(P.78) Schemes left THI and dry

Top developer's collapse signals a low point for the UK leisure sector

by Sean Cronin - Estates Gazette 21 April 2001

Buyers were this week being sought for eight major schemes in Britain and Spain left in limbo following the collapse of top leisure developer THI plc.

Administrative receivers from Ernst & Young were called in when the firm found itself in trouble after expanding abroad. It had been searching for new business following a slump in UK demand for big-box leisure schemes.

Insiders say the firm found it was unable to pay back the high-interest loans it had taken out to fund this expansion.

Mark Girling, Knight Frank investment partner and funding adviser to THI for over a decade, said the news of the company's collapse had come as a "complete shock".

"They had such a good track record in the UK and were definitely the pre-eminent developer in that sector. You're talking about around 15 schemes with a total value of around £300m."

Now Knight Frank has been retained by Ernst & Young to find a buyer for a development in Vittoria, northern Spain, where THI had started work on a £60m leisure and retail scheme.

Back in the UK, the collapse of THI has also cast doubt upon the future of several schemes at various stages of development - including the £60m Park Place in Camberley, Surrey.

Administrative receiver Charles King said that buyers were being sought for around eight development sites located in the UK and Spain.

The collapse of THI is being seen as the clearest indicator yet of the malaise in the leisure sector, where other developers are also reining back on expansion plans.

A series of planned big-box schemes have been put on ice in recent months. Earlier this year, Scudder Threadneedle ditched plans for an £80m leisure scheme in north London.

At the same time, Morrison Developments withdrew from a £30m joint venture with Waitrose for the St James's Station site in Cheltenham.

Titan Properties director Simon Hillcox said:

"The leisure investment market in the UK is at a low point and I don't see it recovering from that in the short term."

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5/5/01 Last updated 5/5/011