Developer agrees £470m deal for major London residential scheme

Nine Elms Square, London

West Midlands developer St Modwen has completed the sale of its interest in a major London residential development for £470m.

It is in a joint venture with Vinci for Nine Elms Square, the 10-acre site is part of New Covent Garden Market, and has now exchanged contracts with Hong Kong-based Wanda Commercial Properties.

The site has planning permission for 1,800 homes in a cluster of towers that reach as high as 54 storeys.

The wider 57-acre redevelopment of the area brings together different developers who plan to build up to 20,000 homes.

The Nine Elms Square development had been for sale since last August with a deal to an unnamed Chinese investor reported to have fallen through in March.

St Modwen expects its cash share of the deal to be £190m, with £70m of that being held in a restricted development account to fund its share of future obligations to complete new market facilities and associated infrastructure.

The remaining proceeds will be used by St Modwen to reduce Group borrowings as well as fund ongoing development activity.

The deal is expected to complete later this summer, after the demolition of the former flower market.

The Vinci/St Modwen joint venture will have no involvement in the future development of the Nine Elms Square site itself but will “remain closely involved in the wider regeneration of the Nine Elms area”.

St Modwen’s chief executive Mark Allan said: “The sale of Nine Elms Square is an important milestone, which will realise the capital required to fund the construction of over 500,000 sq ft of new market facilities.

“It also crystallises a significant element of the value we have been able to create on this complex, inner London development site. Together with our joint venture partner, Vinci plc, we remain very much committed to the longer term regeneration of Nine Elms and are excited about the opportunities ahead.”

The joint venture has a development agreement with Covent Garden Market Authority which will see it provide new market facilities for New Covent Garden Market and in doing so, safe-guarding the existing 2,500 market jobs.

There are also 10 acres of development land that is scheduled to be released in phases for future transformation into three distinct character areas.

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