£4.1m wiped off council's property

Published on Monday 6 October 2008 21:44

FALLING property values have hit the Edinburgh Council's property development company, according to figures released today.

EDI, a wholly owned subsidiary of the council, has wiped 4.1 million off the value of its property portfolio. The value of its assets, including its shares in joint ventures, fell from 81.4m to 75.6m according to its annual report for 2007.

And the group, which has a number of development projects under way – including the 200m regeneration plan for Edinburgh's Craigmillar area – reported a fall in profits from last year.

It made 1.8m profit on a turnover of 8.6m, down from a profit of 2.8m last year. Turnover was up on last year's figure, 6.4m, thanks to the successful sale of industrial estates sold as a part of a joint venture with J Smart & Co.

Despite the impact of falling property value, the group made an 8.5m dividend payment to the council during 2007.

This was the last of a 15m "equity release" plan outlined in 2006 to raise money to meet the council's higher costs under fair pay legislation.

In previous years EDI sold assets including the Morrison Street goods yard to other developers to raise funds.

Sales of flats developed with joint venture partner Burrel were reported as doing well. They sold 35 residential units at the Coalhill development while 24 properties at Bell's Mills in the Dean Village, more than a third, have already been sold.

The group also negotiated a new, simplified funding facility worth 70m with Lloyds TSB.

Gordon Mackenzie, city finance leader and chairman of EDI Group, said the facility was "a counter-point to the … credit crunch".

"Despite those difficult market conditions, we can be reasonably optimistic," said MacKenzie. "A recent review of EDI by our shareholder, Edinburgh Council, has reaffirmed the view that we remain a key vehicle for developing the city's assets."