£800m Eastgate Quarter work postponed

The lead partner in the massive £800 Leeds Eastgate Quarter development officially confirmed today that it has postponed the start of construction work.

Property giant Hammerson said that in the current economic climate, it does not intend to start construction of any major development projects.

It said it was continuing to progress the planning and design stages of the Leeds development, and other schemes, so that they could be advanced in the future.

Construction work on the massive 25-acre site was due to begin this year. Now it joins other flagship city centre construction projects, including the giant Lumiere Towers on Wellington Street, as officially "on hold".

Today's news came as London-based Hammerson announced it was planning to raise almost 600m from investors in an attempt to reduce its debt burden.

The firm made a pre-tax loss of 1.61bn for 2008 - compared to a 110.4m profit in the previous year - due to "substantial" falls in its property portfolio.

The rights issue would raise 584.2m to help reduce debts of more than 3bn. Hammerson said the move was part of a wider policy to reduce costs, including selling assets.

But the company warned it may breach covenants in the future if it was unable to offload some of its assets and the value of its property continues to decline.

The company said it had made early progress on its Leeds scheme - which is expected to create up to 5,000 jobs - having signed lease agreements with John Lewis and Marks & Spencer for anchor stores of 26,000 sq m and 18,250 sq m respectively.

In addition, a Compulsory Purchase Order inquiry had been confirmed by the Secretary of State in July and the initial phase of enabling works on the site was now complete.

John Lewis said last week that it remained committed to opening a department store in Leeds – but admitted it didn't know when that might be.

A company spokeswoman said:"We can't confirm when the Leeds store will open. We are continuing to work with the council and the developers to bring this scheme to fruition."


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Alex Newman, partner at Irwin Mitchell in Leeds

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