20th Apr 2020 17:13
(Alliance News) - Caledonian Trust PLC on Monday said it has signed a variation agreement on the sale of St Margaret's House in Edinburgh, including a possible reduction in the sale price for the development.
The sale of St Margaret's House to Drum Property Group Ltd was announced in February 2018 and at that time was due to take "up to 18 months" due to the fact that the sale is conditional upon Drum obtaining details planning permission and consents for a mixed use development of student and residential accommodation.
Underlying the conditional purchase was a proposal involving Drum entering into a pre-let agreement with a third party tenant, not disclosed, for student accommodation to be built on the property.
However, the pre-letting has not taken place and "material uncertainty" has arisen as to whether the prospective tenant will pursue its interest in the location.
Consequently, Caledonian and Drum have altered the missives relating to the disposal, including a drop in the sale price for St Margaret's House to GBP11.5 million in cash from the previously agreed GBP15.0 million.
As before, the disposal remains conditional on Drum obtaining a pre-let of the student accommodation as well as detailed planing permission and other consents.
However, if Drum enters into a lease for the student accommodation with the prospective tenant before the first student takes occupation of any room within the property then Caledonian will receive the original GBP15.0 million.
The disposal it set to complete in summer 2021 with proceeds to go towards Caledonia's "existing property development programme", as well as re-investment into new development and the repayment of existing debt, Funds will also provide working capital to Caledonian.
Shares in Caledonian closed down 8.6% at 160.00 pence in London on Monday.
By Anna Farley; [email protected]
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