A proposed apartment development in Sutton Coldfield has been put into receivership after its owner became the first major residential developer to fall victim to the credit crunch.
City Lofts had been planning to develop the site in Brassington Avenue since January last year. The company had proposed building 295 apartments and 66,500 sq ft of commercial space on the site, which it acquired from the Cala Group in 2005.
The apartments would have been a mix of studio, one, two and three bedroom properties, while the commercial development had planning permission for cafes, restaurants and leisure use.
However, the fate of the development has been thrown into doubt after Harrogate-based City Lofts was forced to place 250 unsold apartments into receivership.
Bank of Scotland Corporate, which is the company’s largest lender, has appointed insolvency experts Allsop as receiver with a view to disposing of the unsold apartments and the Sutton site.
The apartments are spread across six cities including Manchester, Nottingham, Leeds, Liverpool and Cardiff.
City Lofts, partly owned by US private equity firm JER Partners and investment bank Lehman Brothers, said it had requested its residential portfolio and its development assets be put into receivership as part of a restructuring process.
The company, which was formed in 1996, said it was carrying out the restructuring because of the difficult residential market conditions.
It said it hoped that the process could be completed as quickly as possible.
HBOS’s loans and investment in housebuilding represent less than one per cent of the group’s balance sheet, but its stakes in groups including Crest Nicholson, McCarthy & Stone, Countryside Properties, Miller Group and Tulloch have become a growing concern for analysts in recent weeks.