A group that specialises in buying properties for redevelopment is to acquire a former hospital site in Lanarkshire.

Eatonfield Group plc, a commercial property developer and house builder, has exchanged contracts to buy Birkwood Hospital, a former NHS site.

It has targeted the 83-acre property, which has been unoccupied since 2002, as part of its strategy of increasing the size of its portfolio companies. This will be its second such investment in the past six months.

The financial terms have not been disclosed, but the deal will be funded through debt and is expected to close by the end of May.

The site is currently the subject of two planning applications, and Eastonfield plans to redevelop the site into residential housing and care facilities. The group’s directors believe the project has a potential development value of up to £40 million.

Eatonfield chief executive Rob Lloyd said this deal is the culmination of more than three years’ work. “This project increases the average size of the developments being undertaken by Eatonfield and demonstrates our ability to develop much larger sites.

“We have a local team of consultants working alongside the local authorities to ensure the successful completion of the project,” he added.

Flintshire-based Eatonfield joined AIM in 2006 and reported a £5 million pre-tax profit from an £18.6 million turnover in the year to July 2007.