LONDON (ShareCast) - (Sharecast News) - Edinburgh-based property investment and development company Caledonian Trust has agreed to sell its largest rural development property, Ardpatrick Estate, for £2.7m in cash to two private individuals.
The AIM-traded firm said Ardpatrick Estate occupies a peninsula in Knapdale, Argyll, looking towards Islay and Jura, on the north-west side of West Loch Tarbert.

In addition to Ardpatrick House, the property extended over 1,000 acres with about 10 kilometres of coastline, with "striking views" and including a grassland farm, moorland and rough grazing, an ancient oak forest, a commercial forest, a private beach, a named island, sporting rights and moorings.

The consideration would be payable in cash to Caledonian Trust on completion, which was expected to take place on 24 March.

A deposit of £0.27m in cash, equivalent to 10% of the total consideration, would be lodged with Caledonian Trust's solicitors shortly.

Caledonian Trust noted that the consideration was below the book value of £2.99m, which was attributed to Ardpatrick Estate as at both 30 June 2019, the last audited accounts published by the company, and 31 December 2019, the date of the balance sheet of the company's last published unaudited interim results.

It said that book value comprised stock, primarily the houses on the Ardpatrick Estate, and investment property, being the land.

As Ardpatrick Estate was currently held primarily for development, the firm said it did not generate any material income in the year ended 30 June 2019 from the property, with rental Income less than £1,700 per annum in that year.

As such, other than the annual running costs associated with the company maintaining the property, there were no profits or losses attributable to its interest in the Ardpatrick Estate.

Based on the terms of the agreement and the expected timetable for completion, the company said it expected to incur a valuation loss of around £0.3m on the sale of Ardpatrick Estate in the year ending 30 June 2021.

Under the terms of the missives entered into on 15 December, there was no conditionality to completion of the disposal other than standard contractual terms as expected on a residential property sale.

Caledonian Trust said it intended to use the net proceeds from the disposal to provide funding for its existing property development programme, repay certain existing debt, and provide general working capital.

"The funds released from the Ardpatrick sale will allow us to fund the development of other sites with more immediate and higher development prospects and compensate for the Covid-19 induced delays in realising other ongoing developments," said chairman and chief executive officer Douglas Lowe.

"We are happy that the purchasers of Ardpatrick will continue with the reinstatement of the estate and expect to be resident there and to farm the land."

At 1206 GMT, shares in Caledonian Trust were up 8.77% at 155p.

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