Former owner Ronald Persaud in talks to buy problematic £300m Caltongate scheme out of administration
A 10-year slog to find a developer for the huge Caltongate scheme in Edinburgh city centre came full circle this week, when the site’s former owner entered exclusive talks to buy it out of administration.
Ronald Persaud is understood to be the frontrunner to buy the 9 acre site back from administrators at Deloitte for up to £10m. Persaud used to own the site alongside Dutch fund Sofam, before selling it to investment manager Mountgrange Capital in 2004. Sources close to the deal suggest that Persaud has received financial backing from a South African investor.
The fact that a developer with a longstanding track record, backed by international capital, is willing to take on the site is seen as a vote of confidence for the regional development market.
The UK-based property developer is the latest in a long line of parties to come close to developing the scheme in the heart of Edinburgh’s old town. The existing planning consent is for 185,000 sq ft of offices, 200 flats and a 205-bed Sofitel hotel, and could have an end value up to £300m.
In April Property Week revealed that exclusivity between Deloitte and developer Prism had ended, and that talks were under way with several local parties with better knowledge of the site’s history.
Edinburgh-based Chris Stewart Group and Scottish property company Miller Group are thought to have been among the interested parties bidding. It is believed that Persaud could try to reduce the amount of offices and increase the number of flats to make the scheme viable in the present market.
The site has been a thorn in the side of developers, most notably Mountgrange Capital, which bought the site in 2004 from Sofam as part of a £60m portfolio of regional development opportunities.
The long-running planning battle resulted in the company being placed into administration in March 2009. It spent four years attaining planning consent that incorporated adjacent council-owned land, a process complicated by the site’s proximity to Unesco world heritage sites. There were also question marks over the council’s procurement procedure.
To implement the existing plans, Persaud would need to develop a similarly close relationship with the council, which owns 20% of the buildings on the site, or embark on another expensive planning process.
The council withdrew its assets from the scheme last year, but is now believed to favour the idea of a comprehensive development. Persaud’s former development company, Cuckfield Group, formed a joint venture with Sofam, called New Street Partners, that bought the Caltongate site in the summer of 2000.
Cuckfield was known for finding difficult sites with potential and stepping in quickly with an unconditional offer, but was liquidated in 2007.
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