Developer defaults on City Hall mortgage

THE developer that owns Boris Johnson's offices has defaulted on its mortgage, it was revealed today.

More London, which owns City Hall and to which the Greater London Authority pays rent, breached the loan's terms in January.

At that point the property's value had fallen to £754 million, 21 per cent below a valuation in October 2006. The GLA took out a 25 year-old lease on the egg-shaped glass structure when it moved in in 2002.

A spokesman for Mr Johnson said: "The Greater London Authority has a long lease and carries on paying rent to its landlord, More London, until someone tells us otherwise."

City Hall is one of a series of buildings near Tower Bridge owned by More London, including the HQ of financial services firm Ernst & Young and tourist organisation Visit London.

The terms of the loan have been broken because the value of the property has fallen too far below its previous valuation. Although it is only a technical breach, caused by the collapse in commercial property values, it will come as an embarrassment to the Mayor. The glass-and-steel structure on the south bank of the Thames was designed by Norman Foster and completed by developer CIT Group.

The mortgage is with RBS. More London spokesman Robert Siegfried said the development generated sufficient cash to make debt payments. He said: "The property is in technical default reflecting current real estate conditions in the UK. We are confident about the property both in terms of today and its long-term potential."