By Tom Bill and Brenda Goh
LONDON, Sept 18 The Heron Tower skyscraper,
struggling to fill up with tenants in London's weak office
lettings market, could be sold by lenders who are frustrated by
its owners' inability to agree a refinancing deal, a source
familiar with the talks said.
The 46-storey tower, whose office floors are almost half
empty, is owned by a trust that includes developer Heron
International, led by property entrepreneur Gerald Ronson,
Oman's largest sovereign wealth fund and Saudi investors.
The trio has been discussing the terms of a deal to
refinance a 315 million pound ($501 million) loan for several
months as part of an agreement that includes the injection of
more than 100 million pounds of extra equity, the source said.
A deal is needed because the tower, close to Liverpool
Street railway station in the City financial district, has not
let as quickly as planned, with 41 percent of office space still
unoccupied since it opened in 2011.
"This is not about anyone's ability to write the cheque,
this is a boardroom punch-up," the source said. "If the
shareholders can't agree between themselves on how to take it
forward, and the bank facility needs refinancing, then the bank
will need to appoint receivers," the person said.
Disagreements include the timing and circumstances that
could trigger any future exits from the investment, the source
Heron International declined to comment and the State
General Reserve of Oman was not immediately available for
The refinancing talks - with a group of banks which include
Wells Fargo and Landesbank Hessen-Thuringen - also
include the possibility of new debt from private equity firm
Starwood Capital but any deal depends on shareholder hostilities
ending, the source said.
London has experienced a tough office lettings market since
the financial crash with many companies forced to stay put or
extend existing leases rather than sign for new space,
particularly in the financial district.
The Heron is one of a series of towers in central London
planned before the financial crisis that hoped to take advantage
of a wave of lease expiries in the British capital and a
shortage of high-quality new offices.
Despite a small number of recent deals, lettings have been
largely stagnant outside the relatively resurgent insurance
heartland, where developers like Land Securities,
Canary Wharf Group and British Land have
benefited from stronger interest.
The Shard, one of Europe's tallest skyscrapers, is
struggling to sign office tenants and work is stalled on two
other proposed towers amid a fruitless searches for large
tenants that would kickstart the schemes.