Reading FC chairman seeks extra time from lender

[Isaac Hunt]

Apologies if this has already been mentioned elsewhere (or should be in AE?). Things not going too well in the property market for SJM...

http://business.timesonline.co.uk/tol/b ... 128318.ece

Sir John Madejski is in talks with lenders over the future of one of his biggest companies Sackville Properties.

Sir John, who owns a slew of companies based in his home town of Reading, is in negotiations with the taxpayer-backed Royal Bank of Scotland to safeguard Sackville’s future in expectation of a covenant breach on July 1, which would give the bank the right to take control.

Sackville owns industrial and business park properties across the country. Sir John is likely to press for a waiver or an amendment to the terms of the bank’s £63 million loan.

In common with companies owned by other property entrepreneurs, such as Vincent and Robbie Tchenguiz and Simon Halabi, Sackville has been hit hard by the recession and the collapse in British property values. The property company’s shareholders, of which Sir John is the biggest, are facing losses of more than £30 million.

Sir John — whose life was documented recently in the BBC television programme Rich Man Poor Man: a Knight’s Tale — has pumped about £160 million of his personal fortune into his business empire and is facing mounting losses at companies ranging from Reading Football Club to the traffic management group Clearview. Unlike many other millionaires, he has reached into his own pocket to prop up some of his companies, including Clearview and Reading Broadcasing, to which he has lent tens of millions of pounds.

“I’m involved with about 18 companies globally and we’ve had to work through the recession,” Sir John told The Times.
“We’re trying to keep jobs and we are doing the best we can. Hopefully, with a new Government, things will start looking up again.”

Sir John is pressing ahead with a £400 million scheme to revitalise Reading town centre, which will include office blocks, shops and hundreds of flats near the railway station.

The Station Hill development is owned by Sackville Developments (Reading) Limited, which is in breach of the covenants on a £43.6 million bank loan from HBOS, now Lloyds Banking Group, taken out at the time the company acquired the site in 2005.
Sir John, who has invested almost £20 million in the company since becoming chairman in 2001, has negotiated a waiver with Lloyds after promising to find a joint venture partner to inject more cash in the business and restart the development. The company won planning permission for the 3¼-acre site last September, although work is not expected to begin until at least 2012. Tenants in the existing buildings are paying enough rent to “broadly cover” the
interest payments on the loan in the meantime.

Sir John told The Times that he believed the property market was coming back. “This is a short-term market position. The fundamentals of the property industry haven’t really changed,” he said.
Commercial property values fell by 45 per cent from peak to their trough in August last year, according to the Investment Property Databank, but have since regained about 10 per cent of their value.

However, despite the recent rebound, banks remain wary of lending against speculative property developments.
Lloyds Banking Group and RBS are the two biggest lenders against commercial property in the UK and have billions of pounds of loans outstanding against properties that are now worth less than the debt. The two banks have been calling in loans in cases where they do not believe the properties will recover their value under their existing owners.

[RoyalBlue]

"Sir John is pressing ahead with a £400 million scheme to revitalise Reading town centre, which will include office blocks, shops and hundreds of flats near the railway station."

With what's about to hit this country, he might just as well p*ss his money away on RFC!

Can't see too much new demand for offices, shops or even flats (if they tighten up on lending) in the foreseeable future!

[Row Z Royal]

Apologies if this has already been mentioned elsewhere (or should be in AE?).

KFOAE

[Jackson Corner]

Shops are closing down in the Oracle Readings prime shopping outlet. Why build any on station hill?

[Sun Tzu]

Shops are closing down in the Oracle Readings prime shopping outlet. Why build any on station hill?

Shops have closed ever since the Oracle opened though, there's usually a couple of empty units but also new ones opening.

These major developments are long term affairs, what is happening today is likely to be pretty different to what is happening in 4 or 5 years time and if you stop building now then when things recover there will be nothing ready to come on stream.

Whether SJM has the financial clout to get his terms renegotiated I have no idea, lucky we aren;t reliant on him for cash anymore.

[Barry the bird boggler]

This is one necessary project that would improve the town centre immensely. However, in the current climate, it should be postponed for another couple of years, just like the proposed scheme to give Bracknell a shopping centre.

Give it a rest John and concentrate on the football!

[Big Foot]

Or perhaps, in the current climate it's good to entreprenuerial and invest in something tangible and lasting like property as opposed to spunking £5M on a player who could get injured or not have the desired impact?

[zummerset]

Or perhaps, in the current climate it's good to entreprenuerial and invest in something tangible and lasting like property as opposed to spunking £5M on a player who could get injured or not have the desired impact?

Well said Big Foot - anyway our squads ok (a few excellent, a good part very good, some averages and a few clunkers). If Cisse moves and perhaps Feds gets a good offer then Jm may buy a decent striker (who hopefully will have more pace than Rasiak)

[Wycombe Royal]

This is going to take a few years to complete so why would you wait UNTIL the ecpnomy has picked up to start it? Surely you want it to be ready for WHEN the economy picks up?

[Urinal Mint]

Shops are closing down in the Oracle Readings prime shopping outlet. Why build any on station hill?

because it'll be his last big stamp on the town before he pops his clogs i expect.

[Upper West Ginger]

There are two substantial modern office blocks on Station Hill / Tudor Road which have lain empty for several years. The one on the corner of Tudor Road and Caversham Road has never been occupied since it was built. This would seem to suggest that the market for new offices adjacent to the station is not as strong as people once thought. Whilst having a shiny new suite of buildings around the station is a bold vision, harsh reality suggests it is un-needed and unaffordable (for the moment at least).

[Dirk Gently]

But I believe that if an office block is built and then stays empty for 3 years there are extremely generous subsidies provided.

[Harpers So Solid Crew]

Centrepoint in London being a case in point, a huge white elephant, but massive profit despite being empty for so long.

[Sun Tzu]

I suspect the developers have looked at the local area, assessed the market and the existing space and worked out whether what they are planning fills a need.
The buildings that have been empty for a long time may now not be of the required standard, or may be a difficult to let size (too big for small firms / too small for big firms !)
The Station Hill development is a very different beast to the one off blocks that have stood empty.