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REAL Estate Opportunities (REO),

REO's shares hit a closing high of 165p

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UK:REO / Real Estate Opportunities PLC (LSE) .. update

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The owner of Battersea Power Station has been wrecked by the commercial-property crash.

The past three years have been nothing short of brutal for property investor Real Estate Opportunities (LSE: REO) and its shareholders.

 

The owner of Battersea Power Station has been wrecked by the commercial-property crash.

 

The past three years have been nothing short of brutal for property investor Real Estate Opportunities (LSE: REO) and its shareholders.

 

Riding the bubble

Until 2007, REO was riding high on the back of property bubbles in the UK and Ireland. Indeed, in December 2006, it added London landmark Battersea Power Station to its extensive portfolio of Irish and British commercial and domestic property, paying £400 million for the site.

 

At their peak, REO's shares hit a closing high of 165p on 16 March and 5 June 2007. Alas, as commercial and domestic property prices started to dive on both sides of the Irish Sea, all went downhill from there. In less than two years, UK commercial property valuations fell 43%.

 

As you can see from its portfolio, REO has relatively few properties in the UK, most of which are in London. However, it owns dozens of properties in Dublin and the surrounding area, where prices have crashed spectacularly since peaking in 2006.

 

Thus, REO's share price hit an all-time low of 7.5p on 2 April 2009, although they subsequently recovered, to close at 16.5p on Tuesday. Unfortunately, REO's share price crashed again yesterday, plunging 42% to close at 9.5p (down 7p) after the publication of its latest results.

 

As things stand today, REO has lost 94% of its value since its 2007 peak. Ouch.

 

Now that's what I call a loss

In the 14 months to 28 February 2010, REO saw the value of its property portfolio tumble by 43% to £1.1 billion. At £388 million, Battersea Power Station (BPS) accounts for more than a third (35%) of REO's total assets.

 

Battersea Power Station, REO's largest asset in the UK, has fared a lot better than its Irish property portfolio. The value of BPS has fallen by just £12 million (3%) since REO bought it 3.5 years ago. On the other hand, many of REO's Irish properties have fallen in value by 50%+ since Ireland's property bubble burst. Subject to shareholder approval, the firm today announced plans to spin off BPS into a new, separately listed vehicle.

 

In the past 18 months, the destruction of value at REO has been immense. At 31 December 2008, REO had a net asset value (NAV) per share of 104.1p. At 28 February 2010, NAV was a negative 178.2p per share.

 

Although REO reaped property income (largely rent) of £44 million during this 14-month reporting period, it reported an underlying pre-tax loss of £929 million. This was largely due to an £811 million write-down of property assets. This produced a loss per share of 248.2p, versus a loss of 107.8p in 2008.

 

Given that REO's market cap today is a mere £31.7 million, losing close to a billion pounds is going some.

 

/more: http://www.fool.co.uk/news/investing/compa...h-property.aspx

 

REO profile :: http://investing.businessweek.com/research...p?ticker=REO:LN

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Property company REO has begun to move nearly €900m of its loans

 

Thursday April 01 2010

 

REAL Estate Opportunities (REO), the London-listed property company controlled by Irish developers Johnny Ronan and Richard Barrett, says loans worth €896m have begun moving into the National Asset Management Agency (NAMA).

 

The Jersey-based company's developments include Battersea Power Station in London and a proposed shopping centre in Ballymun, Dublin, that the developers say will become the country's biggest mixed-use shopping centre.

 

Loans extended to the State's most indebted developers began moving into NAMA this week after the agency announced the discounts it would pay on loans.

 

REO will now repay NAMA and not the banks.

 

The company made the announcement to the stock exchange yesterday; it is the only publicly quoted company linked to the top 10 developers whose loans have begun moving into NAMA.

 

"These loans are from Allied Irish Bank, Anglo Irish Bank, Bank of Ireland and Irish Nationwide, and amount to €896m of a total of €1.49bn of the company's outstanding bonds and loans," REO chairman Ray Horney said in the statement.

 

"We are pleased with the statement from the Finance Minister (Brian Lenihan) regarding NAMA, which outlines definitive action to return strength and stability to the Irish banking sector and the consequent positive effects on the Irish economy," he added.

 

Shares in REO inched up 1.5pc to 16.5p in London, giving the company a market value of £55m (€61.9m) or less than one-10th of the value of the loans moving into NAMA.

 

- Thomas Molloy

 

Irish Independent: http://www.independent.ie/business/irish/p...ns-2120342.html

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The Irish Times - Saturday, November 13, 2010

 

Planning approval for REO in Battersea

 

A LONDON local authority has paved the way for listed property vehicle Real Estate Opportunities (REO) to refinance its Battersea Power Station project by giving planning permission for its proposed redevelopment.

 

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Treasury Holdings-backed REO bought Battersea four years ago for €600 million. State agency Nama owns part of the debt as Bank of Ireland was one of the institutions that loaned the company money for the purchase.

 

REO has since said that as part of an overall restructuring of its finances, it intends to float off Battersea and bring in a strategic partner or partners to help finance the project, which will cost £5 billion to complete.

 

Yesterday the company announced that Wandsworth Council has approved its planning application to redevelop the landmark power plant for residential and commercial use.

 

The proposal has to go to the Mayor of London, Boris Johnson, and to Britain’s secretary of state for communities and local government, Eric Pickles for final approval. The Greater London Authority has already signalled its support for the plan, as have a number of local bodies and English heritage organisations.

 

Treasury Holdings’ UK managing director, Rob Tincknell, said yesterday that Battersea was “95 per cent there to a final decision”.

 

Planning permission means that REO can put a value on the site, and, while Wandsworth’s decision goes for final approval, the company intends beginning a parallel due diligence process with prospective partners.

 

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Mr Tincknell said yesterday that there had been a lot of interest internationally and added that prospective partners included sovereign wealth funds, private equity groups, property developers and wealthy families. The first phase of the development is due to start in early 2012, and should be completed by 2016. The project will be completed in 2024.

 

Battersea was a coal-fired power plant built in two phases in the 1930s and 1950s. It was decommissioned in 1983 but the distinctive, four-chimneyed plant is listed. The property has passed through a number of owners since the 1980s. The John Ronan- and Richard Barrett-owned Treasury Holdings is the biggest shareholder in REO.

 

/ see: http://www.irishtimes.com/newspaper/financ...4283235549.html

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Regeneration of the Nine Elms Opportunity Area

 

Real Estate Opportunities plc. announced Wandsworth Council's approval of the planning application for the Battersea Power Station site.

 

The next stage of the process will see the application referred to the Mayor of London and the Secretary of State for Communities and Local Government for their consideration. Wandsworth Council's approval of the planning application is a major step towards realising the vision for Battersea Power Station, and follows one of the most comprehensive consultation programmes for a property development ever undertaken in the UK, consisting of over 300 meetings with local groups and stakeholders, 3 public exhibitions and over 16,000 visitors to Battersea Power Station.

 

The scheme has received strong support from a range of stakeholders including the Greater London Authority, English Heritage, the Commission for Architecture and the Built Environment and most importantly, the local residents and general public. Rafael Viñoly's master plan will create a 10.1m sq ft mixed-use sustainable development with over 3,400 new homes and 1.7m sq ft of office space alongside 1.5m sq ft of other commercial uses including community, hotels, cultural, leisure, conference centre, shops and restaurants. At the heart will be the Power Station, restored to its former glory, standing as a commanding reminder of London's industrial past and thrilling future.

 

The development will also include a new tube station on the proposed extension of the Northern Line from Kennington to Nine Elms and Battersea Power Station. This will be the first ever privately funded extension to the tube network in Central London. The scheme is expected to generate approximately 15,000 new jobs and training opportunities, and will create a vibrant and inviting new community, serving as a catalyst for the regeneration of the Nine Elms Opportunity Area. Construction on Phase 1 of the development is scheduled to commence in early 2012 with completion in 2016. The remaining phases, including the new underground station will follow, with the entire development scheduled for completion in 2024.

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