City Lofts, the developer of trendy city centre apartments, has gone into administration days after it was forced to put 250 of its unsold units, plus an unstarted development site, in the hands of a receiver. It has blamed "extremely difficult market conditions" and had been trying without success to restructure its business.
Bank of Scotland Corporate, part of HBOS, which is City Lofts' biggest lender and has lent on most of its schemes, has appointed Jon Gershinson of Allsop as receiver of the unsold apartments. City Lofts itself has had Ernst & Young appointed as administrator.
The unsold properties include apartments at a scheme at Salford in Greater Manchester (203 units), the Springfield Mill complex in Nottingham (105), Roberts Wharf in Leeds (198), Prince's Dock in Liverpool (162) and Admiral House in Cardiff (167).
The development site that has gone into receivership is in Birmingham. City Lofts had been planning to build 295 apartments and 66,500 sq ft of commercial space on the site.
In Liverpool alone, the 20 unsold apartments have a reported market value of nearly £4 million. The development, which includes two linked 20- and 10-storey buildings, was completed in 2006, showing how long the apartments have remained on the shelf.
The City Lofts crisis shows how serious market conditions are, and how badly confidence in city centre apartment blocks has slipped.
City Lofts, based in Harrogate, Yorkshire, was formed in 1996. In its last set of published accounts, to December 2006, it recorded pre-tax profits of £4.6 million on a turnover of £67.2 million.
Meanwhile, Imagine Homes founder Grant Bovey is in talks with his lender, HBOS, about the restructuring of his property investment business.
Written by Rosalind Renshaw