Urban Splash restructures and prepares to develop

Urban Splash today announced a company restructure and asset sale which will enable it to reduce its debts and once again start to develop the types of scheme it was once famous for.

A spokesman for the Manchester company insisted the restructure was not a result of the company having become insolvent and reflected its desire to focus on property development rather than asset management.

Accounts for the year to March 2012 showed Urban Splash had net debts of £242m.

The Manchester developer has sold a residential portfolio of 654 apartments to Places for People in a deal worth £77m, which will be used to reduce group debt.

Places for People has provided Urban Splash with a three-year sales and management contract for the properties in the South West, Yorkshire and Manchester, including the Silvia, Christabel, Chips and Longlands developments.

The portfolio includes stock from Urban Splash schemes which have seen investment through the Homes & Communities Agency, including its Rent to Homebuy Scheme.

A new holding company has been formed as well as a property management company and a number of Urban Splash asset holding companies.

Urban Splash is also understood to have attracted new undisclosed private investment for development purposes and is seeking joint venture partners.

Urban Splash chairman Tom Bloxham said "The sale of this portfolio marks a significant turning point for Urban Splash and the funding from it will be used to reduce debt while our corporate restructure will allow us to undertake future development projects.

"This restructure, sale of the residential portfolio and setting up of a sales and management agreement with Places for People signals the start of a new beginning for us.

"It has been a tough five years but during that time we have delivered some great award winning projects including the Royal William Yard in Plymouth, Lakeshore in Bristol, Longlands in Stalybridge and Park Hill in Sheffield.

"We are pleased that we have now been able to undertake a corporate restructure and place individual properties and relevant debt into new legal entities.

"Over the last 20 years, we are very proud of our track record for transformation, which has been recognised with 342 awards. We hope that this restructure will allow us to continue helping to regenerate the UK."

All of the Urban Splash companies remain 100% owned by Urban Splash directors.

The new management company and a number of the asset holding companies are entirely free from bank debt and will be the entities via which Urban Splash will undertake new projects going forward; both on their own and in joint venture partnerships.

Urban Splash Management Limited will provide residential and commercial property management, sales, marketing and development advice services to other Urban Splash companies as well as to Places for People and a number of other third parties.

Advisors from Deloitte and Eversheds worked with Urban Splash on the restructure, sale and management agreement.