Development Securities has appointed an LPA receiver to repossess its North London Colindale site after failing to receive the final payment from the £68m deal.
In its 2008 results this morning, the developer added to the gloom of a 30% fall in its net asset value and a £65.6m pretax loss last year, with the news that Peter Virdee, who led a consortium to buy the Edgware Oriental City development in November 2007, had failed to complete his payment of £52m outstanding loan notes.
Due to ‘the exceptionally difficult conditions in the banking markets’, Virdee had only paid £16m plus interest of the £68m cash and loan notes that were supposed to be paid by 30 June, but was extended to 28 November last year.
Dev Secs said: ‘We are now giving careful consideration to the options open to us to extract value from this property, including seeking an alternative planning consent, an operational partnership to re-open the existing building for retail activity or an outright sale.’
The loss the company suffered last year was largely a result of a fall in values which led to decreases of £45.1m, £11.5m and £9.8m on its investment and joint venture portfolios.
Falling values also meant that its gearing increased from 31.2% in 2007 to 54.1% last year – though the company has not attempted to renegotiate its loan covenants.
It said that the declines were mitigated by strong development profits of £22.9m.
The company’s executive directors took a 10% reduction in their remuneration, while the senior management team also took a voluntary reduction of 7.5% as of January.
David Jenkins, chairman of Development Securities, said: ‘It is with regret that I report this year’s results, but the circumstances leading to them arise from a sequence of events that are unprecedented in living memory.’
However, he added: ‘As well as our more traditional UK and European development funding partners, we are in the early stages of dialogue with a number of overseas investors that might have appetite for appropriately timed investment and development risk as well as exposure to Central London, especially given the recent decline in sterling alongside the significant falls in property values.’