City’s Gherkin skyscraper to be sold off with £640m starting price tag

The City’s iconic Gherkin has been put up for sale on the open market after it collapsed into receivership earlier this year, with a price tag of around £640m.

 

Receivers at Deloitte have appointed their real estate arm and Savills to sell 30 St Mary’s Axe, which will be advertised to buyers across the world in a marketing push starting today. 

 

Offers for the building are expected to start at around that £640m mark, although strong dem­and from buyers keen to get a slice of one of London’s trophy buildings could see the Gherkin go for more. 

 

The tower’s lenders called in Deloitte in April after losing pati­ence with owners Evans Randall and German firm IVG, which had failed to strike a restructuring deal over its mounting debt-pile.

 

The pair said at the time that the problem was largely due to a tranche of the debt secured against the building, which had soared as the Swiss franc strengthened against the pound.

 

IVG and Evans Randall bought the tower in early 2007 for £600m from insurer Swiss Re, which set a record at the time for a building in the City and was considered overpriced. The acquisition was funded by a £500m loan from a consortium of five banks led by Bayerische Landesbank and first defaulted in 2009.

 

Based on the £600m paid in 2006, it would now be worth around £742m acc­ounting for inflation. And its value has not kept pace with other soaring London property sectors.

 

 

Deloitte partner Julian Stocks, handling the sale for Deloitte, told City A.M.: “There is nothing wrong with the building. It’s a great asset. The issue is with the capital structure and finan­cing. If [buyers] want an interesting piece of London, this is as good as it gets”. 

 

The tower, designed by Lord Foster – who was also behind City Hall and Wembley Stadium – is 99 per cent let to companies, including Swiss Re, which occupies around half of the building. Tenants pay an average rent of £55 per sq ft. 

 

The London commercial property market has seen insatiable demand from overseas investors and a growing number of UK institutions on the back of the economic recovery.  According to Savills, £71.1bn has been invested into the office and retail markets over the last five and a half years, with overseas investors accounting for £47.7bn.

 

The Gherkin is in the heart of the insurance district, which has seen a flurry of leasing activity led by insurers moving into new developments such as the Walkie Talkie.