Brentwood joins £1bn JV with Morgan Sindall
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Brentwood council is set to sign a joint venture with Morgan Sindall Investments worth £1bn in contracts for development in the borough.
Though this is the fourth local asset backed vehicle (LABV) project for the investment consultants, Brentwood said the deal formed the “largest and most significant” development project ever undertaken by the council.
Louise McKinlay, Brentwood’s council leader, said the arrangement—still subject to full council approval—would allow the use of council-owned land to build homes and facilities.
“At a time of ongoing squeezed local government funding, the profits raised will help to protect against making cuts to frontline services,” said McKinlay.
“Our residents will, over the coming months and years, be able to see a real change that will build on our heritage and create a town of the future for generations to come.”
LABV joint ventures see the creation of corporate entities with equity shared equally between a local authority and a private sector partner.
Councils transfer ownership of land, or real estate, into the JV while the partner injects cash, often to match the value of the property.
The process allows the creation of a body that has both land and cash resources to carry out development. Resulting profits are shared.
Details on the Brentwood deal are scant but a joint statement said the deal would run for 30 years and would include new homes, mixed use developments, public space, commercial and leisure facilities.
Wes Erlam, managing director of Morgan Sindall Investments, said the business was “looking forward to making a real difference to communities in Brentwood.”
Other local authorities working with Morgan Sindall include Bournemouth, launched in 2011, Slough in 2012, and Hertfordshire, announced last year.
The Bournemouth Development company is worth around £500m in contracts and will run for 20 years delivering, among other projects, housing, student accommodation and parking.
Slough Urban Renewal is due to run for 15 years and is also worth around £1bn.
The latest stage, revealed this week, will see the redevelopment of Stoke Wharf, the end of the Slough branch of the Grand Union Canal.
The partnership has also seen construction of the town’s now iconic Curve building.
The deal with Hertfordshire County Council will see the development of 500 homes across 12 difference sites.
Herts and Morgan Sindall agreed to make contributions worth 35% of costs at the outset. The rest of the capital was expected to come from external borrowing undertaken by the JV.
Steve Faber, managing director of Herts Living, said the partnership would deliver “homes at pace” and “optimise” financial returns without diverting the council from its core role of delivering services.
Not all partnerships go well. In July last year London Borough of Haringey ended a project with property giants Lendlease following a campaign to change political leadership in the borough.
At the time council officers estimated the cost of termination to the borough at £3m.
That included around £520,000 in “agreed costs”, due to be paid back to Lendlease, plus £2.5m on legal support, commercial advice and project management.
Lendlease went on to sue Haringey with a settlement reached in November.
