A MULTI-MILLION-pound project to redevelop one of Edinburgh’s landmark buildings is set to be revived following the £210 million sale of Scottish house builder Cala.
Cala, bought by private equity firm Patron Capital Partners and insurer Legal & General, said it now has the “financial muscle” to push ahead with the redevelopment of the Donaldson’s School for the Deaf after several attempts to sell the building failed.
The prominent A-listed building has lain empty for five years while the cash-strapped Cala struggled to find a buyer for the school.
Alan Brown, chief executive of Cala, admitted the project would be “capital-intensive” but said it was an “iconic building on a fantastic spot”.
He added: “We now have the financial muscle to allow us to have a rethink about Donaldson’s and decide we might do it ourselves.”
Legal & General has said the group has a £36.5 billion “war chest” for investment.
Brown said “a number of interested parties” have been eyeing the former school for the deaf for redevelopment as a hotel or luxury flats, and these still “might go ahead”.
However, sources have claimed that a deadline at the end of 2012 brought the most recent bidding round to a close. It is understood Cala had been looking to sell Donaldson’s for around £15m – lower than the £22m it paid to acquire it nine years ago.
A previous bid round, where the asking price was reported to be £22m, failed in 2011.
The William Playfair-designed school has lain empty since 2008, when its students relocated to a new property in Linlithgow.
Last April, the 162-year-old building was added to the Buildings At Risk Register by the Royal Commission on the Ancient and Historical Monuments of Scotland.
The school, which sits on 18 acres of land on a prominent site in Edinburgh’s salubrious Murrayfield district, has planning permission for 63 apartments in the building and 72 on the grounds at the rear and side.
Until the house builder was sold by Lloyds Banking Group last week, Brown said the company’s ability to grow was “restricted”.
“Although our growth was restricted in terms of our ability to develop sites, it wasn’t restricted in our ability to own contract sites – provided that by about this time we had a new partner in place to provide funding for growth. Timing has been really good, the team has done really well,” said Brown, who called the deal a “marriage made in heaven”.
Brown added that it expected to increase the number of houses it builds from 700 to more than 1,000 in the next two to three years.
In 2009, Cala was forced into a major restructuring, including a debt-for-equity swap with Lloyds, after racking up losses of £226.1m.
Last year the company unveiled its highest profits since the group was taken private in 1999. Cala reported a sharp rise in annual pre-tax profits to £11.4m, up from £2m the previous year, which had been its first move back into the black since the onset of the housing crisis.