JDC to extend £2.5m credit because finance centre still not full

Thursday 21 September 2017

The Jersey Development Company has been given longer to pay off borrowing of £2.5million because they don’t want to sell off the International Finance Centre before it has been filled.

IFC1 - as the first building in the international finance complex is known - has come under intense scrutiny after it emerged that construction had begun when less than a quarter of its rental space had been let, rather than all of it as previously suggested.

Packages of incentives have been offered to companies to encourage them to move into the facility, with JDC having spent more than three quarters of a million on moving into UBS’ former offices in a bid to secure a lease with the Swiss bank.

Pictured: UBS agreed to lease 16,500 square feet in IFC1 in 2015 after JDC said they would move into their offices. Construction of the IFC’s buildings, which are looked after by the States-owned JDC, were only able to begin after tenancies were announced.

The completed building opened for business earlier this year, but Treasury Minister Senator Alan Maclean explained that 70% had been let, while 18% remained “in legal hands.”

Once sold, he said that returns in excess of £7.5million could be expected. Exact profits, which will take into account contamination reduction costs and commercial incentives, can then be calculated.

But that sale won’t happen until the remaining 30% of space is dealt with. In a recent Ministerial Decision, the Treasury Minister gave permission to the JDC to extend their £2.5m credit with HSBC until 7 August 2020, after they have sold the building.

An accompanying report said: “After careful consideration the Board of SoJDC has agreed that it would not be in the best interests of the Company to raise the required funds through a sale of IFC1 now (because of a reduced value as a result of unlet space) as it has the ability to borrow money, effectively as bridging finance, until IFC1 is sold. JDC therefore needs to extend the current [Revolving Credit Facility] linked to the construction of IFC1 as they are not yet in a position to sell the building.”