LONDON (Reuters) - The owners of Battersea Power Station, a huge industrial building in London currently being turned into homes, offices and shops by a Malaysian consortium, are in talks to sell it for 1.6 billion pounds ($2.22 billion), the redevelopers said on Thursday.
With its four giant chimneys, the disused electricity generating plant on the south bank of the River Thames was pictured on the cover of Pink Floyd’s album “Animals” and is one of the best-known silhouettes on the London skyline.
Built in the 1930s, the coal-fired power station stopped operating in 1983 and gradually fell into disrepair, with multiple attempts to redevelop it floundering due to costs and practical difficulties in converting the gigantic site.
It was eventually sold to a Malaysian consortium led by property developer SP Setia in 2012, for 400 million pounds, and since then has been undergoing construction work on a vast scale. The project is due to be completed in late 2020.
SP Setia said in an announcement to the Malaysian Stock Exchange that it was in discussions about a potential sale with Permodalan Nasional Berhad (PNB), a Malaysian government-linked investment firm, and Employees Provident Fund Board (EPF), a state pension fund.
The proposal is to sell Phase 2 of the project, the building itself, but not the surrounding land which is also in the process of being redeveloped.
Through their holdings in the current developers and through direct stakes, PNB and EPF already own about 70 percent of the project as a whole.
Battersea Power Station Development Company Ltd, the UK-based structure managing the project, described the proposed transaction as a re-organization of the ownership of the building that would create a long-term asset management and ownership structure.
“Subject to further due diligence and negotiations, the transaction sum is estimated to be 1.6 billion pounds, which is contemplated to be paid in stages through the rest of the construction phase of the Power Station building,” it said in a statement.
Apple announced in September 2016 that it would be moving its London headquarters to the former central boiler house of the power station — a commercial and public relations success for the redevelopers.
London’s Evening Standard newspaper reported that the proposed sale came after the costs of transforming the brick structure doubled from an initial forecast of about 750 million pounds to around 1.5 billion.
It said the spiraling costs had meant the profit return on the scheme had been cut from 20 percent to 8.2 percent.
A spokesman for the Battersea Power Station Development Company denied that the transaction was in response to an increase in costs.
“Whilst there have been cost increases across the industry and at Battersea Power Station, this transaction is not in reaction to costs,” he said.
“It is simply being concluded to create a long-term stable asset management and ownership platform going forward.”
Reporting by Estelle Shirbon; editing by Stephen Addison