The listed developer said it has a target of returning a profit of between £80m and £100m on its 30-acre regeneration project close to Manchester Piccadilly station, according to a trading update published today, providing a welcome fillip for shareholders.
“The scheme is expected to deliver £80m to £100m of profit and £40m in development management fees to U+I over its lifespan to 2034,” the company said in a statement.
Matthew Weiner, chief executive of U+I, said it had been a “good start” to the financial year following a “challenging period” which saw the firm make a £58.6m pre-tax loss for the year to April.
Following news of the loss, U+I was given a boost when it secured a £23m grant from the Government’s £900m Getting Building Fund.
The grant will enable the first phase of Mayfield, comprising a 6.5-acre public park and 320,000 sq ft of commercial space across two office buildings designed by architects Bennetts Associates. The cost of the public park has been a longstanding viability hurdle for developers at Mayfield, necessary to make it an appealing place for occupiers and residents but removing a chunk of space that could be sold or let.
The £1.4bn Mayfield project aims to bring back into a use a previously derelict site opposite Manchester Piccadilly station over the next 10-15 years.
Once complete, the redeveloped site will provide 1,500 homes, a 650-bedroom hotel, retail and leisure space and more than 2.3m sq ft of offices.
U+I is delivering the scheme as part of the Mayfield Partnership, which also includes government-owned railway land developer LCR, Manchester City Council and Transport for Greater Manchester.
Weiner said: “Following on from such a challenging period, it has been a good start to the year for U+I where we have focused on progressing and realising value from our existing portfolio, reaching key milestones across a number of our major regeneration projects, priming them for delivery.
“Securing the largest single Government grant at Mayfield is testament to the quality of our schemes and alignment with Government’s Build, Build, Build agenda. This grant also reinforces the relevance of our business model in the UK’s post Covid-19 economic plan which, combined with the momentum we have seen at the start of the financial year give us confidence in the long-term outlook for U+I.”
The project team for Mayfield includes masterplanner Studio Egret West and Deloitte Real Estate as the planning consultant, alongside consultants Faithful + Gould, Stace, RoC Consulting, WSP and Buro Happold.
U+I’s share price was up 3% on Thursday morning to 64p.