Publishing business Reach has paid £15.5m in penalties for missed deadlines to Dubai investor Select Group, its partner in the development of its former base in Old Hall Street.
In a half-yearly financial report published this week, Reach – formerly Trinity Mirror – said under a heading of “historical contract issues” that “a charge of £15.5m has been made in the half year reflecting a historic property development onerous contract” – referring to the deal done in October 2018 with Select, the terms of which were undisclosed.
Sony Interactive confirmed its move to 65,000 sq ft at the building in August 2019, and Place North West understands that work is progressing, with occupation expected in Q1 2021.
As well as offices, the Echo building’s overhaul is to feature a 207-bed hotel – leased to Melia Hotels for its Innside brand – and 26,000 sq ft of retail on the ground floor. Innside. which initially hoped to be open from spring 2020, said in July that it intends to open later this year.
The project has fallen victim to the Covid crisis, said Reach’s report, which continued: “In 2018 the group sold part of its freehold property in Liverpool with total net proceeds of £6.6m resulting in an accounting profit of £2.3m being included in operating adjusted items.
“The group also entered into a joint venture to develop the property into a hotel and retail/office space. As a result of Covid-19 the development has incurred significant time delays and cost overruns, with no certainty as to the amount that could be incurred on completion of the development and insufficient contractual protections based on the historical agreement.
“A new agreement has been reached with the joint venture party to limit the exposure to the group to £15.5m. A one-off provision of £15.5m has been made in the half year results and the £15.5m was paid to the joint venture party in September 2020. The group has no further exposure in respect of this development.”
The building was previously occupied by the Liverpool Echo, which moved 300 staff to a 25,000 sq ft space at 5 St Paul’s Square.