Backer retreats from Elliot Group amid investigation
The preferred debt funder for two of Liverpool-based Elliot Group’s schemes has pulled out, prompting the developer to ask investors for earlier repayments while a police investigation continues.
Elliot Group founder, Elliot Lawless, was arrested on 18 December along with Nick Kavanagh, head of regeneration at Liverpool City Council, on suspicion of conspiracy to defraud, bribery and corruption.
Both men were released on conditional bail and deny the allegations. No charges have been brought and a police investigation is underway.
Elliot Group is involved in around 20 residential developments across the North West, mainly in Liverpool. Projects include the £170m redevelopment of Heap’s Rice Mill, the £100m Wolstenholme Square, the £100m Aura student scheme on the edge of the Knowledge Quarter, and the 1,000-apartment scheme Infinity on Leeds Street.
The preferred debt funder for Aura and Infinity, Maslow Capital, is understood to have retreated from talks with Elliot Group, and the developer has written urgent letters to investors asking them to make payments more than a year earlier than planned.
The already delayed Aura project could collapse if they do not do so, the letter to Aura investors said.
A spokesman for Elliot Group said in a statement the letters are “standard communication” from the developer reminding investors of a revised funding proposal for Aura.
The developer plans to invest £7m of its own resources to cover Aura’s construction costs to reassure investors of its commitment to the scheme, the spokesperson added.
“Our funding model has delivered 2,500 new units for investors over the last five years,” the spokesperson said. Many of our investors in Aura have bought multiple properties from us and enjoyed strong rental and capital returns as a result. The business model they have bought into is the same as that deployed for our Aura development.
“Our investors are experienced and understand our model and their lawyers and agents are in communication with us about their investment needs.
“This issue has arisen because some have chosen not to support bringing an external investor into the Aura opportunity. This was originally identified as our intention at the point they invested.
“As such, the default position is to seek the balance of funding from them which is similar to what we have done on numerous other successful investor-funded developments.”
The additional £7m from Elliot Group, together with the funding requested from existing investors, “will ensure that the development will be successfully completed”, the spokesperson said.
“Our retained contractor, Vermont Construction, has confirmed it will commence works on site as soon as this funding is secured.”
Maslow Capital declined to comment. A similar letter has been sent to investors in the £250m Infinity scheme in Liverpool.
As well as its Liverpool schemes, Elliot Group has a project in Greater Manchester – the 34-storey The Residence at Greengate in Salford, which is due to complete next year.