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Caledonian Trust amends deal to sell St Margaret's House
20th Apr 2020 16:15
(Sharecast News) - Property investment and development company Caledonian Trust updated the market on its proposed sale of St Margaret's House on London Road in Edinburgh to Drum Property Group on Monday.
The AIM-traded firm noted that Drum's proposal underlying its conditional purchase involved it entering into a pre-let agreement with a specific third-party tenant for the student accommodation to be built on part of the property.
However, it said on Monday that the pre-letting had not yet occurred, adding there was now "material uncertainty" on the prospective tenant pursuing its interest in the location.
As a result, and in order for Drum to proceed with the purchase of St Margaret's, the missives in relation to the transaction had now been varied, and a variation agreement was entered into on 17 April by Caledonian Trust and Drum to accommodate different pre-letting outcomes.
"The amended missives include a potential reduction in the overall consideration for the proposed disposal to ?11.5m exclusive of VAT, payable to the company on completion in cash in the event Drum does not agree a pre-let to the prospective tenant," Caledonian Trust said in its statement.
"The proposed disposal remains conditional ... on Drum securing a pre-let of the student accommodation, and Drum obtaining detailed planning permission and all other consents to its entire satisfaction all as previously agreed."
It said the terms of the amended missives specifically allowed for the consideration for the proposed disposal to revert to the original sum of ?15m if Drum enters into a lease, or certain other forms of letting agreement, in respect of the student accommodation with the prospective tenant prior to the first student taking occupation of any student bedroom within the property.
The amended missives reflect the planning application which Drum submitted to the City of Edinburgh Council Planning Committee in September, which was for 377 student bedrooms and 107 residential flats.
"The directors currently expect that completion of the proposed disposal will take place in the summer of 2021," Caledonian said.
"The company intends to use the net proceeds from the proposed disposal to fund the company's existing property development programme, re-invest into new property developments, repay certain existing debt and provide working capital."
At 1016 BST, shares in Caledonian Trust were down 8.57% at 160p.
The AIM-traded firm noted that Drum's proposal underlying its conditional purchase involved it entering into a pre-let agreement with a specific third-party tenant for the student accommodation to be built on part of the property.
However, it said on Monday that the pre-letting had not yet occurred, adding there was now "material uncertainty" on the prospective tenant pursuing its interest in the location.
As a result, and in order for Drum to proceed with the purchase of St Margaret's, the missives in relation to the transaction had now been varied, and a variation agreement was entered into on 17 April by Caledonian Trust and Drum to accommodate different pre-letting outcomes.
"The amended missives include a potential reduction in the overall consideration for the proposed disposal to ?11.5m exclusive of VAT, payable to the company on completion in cash in the event Drum does not agree a pre-let to the prospective tenant," Caledonian Trust said in its statement.
"The proposed disposal remains conditional ... on Drum securing a pre-let of the student accommodation, and Drum obtaining detailed planning permission and all other consents to its entire satisfaction all as previously agreed."
It said the terms of the amended missives specifically allowed for the consideration for the proposed disposal to revert to the original sum of ?15m if Drum enters into a lease, or certain other forms of letting agreement, in respect of the student accommodation with the prospective tenant prior to the first student taking occupation of any student bedroom within the property.
The amended missives reflect the planning application which Drum submitted to the City of Edinburgh Council Planning Committee in September, which was for 377 student bedrooms and 107 residential flats.
"The directors currently expect that completion of the proposed disposal will take place in the summer of 2021," Caledonian said.
"The company intends to use the net proceeds from the proposed disposal to fund the company's existing property development programme, re-invest into new property developments, repay certain existing debt and provide working capital."
At 1016 BST, shares in Caledonian Trust were down 8.57% at 160p.