High Street Group blames ‘adverse social media’ for £175m lost deal

The High Street Group has blamed “adverse social media” campaigns for three funds turning down a 2,000-home platform that would have generated £175m for the company. Writing to loan noteholders, High Street Group chairman Gary Forrest said the company had entered talks with “a major investment fund” and “the world’s largest asset management company”, understood to be Greystar, to create a PRS platform in 2020. The strategy sought to deliver 2,000 stabilised homes, which would then be sold to a pension fund. In the letter, Forrest said this would have generated £175m for HSG over five years. The schemes included the 328-home Strawberry Place in Newcastle (pictured), which has subsequently been taken over by lender Reditum Investments following a bridging loan last May. A wider prospective deal would have included all sites listed within the HSG portfolio. However,  Forrest said an “adverse social media campaign targeted towards HSG” saw the fund withdraw in October, with two further deals also lost this year “because of the social media campaign”. Forrest said all scenarios would have repaid loan noteholders. The social media campaign he refers to involves comments on a site called The Bond Review. The website was subsequently contacted and removed the comments, Forrest said.  However, the developer has faced a scrutiny and criticism over its high-risk loan notes across a number of platforms this year. Small investors backing these bonds have subsequently join forces as part of a creditor action group. This group reported 82 members in April. The group said it has pursued legal action to recoup funds and lawyers recommended the site could “galvanise as a collective group”. The failed deals follow several successful forward funding agreements for HSG with Invesco, Grainger and a string of deals with Edmond de Rothschild REIM. However, following the onset of the pandemic, the developer has struggled as investor caution has heightened. In June, HSG secured approval from investors to prevent early redemptions from its £100m loan note. Investors backing the seven-year bonds agreed to waive their rights to draw funds, with the business citing financial troubles amid delays in development as a slowdown in sales of completed projects. In the letter, Forrest describes the business’s recovery plan with the sale of approximately £600m GDV of assets to Hadrian Real Estate Plc. Last month, the PRS business relaunched as Hadrian Real Estate, under chairman Andrew Marsh, with former HSG managing director Gavin Fraser at the helm. Forrest said he has stepped away from the business for family reasons. Forrest said Hadrian Real Estate had provided indemnity to HSG for repayment of the loan notes upon completion of the projects. He added that Hadrian’s immediate priority is to consolidate the company’s cash flow position and that may mean that “difficult decisions need to be taken in order to deliver a full return to all investors”. Hadrian Real Estate Plc released a statement confirming the business has provided an indemnity to High Street Group “in relation to certain liabilities, which will include loan note holders”. The company did not respond to a specific request for comment regarding the failure to respond to investors. However has confirmed a number of further acquisitions from HSG vehicles, including a 195-flat PRS scheme at Pottery Lane, in Newcastle. It said the developments will support its strategic aim of creating a 3,000 new homes in the next five years. Andrew Marsh, chairman and non-executive director of Hadrian Real Estate, said: “The private rental sector is an important piece of the UK’s housing market and we delighted to secure our first pipeline of developments to enable us to make a positive contribution to the UK’s residential property requirements.”   To send feedback, e-mail emma.rosser@eg.co.uk or tweet @EmmaARosser or @EGPropertyNews