Negotiations on funding deals for two major mixed-use developments in
Gladedale Capital has ended talks with Paul White’s Frogmore to forward fund its £150m scheme at 220 Broomielaw.
Stockland Halladale’s deal with Scottish Widows to fund the £25m redevelopment of Shaftesbury House on
Gladedale had been in negotiations with Frogmore to create a joint venture to deliver the 395,000 sq ft, 220 Broomlielaw since the summer.
Martin Smith, development director at Gladedale, said: “We came close to an agreement but, after a four-week period of detailed discussions, weren’t quite there and so decided not to proceed.”
Smith added that Gladedale was now planning to fund the Make-designed scheme using debt finance. Work is expected to begin next spring.
Stockland Halladale confirmed that it had “failed to reach an agreement” with Scottish Widows on funding for Centro, its 57,000 sq ft redevelopment of Shaftesbury House.
Joint managing director Ken Lindsay said the scheme would now be self-funded “off balance-sheet”, with work starting imminently for completion in 2009.
“The credit crunch is affecting everything but there may also have been a perceived future oversupply problem, which has resulted in the appearance of a sluggish funding market,” said Andrew Kubski, investment partner at Drivers Jonas. “Developers could struggle to get the funding levels that allow future schemes to get off the ground.”
Prime yields in the city have softened from around 4.5% to 5.25% since the start of the year.
