A group of more than 100 investors in the stalled Salford apartment project is the preferred bidder to acquire the scheme out of administration, but funding challenges are delaying the deal.
Construction of Elliot Group’s £70m The Residence tower at Salford’s Greengate halted earlier this year after the Liverpool-based developer’s founder, Elliot Lawless, was arrested on 18 December along with Liverpool City Council’s regeneration chief Nick Kavanagh on suspicion of fraud.
Lawless was released on bail and no charges were brought, and he later won a case in the High Court ruling that a police search of his house at the time of the arrest was unlawful.
However, the 34-storey The Residence tower remained stalled during the months of uncertainty following the arrests and went into administration in March along with two other Elliot Group schemes.
An update on The Residence administration process, published by David Rubin & Partners at the end of last week, said the administrators had granted a three-month extension in June to the sale process for The Residence, following requests from the 100-plus investors in the scheme.
The investors, most of which are represented by a formal ‘steering committee’, are in the process of drawing up a bid to take over ownership of the Greengate site, complete the scheme’s delivery and recoup their investments.
Wrangling between the investor steering committee and several other investors that had been working on an alternative bid for the site earlier in the summer has so far contributed to delays in the process, Place North West understands. By law, the administrators are obliged to consider bids submitted by all investors in the scheme.
However, David Rubin & Partners said in its report last week that mounting costs borne by the scheme mean that a sale “now needs to be agreed urgently”.
It said: “The preservation of the development requires significant ongoing costs and the administration estate is unable to pay for these costs unless a suitable funding arrangement is made with the SC [steering committee].” The scheme’s backer, Equity Group, pulled out of a funding agreement with Elliot Group in June.
The report added: “Accordingly, the joint administrators are unable to delay the sale and it is now necessary for a sale to be agreed urgently.
“The joint administrators are working with the SC to finalise a deal as soon as possible but reserve the right to approach other parties to conclude a sale, should it be deemed necessary.”
Last month, the High Court signed off a deal to transfer ownership of one of the other two Elliot schemes placed in administration – the £100m Aura project – to investors. The investor consortium was gifted the freehold title of the 1,000-bedroom student accommodation scheme in Liverpool, under the deal.
Meanwhile, similar talks to salvage the £250m three-tower Infinity residential scheme are ongoing, with a consortium of investors selected as the preferred bidder.
Elliot Group was approached for comment.