The developer of The Island Quarter scheme in Nottingham has incurred a loss of £3.8 million in the six months to 31 March 2024.
Conygar notes that this is mainly derived from net operational, financing and administrative losses of £2.4 million as it continues the transition of consented development plots at The Island Quarter to income-producing assets.
However, with the restaurant and events venue at 1 The Island Quarter now well established and expanding its operations, in addition to the first phase student accommodation development in Nottingham becoming rent-producing from September 2024, Conygar anticipates a material uplift in revenues in the coming year to offset against these operational costs.
Construction of the 693-bed student accommodation development at The Island Quarter is expected to complete, as planned and on budget, before the end of June 2024 with lettings “progressing well” for the September 2024 student intake. Conygar is targeting full occupancy and a net operating income for the 2024-2025 academic year of circa £5m.
In February 2024, the firm submitted a detailed planning application for the adjoining second phase of student accommodation, comprising a 383-bed scheme.
Meanwhile, at The Island Quarter’s restaurant and events venue, a loss was made in the six months to 31 March of £0.3 million, which Conygar said came “against a backdrop of squeezed household budgets and rising costs, compounded by a recent increase in the minimum wage.”
However, as a result of increasing capacity, in particular for outdoor events space, and the provision of a stretch tent cover, to enable its all-weathers use, total revenues for the venue have increased by 30% compared with the same six-month period in the prior year.
“This expansion, supplemented by significant improvements in food, beverage and wage margins since the start of the year, and the onset of the summer months should enable enhanced returns in the next six months with gross revenues projected for the full year in excess of £6 million,” said Conygar.
Robert Ware, Chief Executive, added: “Investment activity will take time to return to the levels seen before the market downturn. However, as inflation and interest rates recede, such that costs become more stabilised, the viability of funding opportunities should improve.
“Given the significant progress made at The Island Quarter, Nottingham and with investors prioritising high quality and sustainable investments we are optimistic that opportunities will evolve over the coming months and years which should enable us to maximise the returns from this and our other development sites.”
