Stanhope deal breaks Stratford stalemate

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The Independent Online

Stanhope has agreed to sell its stake in the troubled Stratford City development, leaving the way clear for rival property magnates the Reuben brothers or Frank Lowy to take full control.

But the property group's decision does not signal an end to the bitter dispute as the parties continue to clash over the price.

The £4bn Stratford City development is one of the largest regeneration projects in Europe. As well as extending the Channel Tunnel rail link, it will include homes, shops and accommodation for athletes in the 2012 Olympics.

London & Continental Railways (LCR) owns the leasehold on the 170-acre site and a consortium was appointed to develop it. This consists of Stanhope, Mr Lowy's Australian business Westfield, and David and Simon Reuben's Aldersgate vehicle. They control 50 per cent with the rest divided between Stanhope and Westfield.

But the project has been rocked by rows within the consortium. A "shoot-out" auction was eventually agreed, where the highest bidding partner would buy the others out, but LCR, frustrated with the lack of progress, served notice last month. It is drawing up a list of potential partners and the consortium has until next month before the contract goes out to tender.

Stanhope's agreement to sell is a crucial step in the talks. The group, majority owned by chief executive David Camp, declined to comment but it is understood a contract has been drawn up stating that the stake will be sold to whoever takes control of the project.

It is thought the billionaire Reubens are prepared to pay between £50m and £55m for the stake, though insiders say Stanhope could be looking for closer to £70m.

The development rights have soared in value since London secured the Olympic games.

"It could all still implode - there's just so much emotion and ego involved," said one closely involved source.

The Reubens are tipped to win control but it is understood Westfield remains keen to buy out its rival. Mr Lowy's yacht recently arrived in London and is likely to stay in Europe throughout June as he is closely involved with the Australian football team, competing in the World Cup.

The 244ft Ilona, which is moored at Canary Wharf, has 18 guest rooms, a gym, massage parlour and cinema, as well as a helicopter pad and crew of 13.