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Gherkin goes into administration

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Deloitte has been called in as administrator for the Stirling Prize-winning Gherkin skyscraper

The Foster + Partners-designed skyscraper in the City of London has fallen into receivership despite being described as in ‘trophy condition’.

The building, which was voted as London’s top skyscraper in a recent Ipsos MORI survey, has been leased consistently since it opened in 2004, but its owners have struggled with debt, defaulting on payments for the past five years.

Neville Kahn, joint receiver and restructuring services partner at Deloitte said: ‘The senior lenders were reluctant to appoint a receiver but felt they had no choice due to the ongoing defaults, which have remained uncured for more than five years, and concerns that the borrowers’ lack of equity in the transaction had caused their incentives to become misaligned with the lenders’.

He added: ‘The Gherkin is a truly exceptional building, a landmark recognised around the globe. Our priority is to preserve the value of this asset. We are in the process of communicating with all tenants and working with the property manager to ensure the continuation of all property management services with no interruption to tenants.’

The iconic 30 St Mary Axe building, which is the headquarters of Swiss Re, is co-owned by Germany’s IVG Immobilien, which went into bankruptcy in 2013.

A spokesperson for Evans Randall, adviser to Skyline Investments, which owns the Gherkin in a 50-50 partnership with IVG, commented: ‘As widely reported previously, 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.

They added: ‘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.’

30 St Mary Axe declined to comment on the announcement.

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