Deal with M&G Real Estate expected to herald more disposals
Interserve has sold its stake in a mixed-use scheme in Edinburgh for close to 拢50m.
The firm formed a joint venture five years ago with Tiger Developments to invest in and construct a 拢200m mixed-use development in the Haymarket area of the Scottish capital.
The site now has planning for three office buildings running across 345,000 sq m as well as retail space along with a 190-bed hotel and a 170 unit apart-hotel.
Interserve executive director Dougie Sutherland said the 拢49.1m deal with M&G Real Estate 鈥渇ollows a strategic review of the project and is part of our overall transformation plan, allowing us to realise our investment at a time that is right for both the development and the market鈥�.
The firm, which completed a refinancing with its banks earlier this year, is under pressure to cut costs and bring in cash with net debt set to peak between 拢650m and 拢680m in the first half of this year.
Chief executive Debbie White has begun a restructuring plan called Fit for Growth which is expected to rake in annual savings of more than 拢50m from 2020.
But Cenkos analyst Kevin Cammack said the firm would have to offload more parts of the business to meet upcoming banking covenant targets.
He added: 鈥淔urther asset disposals will be needed to meet the covenant target of sub 拢450m gross debt by June 2020. So, a start no more, no less.鈥�
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