The developer is still looking for lenders to back the first phase offices and car park at the large Manchester project, the developer said as it updated the stock market on the “root and branch review” of the business.
Shares in U+I fell 5% on Wednesday morning as it reported a pre-tax loss of £86.7m in the year to April compared to a £58.6m loss the year before. The net asset value of its portfolio fell 30% to £202m. A series of disposals reduced debt to £72.1m, a gearing level of 35.5%, down from 44.9%, against a target of 25-35% by the end of the 2022 financial year.
U+I started an internal shake-up in January when it produced a £50m loss for the half year and saw CEO Matthew Weiner leave.
Richard Upton stepped up from deputy to CEO. He called today’s results “hugely disappointing” as he reflected on “clinical decisions” that had resulted in “further trading and asset impairments,” largely related to projects in Dublin, Norwich, Slough and Bromley.
In Manchester, U+I is focused on “entering into funding agreements with patient capital” on the delivery of the remainder of phase one, 320,000 sq ft of offices in two blocks and an 11-storey car park. U+I has previously said it will start on site with these buildings this year.
There is £24.9m of work in progress at Mayfield creating the public park funded by a £23m grant from government, with £2m future equity required, U+I said.
The gross development value of Mayfield across all phases is £1.5bn and the gross profit margin is £400m.
The scheme is being delivered by the Mayfield Partnership, a public-private venture comprising regeneration specialist U+I, Manchester City Council, Transport for Greater Manchester and developer LCR.
Overall, Mayfield is set to transform a previously derelict part of Manchester’s industrial heritage to deliver 1,500 homes, 1.6m sq ft of offices, 300,000 sq ft of retail and leisure facilities and 11 acres of new public realm. The park is on target to open to visitors in September 2022.
During the period, U+I sold an apartment and leisure block called Vicus in Liverpool Road Manchester as part of a plan to raise cash and reduce debt. The firm also sold the Chill Factore ski slope next to the Trafford Centre generating a £1.1m gain for its joint venture ownership vehicle.
The project team for Mayfield includes Bennetts Associates, Morris & Company, Faithful + Gould, Stace, RoC, WSP, Buro Happold, Studio Egret West, Civic Engineers, CBRE, PP O’Connor.
Upton added: “We have refined our activity to focus on what we do best – creating thoughtful and inclusive regeneration that delivers significant socio-economic benefits. We intend, simply, to do more of this where we can demonstrably deliver exceptional total returns. The company’s distinction, the scale of our core regeneration pipeline and planned disposals of non-core projects present a strong opportunity for significant shareholder value growth in the coming years.”