THE closure of a Japanese-owned language college in Highgate will allow the owner of the site, listed property developer Finbar, to pursue redevelopment plans earlier than anticipated.
THE closure of a Japanese-owned language college in Highgate will allow the owner of the site, listed property developer Finbar, to pursue redevelopment plans earlier than anticipated.
Finbar Funds Management, a wholly owned subsidiary of the South Perth-based Finbar Group, bought St Mark’s English Language College from the Japan-based GEOS group on a lease back arrangement for $11.8 million in February 2007.
Upon purchasing the property, Finbar announced it had plans to demolish the non-heritage listed buildings at the site, and develop residential apartments when the school’s lease expired in 2012.
According to its 2009 annual report, it appears the property was Finbar’s only operating lease, for which it forecast a total of at least $4.1 million in income under non-cancellable leases over the next five years.
Finbar expected to earn at least $757,120 from the property this financial year.
It appears an annual increase of about 4 per cent was anticipated, taking the minimum expected rental income to $885,723 in 2013-14.
After inquiries regarding the property by WA Business News early this week, Finbar executive director Darren Pateman released a statement to the ASX which said the company would be exploring redevelopment options sooner than anticipated as a result of the school’s closure.
Mr Pateman said GEOS had no arrears in respect to rent, and the company held a cash security bond in excess of 12 months rent.
“We do not anticipate there will be a material effect on the company’s financial position or profit guidance should GEOS default on the lease,” Mr Pateman said.
“Instead, Finbar will be in the position to explore the redevelopment options to unlock the value of the property sooner than originally anticipated.”
St Mark’s is one of eight English language schools across Australia owned by the GEOS group, which owned more than 500 colleges at its peak.
The Perth college is located at 369-375 Stirling Street in Highgate, and is situated on 8,790 square meters, which currently comprises 3,200sqm of existing school buildings.
The land has a residential zoning of R80, which means the site can be developed for up to 80 dwellings per hectare.
Late last week, Justin Walsh and Adam Nikitins from Ernst & Young were called in as administrators for the nine companies that operate the eight Australia-based GEOS schools.
Ernst & Young confirmed early this week the school would not be re-opened as the companies lacked sufficient working capital to operate for another week, displacing 480 Perth-based students.
Nationwide, GEOS has about 2,300 students from 20 different countries, and 390 employees and contractors.