AN Edinburgh property company has said it will reduce the sale price of a landmark office block in the city by £3.5 million after a change of position by developers.

Caledonian Trust announced the move over St Margaret’s House near Meadowbank, which was included in a plan to develop part of the site into almost 400 student rooms and about 100 family homes, in a statement to the London Stock Exchange.

The property investment holding and development company gave the update on its proposed sale of the site at 151 London Road to Drum Property Group.

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The plan involved Drum entering a pre-let agreement with a tenant for the student accommodation to be built on part of the property.

However, that pre-letting “has not yet occurred and there is now material uncertainty on the prospective tenant pursuing its interest in the location”.

Caledonian Trust said in its statement: “As a consequence of this, and in order for Drum to proceed with the purchase of St Margaret’s, the missives in relation to the proposed disposal have now been varied.

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“The amended missives include a potential reduction in the overall consideration for the proposed disposal to £11.5m, payable to the company on completion in cash in the event Drum do not agree a pre-let to the prospective tenant.

“The proposed disposal remains conditional on Drum securing a pre-let of the student accommodation and Drum obtaining detailed planning permission and all other consents to its entire satisfaction all as previously agreed.”

The terms of the amended documents “specifically allow for the consideration for the proposed disposal to revert to the original sum of £15m, if Drum enters into a lease - or certain other forms of letting agreement - in respect of the student accommodation with the prospective tenant prior to the first student taking occupation of any student bedroom within the property”.

Caledonian said the amended missives “reflect the planning application which Drum submitted to the City of Edinburgh Council planning committee in September 2019, which is for 377 student bedrooms and 107 residential flats”.

The company also said in its update: “The directors currently expect that completion of the proposed disposal will take place in the summer of 2021.”

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