Developer Urban Splash is currently in talks with RBS and the Co-op Bank to renegotiate a ‘large proportion’ of its bank loans, which are payable on demand or due within 12 months.
The developer blames the credit crunch for the ‘difficult trading environment’ that has left the company negotiating with lenders.
‘Sales of residential homes by the group… are significantly below those levels contemplated, which has adversely affected profits and liquidity in the financial year,’ said the directors in a statement which accompanied their recently-posted 2008 financial results (see attached .pdf for full report).
The statement also reveals that Urban Splash has ‘instituted measures to preserve cash, reduce costs and generate new income by renting out completed homes that have not been sold’.
Founded by Tom Bloxham and Jonathan Falkingham, Urban Splash has gained a reputation for its regeneration of ailing industrial sites in northern UK cities with the help of high-profile and emerging architects. Developments include New Islington, Manchester, which recently saw the completion of Will Alsop’s building, Chips.
In the statement, the directors say they believe they will be able to successfully renegotiate with lenders: ‘It is unlikely that the banks would demand facilities to be repaid in the next 12 months and that those due for renewal will be satisfactorily renegotiated.’ The firm has already agreed a £101.2 million overdraft with HSBC.
According to the company’s profit and loss account, Urban Splash has experienced significant growth over the past year, with sales having increased by 9% to £62.1m.