The Quartermile development, on the site of the former Edinburgh Royal Infirmary, has been sold by Lloyds Banking Group-backed developer Gladedale Capital to property investor Moorfield.
Yesterday’s deal came more than a year after Gladedale was said to be in talks to sell the 19-acre scheme – home to legal heavyweight Maclay Murray & Spens and flight search firm Skyscanner – to London-based Exemplar Properties for a reported £65 million.
Moorfield remained tight-lipped on the value of the transaction, but chief investment officer Charles Ferguson Davie said he was “very excited” with the prospects for the project, which Gladedale had previously estimated could be worth as much as £500m once it is completed. He added: “The Quartermile team have done a fantastic job so far and we will aim to continue to focus on the creation of a vibrant community at Quartermile that will appeal to both the existing residents and the future ones that we hope to attract.
“Edinburgh is a leading city on the global stage and we believe that the mixed uses the destination estate offers will prosper due to increasing demand and a shortage of supply.”
Gladedale is owned by Dunfermline-based Avant Homes – formerly called Gladedale Group – which operates in Scotland under the Bett and Manor Kingdom brands.
The Quartermile site was sold by the Lothian University Hospitals Trust in 2001 to a joint venture between Bank of Scotland, Taylor Woodrow and Kilmartin Property Group, for about £35m. In 2005, Gladedale bought out Taylor Woodrow’s 50 per cent stake in the development in a deal thought to be worth as much as £200m, while Kilmartin fell into administration in 2010.
Development largely ground to a halt in the property crash in 2008-9, but once finished the scheme will feature 900 flats, 395,000sq ft of offices and 70,000sq ft of shops and leisure space.
The Quartermile deal represents Moorfield’s second investment for its latest real estate private equity fund, which teamed up with Oaktree Capital Management in July to buy a Manchester office building from Edinburgh-based Scottish Widows Investment Partnership for £41m.
In April, the fund said it had secured more than £100m from European and US investors, and is eventually aiming to have £250m to invest in UK properties.
Neil Fitzsimmons, chief executive of Avant Homes, said the sale of Quartermile would allow the firm to focus its efforts on developing its core residential business. In 2009, state-backed Lloyds completed a debt-for-equity swap that gave it preference shares in the developer in exchange for writing off about £500m of its £1 billion debt.
Last year, Lloyds restructured the property firm’s borrowing facility, giving it until the middle of next year to repay its loans, extendable to 2015.
Former Gladedale managing director Paul Curran, who will remain as head of the Quartermile project, said: “We are delighted to have the backing of Moorfield to take Quartermile forward.
“With almost 500 apartments now sold and a growing business community choosing the development – including the latest tenants Skyscanner, Investec and Marriott – this is a very exciting time for everyone involved.”