BAA struggling to fill cargo warehouse space
08 / 03 / 2008
WITH empty cargo warehousing weighing heavily on its existing debt burden and the Competition Commission breathing down its neck, the BAA is under pressure from all angles – what a warm welcome for new chief executive Colin Matthews.
Ferrovial, the Spanish owner of BAA, is under pressure to cut the £1 billion price tag on a portfolio of warehouses and offices around Heathrow and Gatwick by at least £100 million as the credit crunch forces it to reduce its debt.
The airport operator intends to sell its half-share in the £1 billion Airport Property Partnership – that includes BAA Lynton – and had hoped to have sealed the deal by now. However, Brixton, the industrial developer and Prologis, an American developer, fell at the last hurdle of negotiations last year because the BAA refused to budge on price. It is rumoured that the buyers wanted a 20 per cent reduction in price.
Completion of the sale is imminent according to the BAA and should be signed by the summer. “We are trying not to get involved in speculation about who potential bidders are, but the sale will go ahead, so watch this space,” Malcolm Robertson, BAA deputy director of corporate communications told Air Cargo News.
Having been slammed for steep rent increases the property arm is readying itself for the sale. “BAA Lynton can confirm that there are currently some voids at the Heathrow Cargo Complex but feels that it is important to point out that a number of these have been created deliberately through taking lease surrenders,” a spokesperson told Air Cargo News. “This strategy has been undertaken as BAA Lynton firmly believes that there is latent demand for the space.”
The BAA portfolio is also under scrutiny from the competition authorities, which is expected to deliver its preliminary findings in April, according to Robertson. But the industry will have to wait until the end of 2008 for a final outcome.
There has been speculation that the operator will be forced to sell one of its London airports to up ‘rational competition’ between Heathrow, Gatwick and Stansted.