Published on February 12, 2014 | by Ellen Thomas1
UAL writes off £1.8m after property firm collapses
The University of the Arts London has confirmed that it lost at least £1.8 million as the result of a failed property investment.
The financial loss was incurred after UAL invested in the Opal Property Group Limited which then went into administration with debts of more than £900 million.
It is unclear as to why the Opal group suffered such severe financial problems but no students were evicted and, due to an agreement with the banks, they were able to stay in their rooms until the end of their contracts.
In response to two Freedom of Information requests from Arts London News the university revealed that they would not be taking steps to recover the money as “the banks have first call on any monies or assets left by the group, leaving no funds for other creditors”.
However, UAL’s financial reports show that they can afford to write off the loss; since 2009 they have reported an annual surplus of between £10m and 16m, which has produced a total reserve of more than £264 million in July 2013.
“What happened with Opal was incredibly unfortunate, and a lot of students’ money was lost. I hope the university learns from this failure and begins to change its strategy.” Shelly Asquith, SUARTS
In response to the FoIA inquiry, UAL officials said: “The university had a successful year during 2012-13 generating a positive surplus which it will use to fund its capital programme and the university will adjust funding for the capital programme accordingly.”
The loss however has raised concerns as to whether the privatisation of student accommodation is a sound strategy; opponents say that investing in privately-owned companies is not only more expensive for students, but involves taking a bigger financial risk.
SUARTS President Shelly Asquith supported that view: “I think accommodation should be run and provided by UAL, rather than private interests. It means that it is more accountable: if something goes wrong, students know who to contact. It also means UAL can have ultimate control over the level of rent being charged.”
“What happened with Opal was incredibly unfortunate, and a lot of students’ money was lost. I hope the university learns from this failure and begins to change its strategy toward one that is less risky, more sustainable, and ultimately avoids private interests,” she added.
The revelations about the losses came as a result of the departure of Hamish Clifton as the creative director of UAL in summer 2013, shortly after the Opal Group went into administration.
Despite repeated direct inquiries and the two Freedom of Information Act requests, the university has refused to confirm whether Clifton was fired or resigned in the wake of the collapse of the Opal Group deal.
Most of the properties owned by Opal have now been sold to new owners such as CRM Students.