Private real estate investment management firm Apache Capital Partners and build-to-rent developer Moda Living have engaged sister company Caddick Construction on their £154 mln (€175 mln) Angel Gardens scheme in Manchester, following the collapse of the project's contractor Carillion.
The announcement marks one of the first major private contracts to be back on site within two weeks of the Carillion collapse, which is expected to affect thousands of projects worldwide and put up to 43,000 jobs at risk, plus hundreds of subcontractors.
'It was critical to Apache Capital that, as soon as we became aware of financial difficulties of Carillion in summer 2017, we implemented our contingency plans to ensure that we protected the interests of our investors and banking partner Pbb,' commented Richard Jackson, managing director and co-founder of Apache Capital.
Carillion started work on Angel Gardens in January 2016 after Apache Capital and Moda agreed a £85 mln (€97 mln) BTR senior debt facility with Deutsche Pfandbriefbank, a record for the asset type.
Moda’s sister company Caddick Construction will deliver the £154 mln Angel Gardens scheme in Manchester, directly hiring 20 former Carillion employees. It is one of the country’s biggest residential schemes outside of London and the move will save around 500 jobs on site, protecting around 30 sub-contractor companies previously working under Carillion before it entered liquidation on 15 January.
Carillion collapse
The collapse of Britain's second biggest construction company is expected to affect thousands of projects as well as many of the firm's workers, including 20,000 employees based in Britain plus another 20,000 overseas. The company has a significant presence in the Middle East and Canada.
The outsourcer fell into compulsory liquidation on 15 January after a string of profit warnings in 2017. A last-ditch attempt to secure a deal with the UK government and the company's bank lenders failed.
Although Carillion is a constuction firm, it also provides facilities management and maintenance services in hospitals, schools and prisons, holding 450 UK government contracts at time of collapse.
When the liquidation was announced, Carillion had £900 mln (€1 bn) of debt and a £587 mln (€667 mln) pension deficit. Its market capitalization had fallen to £61 mln (€69 mln), down from £2 bn (€2.2 bn) in 2016.
Contingency plans
Moda and Apache Capital said that they had contingency plans in place since last summer and the announced move ensures there will be no material impact on the project’s cost or timeframe of delivery.
'We have had contingency plans in place for some time and wanted to prioritise saving jobs, as we hugely appreciate the critical role played by the main sub-contractors and small businesses that support major projects,' said Andrew Parker, director of projects at Moda.
'We have always remained close to the key sub-contractors and suppliers throughout the process and this has proved to be an essential part of the solution to keeping Angel Gardens on track.'
Caddick Construction will now act as construction manager and coordinate existing subcontractors across the 35 storey, 466-home build to rent (BTR) project. The company has recently been building its presence in the North West with a number of new hires.
Moda currently has plans in place to deliver a £1.7 bn (€1.9 bn) pipeline of 6,000 rented homes in cities across the UK, with other schemes in Birmingham, Edinburgh, Glasgow, Leeds and Liverpool already in the works.
