City council and English Partnerships negotiate to create local asset-backed vehicle
The council, led by Sir Howard Bernstein, and the government regeneration agency are exploring options for setting up a local asset-backed regeneration vehicle.
Sites such as the one earmarked for the failed ‘supercasino’ in east Manchester could be included in the vehicle. Sources say the vehicle, which could be as large as £800m, could be set up initially with only a handful of sites with a commitment to the delivery of further assets.
It is thought that discussions are still at a very formative stage and input is being sought from various parties, among them the Northwest Regional Development Agency. No advisers have been appointed yet.
A council spokesman said: ‘We are evaluating our options and we are in discussions with English Partnerships. We will make a statement at the appropriate time.’
Asset-backed regeneration vehicles, which are considered to be the most effective regenerative tools in the market, aim to match underused local authority property assets with private sector investment equivalent to the value of the properties.
Assets that can be included are buildings in need of redevelopment, as well as development sites that are then ‘injected’ into a portfolio and used to leverage private sector finance and expertise. Property investors would benefit from any asset management or development profit as well as gain access to buildings and sites that have previously not been available to them. Profits are typically shared.
The vehicles can be structured in several different ways. It is thought that the council and English Partnerships are looking at what structure would best suit their plans and are identifying potential assets in both their portfolios that could be used to procure a private sector partner.
English Partnerships is working with other councils, such as Sunderland, Birmingham, Carlisle and Coventry, on similar plans.
Corporate real estate advisers have long recommended that councils ‘sweat’ their property assets by retaining the interest and forming partnerships with the private sector, while securing long-term regeneration funding.
Croydon Borough Council, advised by Eversheds and King Sturge, was one of the first local authorities to set up a local asset-backed regeneration vehicle. In June it will decide on its partner, which will be either Land Securities Trillium or the John Laing Partnership.