Caledonian Trust fails to secure sale of St Margaret's House

Caledonian Trust put the potential sale of St Margaret’s House (SMH) at 151 London Road, Edinburgh, on an uncertain footing on Wednesday, as discussions with interested parties have not culminated in a concrete agreement.

The AIM-traded firm had announced on 24 February that it had set up a closing date for indicative offers for the property amid robust interest and subsequently received non-binding proposals from three independent entities.

After detailed analysis and deliberation of the proposals, a preferred bidder was chosen, and an exclusivity agreement was entered to finalise formal terms for purchase by the end of April.

However, Caledonian Trust said the negotiations with the parties had yet to result in a sale despite agreeing on formal terms with potential buyers over recent months.

As a result, the company was pivoting towards a new strategy for SMH and was planning to officially market the property in the spring of 2024, contingent on continued improvement in market conditions.

The previous intent that any formal agreement would be conditional, in particular, on the buyer acquiring the necessary amendments to the planning consent at SMH, still stood, but outcomes remained uncertain regarding the sale’s occurrence, terms, and timing.

In a parallel development, Caledonian Trust said it had agreed with Leafrealm to alter the interest rate on its loan.

Leafrealm, a company controlled by Caledonian Trust’s chairman, chief executive and major shareholder Douglas Lowe, had provided an unsecured loan to the company of £4.02m.

The interest rate on the loan, currently set at 3% over base, would undergo a reduction from 10 October to 2% above the base rate of the Bank of Scotland, capped at a maximum rate of the base rate plus a 5% per annum margin and floored at a minimal rate of 2%.

Despite the adjustment, Leafrealm maintained the right to revert the margin to the original 3% per annum over the base by providing a minimum of a three-month written notice to the company.

“The remainder of the terms of the Leafrealm loan, which was originally put in place on 30 June 2016, remain unchanged,” Caledonian Trust confirmed.

“The Leafrealm loan has been utilised by the company to fund existing property developments, to provide working capital for the company and to provide a source of funding for development at SMH and at Belford Road.”

At 1054 BST, shares in Caledonian Trust were down 6.25% at 150p.

Reporting by Josh White for Sharecast.com.