Opal Property Group considers asset sell off to meet £886m debt mountain

OPAL Property Group, the specialist student property developer with sites in Birmingham and Wolverhampton, is considering a major asset sell-off to help pay back its £886m debt mountain.

According to latest accounts it cost Manchester-based Opal £53m to service debts with 14 lenders, nearly equivalent to its pre-tax profits of £55.4m.

The figures for the year to September show the firm, which employs 546 staff, won short-term extensions on debts of £384m last year.

But £412m with four lenders has already passed a repayment deadline. Last month it struck a standstill agreement until March with all senior lenders that would see it make weekly payments rather than the agreed capital and interest amounts.

In their report the directors said: “During this standstill period the directors, in conjunction with advisers and lenders are considering the future strategy of the group.

“Strategic scenarios under consideration include, but are not limited to, deleveraging the group through one or a combination of selected portfolio disposals, selected individual asset disposals, reprofiling debts with lenders, and the introduction of substantial third-party equity into the group.”

Group overheads grew by £3.1m due to professional fees associated with a potential equity deal.

The directors say Opal can meet its working capital requirements, “on the basis that no restrictions are put on cash usage by the lenders”. But they warn that insufficient support could result in a break-up of the business which is owned by founder Stuart Wall.

During the year turnover rose by 6% to £143.5m. More than two thirds of revenues, or £102.2m, came from Opal’s operational properties which include student lets and flats for professionals, as well as hotels.

This division saw sales growth of 10% which was mainly down to the student accommodation portfolio. Professional lets were flat and hotels grew sales by £250,000. Some £4.4m came from price rises and lease switches, while a further £3m was a one-off benefit from letting student halls during the Olympics.

Sales were static at £41.2m at Opal’s construction business Ocon, however, it incurred an operating loss of 5.6% due to project delays. It delivered 1,751 student rooms and completed projects for the universities of Liverpool and Sussex. It has secured sales of £42.4m for 2013 and £25.3m for 2014.

The firm’s Opal 1 facility is based off Belgrave Middleway in Birmingham city centre, while it also operate Five Ways Hall in Wolverhampton.

Mr Wall could not be reached for comment.

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