Caledonian Tst. Regulatory News (CNN)

Information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR").

24 May 2019

Caledonian Trust plc

("Caledonian Trust" or the "Company")

Update on proposed sale of St Margaret's House

Caledonian Trust, the Edinburgh-based property investment holding and development company, provides an update on its proposed sale of St Margaret's House, 151 London Road, Edinburgh ("St Margaret's" or the "Property") to Drum Property Group Limited ("Drum" or the "Purchaser") (the "Proposed Disposal"). Details of the Proposed Disposal were originally announced by the Company on 5 February 2018.

Following recent discussions, Caledonian Trust and Drum have agreed to amend the missives originally entered into on 2 February 2018 in relation to the Proposed Disposal (the "Missives"), in order to allow Drum sufficient time to progress with the Proposed Disposal.

Drum has been diligently pursuing its proposals for its development and good progress has been made, including completing the necessary investigation of the ground conditions and resolving a mixture of technical challenges, including designing a new and improved vehicular access to the site. Drum is now in a position to finalise their proposals for submission of the requisite applications for detailed planning consent.

Under the amended Missives, Drum is required to submit all of the requisite planning applications for consent for its proposed development by a date which is three months from 23 May 2019 (unless extended by mutual consent). Following the submission of planning applications, Drum will have a period of twelve months to secure such consent. Thereafter Drum will have a period of three months in which to conclude a pre-letting of its proposed development. In order to facilitate completion of the Proposed Disposal, Caledonian Trust will then need to provide vacant possession of the Property, which the Directors estimate will take up to six months following the conclusion of the pre-let. 

On the basis of the sequence of key events described above, the Directors expect that completion of the Proposed Disposal will take 24 months from today's date. 

The amended Missives contain a variation to the mix of units to be sought within the planning consent for Drum's proposed development. Drum is now required to obtain planning consent for a proposed development comprising not less than 493 student bedrooms (which was previously 429 student bedrooms under the original Missives) and 98 flats (unchanged from the original Missives). Whilst the number of student bedrooms required in Drum's planning consent has increased, the total gross area for student accommodation is unchanged, due to the removal of larger studio flats overall and their replacement with more cluster units which accommodate more bedrooms in the same gross area.

The amendments to the Missives will not affect the consideration for the Proposed Disposal, which remains as £15.0 million (exclusive of VAT), payable to the Company on completion of the Proposed Disposal in cash. 

The use of proceeds in respect of the Proposed Transaction remains unchanged, in that the Company intends to use the net proceeds to provide funding to accelerate the Company's existing property development programme, re-invest into new property developments, repay certain existing debt and provide general working capital.

Under the amended Missives, there is still the potential for Company to receive additional cash consideration should the planning permission process result in the development comprising additional student bedrooms and/or additional housing units. However, certain of the reference criteria to be used in the basis of calculation in respect of any additional consideration have been changed to reflect the changes to the proposed mix of units within the planning consent that Drum will seek, as detailed above. The Directors remain of the view that it is unlikely that any additional consideration will be received over and above the consideration of £15.0 million referenced above. 

St Margaret's is the Company's largest property and is located in Edinburgh, approximately one mile from the Parliament and Princes Street and adjacent to Meadowbank Stadium. The existing building is a 92,000ft2 multi-storey building that is currently fully let out with the main tenants being Edinburgh Palette, a registered charity, with the Registrars of Scotland renting 120 car parking spaces. The Company has planning permission in principle (PPP) at St Margaret's for a 231,000ft2 mixed-use development.

A book value of £8.0 million was attributed to St Margaret's as at 30 June 2018 in the last audited accounts published by the Company. For the year ended 30 June 2018 St Margaret's generated gross rental income of £191,375 for the Company and an operating profit of £155,949. 

The Company will release further announcements on the Proposed Disposal at the appropriate time.

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