Deal with M&G Real Estate expected to herald more disposals
Interserve has sold its stake in a mixed-use scheme in Edinburgh for close to £50m.
The firm formed a joint venture five years ago with Tiger Developments to invest in and construct a £200m mixed-use development in the Haymarket area of the Scottish capital.
The site now has planning for three office buildings running across 345,000 sq m as well as retail space along with a 190-bed hotel and a 170 unit apart-hotel.
Interserve executive director Dougie Sutherland said the £49.1m deal with M&G Real Estate “follows a strategic review of the project and is part of our overall transformation plan, allowing us to realise our investment at a time that is right for both the development and the market”.
The firm, which completed a refinancing with its banks earlier this year, is under pressure to cut costs and bring in cash with net debt set to peak between £650m and £680m in the first half of this year.
Chief executive Debbie White has begun a restructuring plan called Fit for Growth which is expected to rake in annual savings of more than £50m from 2020.
But Cenkos analyst Kevin Cammack said the firm would have to offload more parts of the business to meet upcoming banking covenant targets.
He added: “Further asset disposals will be needed to meet the covenant target of sub £450m gross debt by June 2020. So, a start no more, no less.”