Liverpool Echo publisher Reach entered into a joint venture to redevelop its former Old Hall Street home into offices, shops and a hotel but the COVID-19 crisis has caused ‘significant’ delays. Tony McDonough reports
Liverpool Echo publisher Reach has taken a £15.5m hit on the redevelopment of its former city centre headquarters due to delays caused by the COVID-19 pandemic.
In it half-year results, which reported higher than expected profits following the lifting of the first lockdown, Reach said a joint venture to turn its former Old Hall Street base into new retail, office and hotel space had met with “significant time delays and cost overruns”.
In 2018 Reach sold a portion of its freehold interest in the building, which had previously housed the paper’s printing presses, for £6.6m and entered into a joint venture with Dubai-based Select Group to redevelop the site, which includes a 15-storey office block.
The Echo had occupied the building since the 1970s and, following the sale, it relocated its 600 staff, including its team of journalists, just a few yards across the road to No 5 St Paul’s Square.
Known as Echo Place, the new development is set to include a 207-bed hotel, restaurant and bar, located in the former City Tower, as well as 65,000 sq ft of refurbished office space and five retail units totalling 10,000 sq ft.
In August 2019 it was revealed that video games giant Sony Interactive Entertainment Europe had agreed to take all 65,000 sq ft of the office space across three floors, moving 500 staff from their current home in Wavertree Technology Park in south Liverpool.
In the Reach half-year report, the company said: “As a result of COVID-19 the development has incurred significant time delays and cost overruns, with no certainty as to the amount that could be incurred on completion of the development and insufficient contractual protections based on the historical agreement.
“A new agreement has been reached with the joint venture party to limit the exposure to the group to £15.5m. A one-off provision has been made in the half-year results and the £15.5m was paid to the joint venture party in September 2020. The group has no further exposure in respect of this development.”
As well as the Liverpool Echo, Reach also publishes the Daily Mirror, Daily Express, Daily Star and more than 100 regional and local titles, including the Manchester Evening News and the Scottish Daily Record.
It said revenues and profits had tumbled due to the COVID-19 lockdown, to £291m and £25m respectively, but added the results were better that expected thanks to a bounce in Digital advertising and print sales since the initial lockdown ended.