Ratings agency Moody’s has warned that the Citypoint tower in London is valued at far less than the cost of its loan, which is ‘very likely to default either during its term or on its maturity date in 2017.’
The Citypoint tower houses over 700,000 square feet of office space in Ropemaker Street. The building was purchased for £650 million at the height of the commercial property boom in 2007, just before the Credit Crunch took hold and sent prices into free fall.
Its purchasers, Beacon Capital Partners, a US property development and investment company, took out a £535 million loan to secure the deal.
Moody’s warn that the value of the tower was just £432 at the beginning of the year and is likely to drop to £384 million by 2011. This means that the loan is roughly half as large again as the building’s actual value.
Photo credit: Paul Dean