Plymouth city centre’s ghost block of empty student flats has defects that will cost millions of pounds to put right and people owed money by its owners are therefore unlikely to get paid.
Administrators for, say debts of nearly £8million are owed to creditors.
And in addition the lender which provided the cash to have the block built is unlikely to reclaim the full £33million it is owed because the faulty building has dipped so much in value.
READ MORE: {}
Documents filed at Companies House reveal administrators at business consultants BDO LLP aim to sell the vacant block but brought in commercial property experts at JLL to give it a thorough inspection before it could be marketed.
A BDO report said specialist consultants and surveyors carried out surveys to find out the extent of defects and what remedial work is necessary, and then work out how much it would cost to put them right.
The report said it is not possible, at this stage, to identify the full extent of he remedial costs as a competitive tendering process would have to be carried out, but did say: “We can confirm that these costs will potentially amount to several million pounds.”
The report said whether the building is sold in its current condition or after repairs are made it will still bring in “significantly less” than the £33.5million the lender, London-based Longbow, is owed.
Crescent Point was valued at £30million in December 2019, but BDO said that was based on the assumption it is fully occupied at the going market rent when sold as a going concern. BDO stressed: “Vacant property is worth much less”.
Most Read
The Crescent Point towers, two separated buildings of 12 and 15 floors in Notte Street, have never been occupied. The block, which cost more than £20million to build, was supposed to open in September 2018 but didn’t due to .
It was constructed to house 348 students, but none have moved in and no businesses have rented the ground-floor commercial space either.
The company which owns the freehold, Plymouth (Notte Street) Ltd, part of the London-based Harouni Group, went into administration in November 2019.
How to contact William Telford and Business Live
Business Live's South West Business Reporter is William Telford. William has more than a decade's experience reporting on the business scene in Plymouth and the South West. He is based in Plymouth but covers the entire region.
To contact William: Email: william.telford@reachplc.com - Phone: 01752 293116 - Mob: 07584 594052 - Twitter: - LinkedIn: - Facebook:
Stay in touch: BusinessLive newsletters have been re-designed to make them even better. We send morning bulletins straight to your inbox on the latest news, views and opinion in the South West. Get our breaking news alerts and weekly sector reviews too. Sign up now - it's free and it only takes a minute. To sign up for Business Live's daily newsletters click .
And visit the Business Live South West LinkedIn page
BDO has now had the administration extended, by the High Court, to November 2021 and has sent a confidential report about Plymouth (Notte Street) Ltd’s affairs to the Secretary of State for Housing, Robert Jenrick.
The administrators still hope to sell Crescent Point and then dissolve Plymouth (Notte Street) Ltd but said only the secured creditor, which is Longbow, is likely to receive any cash. The lender has fixed and floating charges over the property but is likely to suffer “a significant shortfall” when the building is sold.
On top of its outstanding loan, Longbow has already paid more than £2million towards the cost of the administration and is also facing further costs including interest payments, administrators’ fees, legal bills, and payments to security companies.
Don’t miss
DOES CRESCENT POINT HAVE A FUTURE AS STUDENT FLATS, OR SHOULD IT BE REPURPOSED? PLEASE COMMENT BELOW
Meanwhile, claims from unsecured creditors have poured in and amount to £7.85million. But BDO said: “Regrettably there is unlikely to be sufficient asset realisations to enable a distribution to be made to unsecured creditors.”
The building has also been the subject of legal battles. In 2019, Mears Ltd v Costplan Services (South East) Ltd, Plymouth (Notte Street) Ltd, JR Pickstock Ltd was heard by the Court of Appeal.
Mears, which managed the block, took court action after it emerged 56 rooms were more than 3% smaller than they should have been, and the only way to put them right would have been to demolish the building and start again. But the court found against Mears and said that while there was a breach of contract, it was not deemed “material”.
Some legal cases, involving Plymouth (Notte Street) Ltd and the companies Costplan, a quantity surveyor, and civil engineers Ramboll, have been discontinued and settled, respectively. A case involving Plymouth (Notte Street) Ltd and the building firm Pickstock and engineers Harixon, is ongoing and likely to be heard in the summer.