Tower Gate Developments’ debt burden mounts
MANCHESTER-based property entrepreneur Aneel Mussarrat’s Tower Gate Developments declared a £3.1m loss last year, leading to its auditors striking a note of caution about its future viability.
Accounts recently filed at Companies House show that following the loss, the company, which is part of Mussarat’s MCR Property Group, finished the period with its net liabalities outweighing its assets by £1.9m, compared with a positive net asset position of £7.8m at the start of the year.
The value of its asset portfolio declined by just over £30m during the period to finish at £140.2m. Revaluations knocked £5.6m off, and the company sold £26.2m worth of property but added a further £1.7m worth of new investments.
The disposals also helped to trim the company’s borrowings, which fell from £166.6m to £147.6m during the year.
A note accompanying the accounts from its Heaton Chapel-based auditors, Uppal & Warr, state that the lossess incurred and the net liabilities on its balance sheet “indicate the existence of material uncertainty, which may cast significant doubt about the company’s ability to continue as a going concern”.
However, a seperate statement from Tower Gate Developments’ two directors, Mussarat and MCR PRoperty Group’s legal director Graham Lake, shows that the company is confident that it can continue operating within the levels of its current banking facilities.
“The directors have reviewed cash flow projections for the period until March 2011 and is satisfied that the company has adequate resources to continue in operational existence for the foreseeable future,” it said.
MCR Property Group’s head of asset management, Andrew Philips, told TheBusinessDesk.com: “As with the vast majority of property companies, we are in a position where, due to the property market crash, the value of our assets has fallen and have subsequently been revalued, but where our liabilities remain, leading to this negative set of figures.
“However, our lenders remain supportive and, since the last year end, the company has brokered deals with a majority of its bankers for restructuring its various facilities, giving credence to the director’s optimistic views as to the future of the company.”
He added that the business is now in a far stronger position than at the end of its last financial year.
“Negotiations with the remaining few funders are well advanced and the directors expect to have completed all restructures by the middle of the current year,” he added.
“All interest payments are fully up to date and Towergate is also up to date with all its other incidental bills and payments.”
Phillips said that other parts of the group are continuing to flourish and that the group had completed and fully let two new developments within the past six months, bringing in extra income of £1m per year.
During the last financial year, the administrators of Kaupthing Singer & Friedlander appointed Lambert Smith Hampton as Joint Law of Property Act Receivers on a site the company owned at Water Street on the border of Manchester and Salford.
Kaupthing Singer & Friedlander had held a £56m mortgage on the site, which had previously contained a Harry Ramsden’s outlet but had been cleared for development. Tower Gate Developments has said that it had drawn down less than a quarter of the £56m loan.
Tower Gate Developments had planned a mixed use scheme for the site consisting of three residential towers of 21, 19 and six storeys. The towers were initially due to house 319 apartments and 35,00 sq ft of office space.
In 2008, Mussarat’s property empire was valued at £1bn. He started his company at the age of 17 collecting rents on properties owned by his family. He built the business providing student and keyworker accommodation, but has since diversified into office, commercial and prime residential properties.
