The Gherkin – London’s first building to get a nickname – has gone into receivership. It sounds strange, considering the fact that not only is the building one of the trendiest – and most expensive – addresses in the City, but it’s also one of the most sought-after.
But Deloitte, which was appointed receivers for 30 St Mary Axe, as it is officially known, said senior liabilities secured by the property have ‘increased materially’ as interest rates and currencies have risen. Basically, its loans have got unaffordable.
Before it got its unflattering nickname, the Gherkin was known as the Swiss Re building – but the insurer sold it in 2006 to investment bank Evans Randall and German property firm IVG, for £630m. Last month IVG agreed to sell its half to Deutsche Immobilien Holding for €3.4bn (£2.8bn). London property prices, eh?
Neville Kahn, one of the Deloitte partners in charge of the Gherkin, said its lenders had been ‘reluctant to appoint a receiver but felt they had no choice due to the ongoing defaults, which have remained uncured for five years’. In other words: the Gherkin’s in a right pickle.
Evans Randall, meanwhile, had this to say (deep breath):
'The default has arisen largely as a consequence of the IVG tranche of the loan being denominated in Swiss Francs and has been exacerbated by the insolvency at IVG. These factors have so far impeded Evans Randall’s ability to restructure the financing on the asset, including the injection of new equity. Evans Randall is adviser to single asset company Skyline Investments, which owns the Gherkin in a 50-50 partnership with IVG’s Euroselect 14 Fund. Evans Randall has equity ready to invest and has been unable to do so because of the inability to agree a consensual solution with IVG, given these uncertainties. We will be continuing the constructive discussions to date on a new financial structure. The Gherkin is a strong, well-let asset and one that we are firmly minded to continue our involvement in.'
Unless you’re one of its lenders, though, we wouldn’t worry too much. Deloitte reckons the skyscraper is still in ‘trophy condition’. Any buyer will have quite a responsibility, though: a survey carried out by Ipsos Mori last month found The Gherkin is London’s favourite building – followed by The Shard, The Cheese Grater, and One Canada Square (the pointy one at Canary Wharf).