Beetham Tower sale ends owner’s legal nightmare
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The owner of Beetham Tower has got rid of its “very challenging investment” after finding an investor to take on the Manchester city centre landmark.
The sale of the building’s freehold to an unnamed investor is for a nominal sum but frees Ground Rents Income Fund (GRIO) from the ongoing impact of a long-running and costly legal dispute.
In a statement confirming the deal, GRIO said: “The property has been a very challenging investment for the company but completion of the disposal is a positive step forward.”
Beetham Tower, which is home to Hilton Manchester Deansgate and 219 apartments, was the UK’s tallest building outside London when it was completed in 2006.
The building generates an annual ground rent of £33,250 from the apartments and £30,902 from the hotel, which is on a 999-year lease.
GRIO bought it in 2012 before a cladding defect was found at the 47-storey building two years later.
The original contractor, Carillion, carried out a temporary fix but the went into liquidation before a permanent repair was made.
The hotel operator Blue Manchester began legal proceedings against GRIO’s subsidiary NWGR within weeks of Carillion’s liquidation in early 2018. In the summer NWGR launched its own claims against Carillion and its insurers, façade sub-contractors Bug-Alutechnik and architects SimpsonHaugh.
In 2019 the High Court ordered NWGR to carry out a permanent fix within 18 months, with the work later costed at £8.9m.
An alternative repair scheme priced at £4.1m was drawn up and received planning permission but was blocked by the High Court in October last year. It did, however, extend the deadline to complete the work to July 2022.
GRIO had a £2.9m provision in its accounts for the cost of the repair work, which was its estimate of its part of the bill after recovering some costs from third parties. This will now be reversed, but it will add in a £300,000 increase in costs relating to Beetham Tower.
GRIO said the buyer is “expected to deliver a long-term repair solution for the property”.