Published By Construction Enquirer
NEWCASTLE-BASED PRIVATE RENTAL FLAT DEVELOPER THE HIGHSTREET GROUP COLLAPSEDINTO ADMINISTRATION OWING AN ESTIMATED £211M.
A report from administrators for the group, which built Newcastle’s HadrianTower, revealed the huge estimated liabilities warning creditors it had stillnot received a full director’s report.
Tolent, which built the Hadrian Tower, is listed as one of the unsecuredcreditors, claiming £1.7m.
Joint administrators SKSi and Insolve Plus said the developer’s liabilitiesstood at £212m, including £124m owed to high net wealth investors helping tofund private rental scheme, and £87.7m to unsecured creditors.
The report put The High Street Group’s assets at £136m, but administratorssaid they were uncertain about how much of this sum can be realised at thisstage because £135m of this amount is in “inter-company receivables”.
The administrators are also investigating an arrangement between High StreetGroup and Hadrian Real Estate, which acquired some of its projects in the NorthEast.
Hadrian was originally part of High Street Group but is now under separateownership with an agreement to use proceeds to pay back some of High StreetGroup’s investors.
The report said that High Street Group got into PRS about six years agoafter directors saw an opportunity for investment funds to move into thissector in the UK.
The developer built a land bank for projects targeting Birmingham,Manchester and Newcastle, eventually extending to 13 schemes with a developmentvalue of £1.3bn.
The firm’s investment strategy involved targeting rich investors offering ahigh-interest seven-year loan note.
After successfully delivering the Hadrian Tower in Newcastle and MiddlewoodPlaza in Manchester around £12m of surplus cash would have been generated.
But as Covid hit in March 2020, investors postponed all new projects,including Brett Wharf in Gateshead and Strawberry Place in Newcastle.
The firm then saw a run on redemption requests from investors, forcing thecompany to stop early redemptions and cease paying interest payments.
During this period, Hadrian Real Estate was launched and an agreement wasreached between High Street Group and Hadrian Real Estate to transfer someprojects to the new development firm to pay down loans.
But a series of winding-up petitions followed leading to the appointment ofadministrators on 16 December.