The Crown Estate has granted Israeli group Alrov more time to buy the long leasehold of the Café Royal block after it struggled to find the finance to complete the deal.
In a statement released by the Crown Estate today it said that the majority of the £80m, due in March 2009 and March 2011 will be deferred to December 2013. This deferral will be subject to interest payments from December 2011.
An additional deposit £4m, has been made by Alrov, bringing its total deposit to £8.47m, and further stage payments will be made during the development. It said from 1 September 2010 payments of £500,000 will be made every six months until completion of the hotel and £1m thereafter.
Alongside the revised arrangements Alrov has now taken possession of the Café Royal and is proceeding with the project with completion anticipated in December 2011.
A spokesman for The Crown Estate, said: ‘Alrov and The Crown Estate are committed to the completion of Quadrant 1 in 2011, ahead of the Olympics in 2012. This is an important scheme and unique opportunity for Regent Street and central London – securing jobs and investment – and should not be delayed by the economic downturn and the related difficulty of obtaining development finance.
‘The restructuring of payments puts the Quadrant 1 project on track with our original timetable for the overall development. It reflects our commitment to the regeneration in the West End and to our partnership with Alrov.’
Alrov, run by managing director Georgi Akirov, exchanged contracts in August last year to buy the 125 year-lease of the Café Royal block at the south end of Regent Street for around £80m.
It plans to turn the Café Royal block, which is part of the Crown Estate’s £750m redevelopment of the Quadrant, into a five-star hotel with 160 bedrooms, spa and gym facilities, a restaurant, bar and 16,000 sq ft of shops. The plans involve the retention of several of the Grade I listed rooms such as the Grill Room, a favourite haunt of Oscar Wilde.
CB Richard Ellis advises The Crown Estate and Clay Street Property Investment Consultants acted on behalf of Alrov.