Following the collapse on Tuesday of Signature Living with more than £120,000,000 of losses I’ve has written to Liverpool’s Mayor, Joe Anderson, asking him to establish a Task Force of institutional investors to try and sort out the City’s property problems.
Although most of these problems were not caused by the City Council it is nevertheless our responsibility to put them right because there is no other organisation that can do this. The alternative is to have a new wave of poorly financed speculators buying up assets on the cheap and also of some assets never being developed and being left, like the Paramount scheme in London Road, in an increasing dangerous and unsightly state.
We need to bring into our City experience institutional investors who can evaluate these schemes commercially and bring their expertise and know how into play with these problems. Liverpool desperately needs long term and stable investors like the insurance companies and big long-term developers like Grosvenor and Bruntwood to come in and work with us.
We also need to try and bring forward the Company administrators who have individual legal responsibilities to their individual sets of debtors into a partnership with the Council which might unlock a better return of some assets to those whose investment hopes haven so cruelly abused”.
The full letter is appended here:
Joe Anderson, Mayor of Liverpool,
Tony Reeves, Chief Executive, Liverpool Council
1st July 2020
Dear Joe and Tony,
We need a property Task Force.
The news that yesterday the main Company behind Signature Living has more than £120 million of debts and is not capable of being resurrected hardly came as a surprise. It was just the latest in a series of catastrophes which have beset our property market with companies who have used a fractional investment model and other sources of finance.
We can also count:
- Problems with Fox Street
- Problems with the original company that was going to build on the China Town Site
- Problems with the second company that was going to build on the China Town Site
- Problems with Elliott Group.
- The investigations by the Police into a range of Liverpool based developers and our own staff.
The suggestion is that more than £500,000,000 is owed to investors and that most of it will not be repaid. I have seen no forensic examination of that figure but it would seem to be about right
I would urge that the Council should now produce its report on factional investment as it is clear that Liverpool has been roe affected by this form of investment than any other city. In fact, it has been affected as much as the rest of the Country put together. The main purpose of this letter is not to look back but to look forward.
My concern now is what happens to the assets in the hands of the administrators. In many ways it is not our responsibility to mop after this activity but it may be our job.
There is a clear fear that the assets held by administrators will eb passed on at the cheapest possible price to bargain hunters looking to make a killing from the Liverpool property scene. I hope that you would agree with me that they are not the people we want to see running the Signature Living hotels or finishing off, if they can be finished off, the half-built blocks scattered around our City Centre.
I believe that the Council should convene two sets of people in to strategic groups to try and resolve the situation:
- We should bring together a Task Force of institutional investors to establish a Single Purpose Vehicle to examine what can be purchased from the administrators, put back into use or finished off. At the same time preserving what value that can be extracted for the investors who put the original investments in to get the schemes off the Ground.
The Council has no legal responsibility to do this but I believe needs to act because these things happened in our City and it is our City’s Reputation that is being trashed by these dodgy investments.
- We should convene a meeting of all the administrators of the individual schemes and companies to try and show that corporate action is being taken which might provide better return for the investors as they pursue individual winding up activities than they would get from working as individual administrators.
I have no idea how much this will all cost, how much money is still available from the original investors; what the current asset value before debts is of the schemes; what the net asset value (obviously a minus amount) is; how much is needed to complete schemes to the required level; and how much will be needed by way of public sector subsidy to make sure that the responsible private sector can be encouraged to join us.
I do think that we must act now. The longer that this goes on the more the likelihood that some schemes will rot to a point or no return or that a second way of inexperienced developers with equally implausible financing methods will move in instead.
I would be pleased to discuss this with you but would state my belief that these or similar actions must take place as a matter of absolute urgency if our City is not to be permanently disfigured with dangerous and unsightly half buildings.
Cllr Richard Kemp CBE
Leader, Liverpool Liberal Democrats