Croydon and John Laing in regeneration deal first

04 December 2008

John Laing and Croydon Council have formed a partnership to deliver a pioneering Local Asset Backed Vehicle (LABV), a £450m joint venture, to regenerate sites across Croydon town centre and deliver new flagship council headquarters.

The first deal of its kind, this is a new model of public private partnership, utilising an asset backed Urban Regeneration Vehicle (URV) into which Croydon Council will invest land and John Laing equity. Through this limited liability partnership, the council will receive a 50/50 share in profits and will maintain ongoing control of its extensive regeneration agenda by retaining an interest as a partner-landowner as well as through utilising its planning powers.

As part of Croydon Council’s regeneration aspirations, the URV will deliver sustainable facilities to benefit the entire community supporting its ambitions to become London’s Third City; the hub of living, retail, culture and business in south London and south east England.

Jamie Kerr, Managing Director of John Laing Projects & Developments, said: “Today, more than ever, the public sector is looking for innovation from commercial partners to help maximise returns from their assets. Croydon Council is leading the way and we are delighted to be working with them in developing this unique model that will deliver new infrastructure and significant regeneration to the local communities it serves.”

Councillor Tim Pollard, Croydon Council’s cabinet member for regeneration and economic development, said: “This partnership approach is at the cutting edge of the public and private sectors working together. The creation of the URV paves the way for John Laing to support us in delivering our strategic regeneration plans over the coming years. I would like to thank the council team, especially Tony Middleton, Malcolm Lyon and Anjli Gupta for their dedication in getting the project to this stage.”

The 25 year URV partnership will provide the phased regeneration of four important town centre sites with the creation of two 40 storey towers with approximately 650 residential units; a combination of both private and affordable accommodation. In total the four sites will create approximately 1,250 new residential units, to be delivered between 2012 and 2017.

The project also includes the delivery of a brand new 240,000 sq ft headquarters office building at Fell Road for the council. It is anticipated that the council’s land value and share of development profit will be sufficient to pay for the building and its running costs for many years. The council has already exchanged contracts to purchase Davis House, which adjoins the Fell Road site, from Highcross. In the short term, the vacant space in the building will be used for short term decant space. In the medium term, it will form part of the regeneration of a larger block. In addition almost 20,000 sq ft of retail space will be created.

With the council’s long-term regeneration strategy, they also have the option to add additional sites into the partnership as and when further development is required over the next 25 years.

The project has been supported by advisors working in partnership with the URV. King Sturge (commercial) and Eversheds (legal) acted as advisors to Croydon Council, while Denton Wilde Sapte (legal), Grant Thornton (financial/tax), EPR Architects (architects) and Knight Frank (property), Faber Maunsell (ME & Structure), Indigo (planning) and AYH (cost consultants) worked alongside John Laing.

Chris Pratt, Managing Director of King Sturge Financial Services Ltd said: "This is a complex deal achieved in difficult market conditions and the first of its kind completed by a local authority, it will hopefully provide the blueprint for the many council's that are facing similar challenges.”

Four assets will be placed in the first tranche of development opportunities. These are Taberner House, the council’s 40-year-old skyscraper headquarters; the council’s 1960s offices in Fell Road; College Green including the College’s arts teaching block as well as the underground and multi-storey car parks and the open space; and the Tamworth annex site in West Croydon, the former school that is currently being used by the Primary Care Trust. Most of the buildings involved have a limited life in their present form and are presenting increasing maintenance liabilities. All would benefit from regeneration or redevelopment.