the Gherkin’s 'complex, multicurrency capital structure'. The value of the loan to the Gherkin’s owners has increased by more than 60% since the skyscraper was bought in 2007. The loan was a multicurrency deal, much of which was in Swiss francs. As the Swiss franc has appreciated, the amount owed has increased from an original loan of £396m to roughly £644m today.

The Gherkin will likely be sold and Mr Kahn said Deloitte would work to preserve the skyscraper’s value. But who has a big enough plate for this Gherkin?

Article written by Brian Shillibeer | Published 25 April 2014

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