Richard Upton UandI NEW
Richard Upton, who replaced Matthew Weiner as chief executive this week

U+I in talks over Manchester sites, Chill Factore for sale

Sarah Townsend

The listed developer, which has begun a 12-month review to cut costs, is eyeing two further regeneration opportunities in the city to expand its activities beyond the Mayfield scheme, according to its chief executive.

“We are looking very seriously at two interesting projects and I would be surprised if we hadn’t invested in one within the next 12 months,” said Richard Upton, who replaced Matthew Weiner in the role yesterday.

U+I has £38m to invest in acquisitions by the end of this quarter and expects to have a further £50m to spend by the end of 2021, generated by disposals of non-core assets, Upton added.

“We’re going to be building Mayfield for the next 10-15 years, and we have a team based there that are capable of doing much more. So, I expect Manchester will play an increasing role in our growth strategy in the short-to-medium term.”

U+I launched an acquisition spree last May, seeking to acquire “land with long-term mixed-use regeneration potential”, either directly or in joint venture partnership, in major city-regions including Greater Manchester, it said at the time. But no deals have yet been agreed in the North West.

Upton was speaking to Place North West following the company’s stock exchange announcement on Tuesday in which it reported a £50m loss for the six months ended 30 September 2020.

U+I attributed the slide to trading and development losses, a rise in operating costs and a reduction in the value of its investment portfolio. Upton is now overseeing a 100-day review of the business to cut costs and refocus the company’s activities on regeneration projects – disposing of non-core assets over the next two years “to generate cash and pay down debt”, according to the filing.

In the North West, Chill Factore in Trafford – billed as the UK’s longest indoor ski slope – is among the assets earmarked for sale, Upton said. Agency CBRE has been appointed to market the leisure property for around £20m.

“For years pre-Covid, Chill Factore has been a strong performer in terms of generating operational and rental income, but clearly now it’s a risk as it doesn’t fit in with our regeneration focus and offers no further development opportunities,” said Upton. U+I’s national portfolio contains around 15-20 similar assets of which the company is looking to divest over the coming year.

Upton added: “We’ve been growing our pipeline of large development projects and making good progress with those, but we’ve been less successful with some of our legacy assets [acquired prior to the 2014 merger between Cathedral Group and Development Securities that created U+I].

“This is due to a variety of reasons – geographical dispersal, range of sectors and so on – but it meant we went into the pandemic in a slightly weaker position than we would have liked.

“So now we’ve doubled down on our cash and balance sheet and are looking to realise the book value and move on.”

As the pandemic took hold in the UK last March, U+I issued a statement warning it would likely miss its earnings target for the full-year 2020 due to project delays and market uncertainty caused by Brexit and Covid-19.

Upton admitted the past year “has been a challenging period” in which the pandemic exacerbated issues the business was already facing, to do with planning and project delays, leasing and rent collection.

“Perhaps we could have focussed on our core activities at an earlier stage and that would have helped us to cash in and deleverage sooner, but this is what we’re doing now – we’re doubling down on those efforts and we’re confident in the high-quality regeneration projects we’re delivering,” he said

U+I has around 6m sq ft of mixed-use schemes across the UK that are being readied for a start on site this year.

Upton, who was previously development director at U+I, was appointed to replace chief executive Matthew Weiner, who leaves the business “to pursue other opportunities”, according to yesterday’s filing. Although the changes take immediate effect, Wiener will remain as an executive board member until May.

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I hope this all goes well for U+I, I like their work, they could with focussing on their existing Mayfield project and perhaps bringing in a well respected local partner ie UrbanSplash, Capital&Centric or AlliedLondon to deliver some elements and accelerate delivery

By David Mackie