SeaChange is having trouble meeting its loan repayments for the Priory Quarter (Havelock Place) development. At a meeting of the South East Local Enterprise Partnership (SELEP) in September 2018, it was reported [p86] that SeaChange was requesting a second change to the repayment schedule for the £7m Growing Places Fund loan which it was granted for the Priory Quarter phase 3 development.
In March 2017, SeaChange came to SELEP asking for a change to the repayment schedule for the Priory Quarter development. This was because “the take up of tenancies at the site has been slower than anticipated.”
At that point, SeaChange had only found one tenant, a medical company which was occupying a mere 16% of the available space.
SELEP agreed the amended schedule [p86], which would mean that SeaChange was only required to pay £65,000 back for each of the first two years of the five-year agreement, rather than the original £400,000. That would leave £735,000 to pay for each of the following year, followed by a final payment of £5.4m.
“Below market value rental receipts”
In January 2018, SeaChange announced that they had finally found a tenant to take up the rest of the space in the Havelock Place development. It was the Department for Work and Pensions, which was moving its staff from another site in Hastings.
All well and good, except that in order to persuade the DWP to sign the lease, SeaChange had offered what is euphemistically referred to as a “soft start” – this is explained [p86] as “below market value rental receipts for the first five year period”.
In fact, a March 2018 SELEP update to the Growing Places Fund states that the first year will be entirely rent-free for the DWP.
So SeaChange had found some tenants (albeit not ones who would be creating jobs, as opposed to simply moving them around the town) but by offering them a sweetener to take the lease, they’d put themselves in the position of being unable to meet the loan repayments.
There was only one thing to do: reschedule the loan again. So SeaChange have gone back to SELEP and asked for the loan repayments to be pushed back for a second time. Now the payments look like this:
In the revised schedule, the £65,000 for each of the first two years still stands, but repayments for years three and four have gone down from £735,000 to £211,000. That leaves a massive £6.4m to be repaid in the fifth and final year (2020/21).
Will SeaChange be able to meet its loan repayments, or will it be asking for the loan to be rescheduled for the third time? Watch this space.