City Lofts crisis
City Lofts has become the first major residential developer to fall victim to the credit crunch with around 250 of its unsold properties today put into receivership.
Bank of Scotland Corporate, which is City Lofts biggest lenders, today appointed Jon Gershinson of Allsop as LPA (Law of Property Act 1925) receiver on the unsold units in five regional cities and a Birmingham development site. An LPA receiver is an individual, appointed either by the court or by the holder of a fixed charge over one or more properties.
‘City Lofts has requested its residential portfolio and one of its development assets be placed into LPA receivership,’ a spokesperson said. ‘This is part of a restructuring process which City Lofts has been pursuing in light of the extremely difficult market condition which it and many of the other housebuilders and residential developers are currently experiencing in the UK.
‘City Lofts hopes the restructuring of its business can be successfully concluded in as short a time as possible.’
Bank of Scotland has lent on the majority of City Lofts’ schemes. Properties now being looked after by Gershinson include apartments at the 203-apartment Salford Quays in Manchester, the 105-apartment Springfield Mill in Nottingham, the 198-apartment Roberts Wharf in Leeds, the 162-apartment Prince’s Dock in Liverpool and the 167-apartment Admiral House in Cardiff.
A development site in Birmingham, which has been waiting to be developed since January 2007, has also been put into receivership. City Lofts had been planning to build 295 apartments and 66,500 sq ft of commercial space on the site at Brassington Avenue in sutton Coldfield.
The regional residential market has suffered heavily in the debt expensive market with home-buyers and buy-to-let investors alike disappearing from the market.
City Lofts was formed in 1996 and was AIM-listed before being taken private in January 2007 when an investment vehicle owned by JER Partners and Lehman Brothers bought a 30% stake. The rest of the company is owned by chief executive Stuart Wright and fellow founding directors Rossano Mansoori-Dara and Anthony Brooks who each own 18.6% of the company.