Forth Ports is to launch a search for a development partner for the first phase of the redevelopment of Edinburgh’s Leith Docks – the largest planning application yet approved in the Scottish capital – by the end of the year.
The group, which posted its interim results today, said that it expects to lodge an application for the Hub – the first two villages in the Leith Docks development – later this year.
The Scottish-based ports group reported a 25% drop in pretax profit to £9m after £7.5m was wiped off the value of its £120m Ocean Terminal shopping centre as a result of a movement in commercial property yields.
A statement from the group also forecast further write-downs on the value of its assets and said there has been a decline of “between 15% and 30%” on land values.
The property arm of the seven-strong ports business made a “modest” loss of £400,000 compared with the first half of 2007 when it dropped £500,000 in the red.
The results, to the end of June, were posted the day after the group received outline consent for its 30-year Leith Docks development, which will comprise up to 15,000 townhouses and feature nine ‘urban villages’ including a mix of commercial, retail, industrial and leisure uses.
Despite plans to begin searching for a development partner, the group has “deferred” the infrastructure spend at Leith Docks by more than £40m.
Group chief executive, Charles Hammond, said: “Given the current conditions in the property market, we have reassessed the timing and focus of our [infrastructure] spend over the next few years and have deferred it by over £40m which should result in a spend of around £30m in the three year period 2008/10.”
Hammond added: “The UK property market generally, and the residential market in particular, has experienced a further downturn this year.
“We therefore believe that, despite the positive effect of planning and physical progress on our development assets, there is likely to be a reduction in the market value of these assets (including Ocean Terminal) when they are valued at the year end.
“This expectation reflects the belief that there will be a deferral of disposals and that where disposals occur, they will be at lower levels than had been previously assumed.
“Based on expected house price declines in the current year, land values are generally thought to be down in a range of between 15% and 30%.
He also said that the group will continue to pursue a strategy of maximising asset value rather than realising short-term profits at the expense of this primary aim, and confirms there will be no sales of development sites over the next few years.
The results made no mention of recent press reports that the group was facing calls for a break-up from shareholders.
