In conversation with: Ray Grainger of GMPVF

RAY Grainger, one of the heads of Greater Manchester’s £10bn Pension Fund, is in an enviable position.

While regeneration projects around the region remain stalled either due to a lack of development cash or a scheme that is no longer viable, the Property Ventures Fund which he heads is actively looking to spend.

The fund has a development pot of £200m to spend, which has been allocated for property development projects, and it recently lost out to Realty Estates in a three-horse race to land the BBC’s existing 5.5-acre Oxford Road site in Manchester.

“We have several schemes in the pipeline and an appetitie to go for more,” said Grainger. “We’re constantly on the lookout for new investment opportunities.

“We were very keen on the BBC site,” he said, adding that it had proposed a scheme which would have involved the construction of several new buildings that would have had an end value of around £200m.

“But clearly we need to be paying a sensible price.”

The property ventures fund is currently involved in a number of major regeneration projects around the North West, including the redevelopment of a key
site in Stockport’s town centre and is a joint venture partner with Argent in the proposed 270,000 sq ft One St Peter’s Square scheme in Manchester.

It is also in the process of assembling a 6.5-acre site close to Stalybridge station where it is planning a mixed-use scheme involving offices, retail, leisure and potentially some residential units.

“We’re helping to regenerate the region, and to create and preserve jobs. But we expect to receive a return on the money we invest. We’re not a charitable organisation,” he said.

The Greater Manchester Pension Fund the largest local authority fund in the UK, and in recent years it has been one of the most succesful, with accounts for 2010 showing a £2.7bn net profit on its investments, which increased the size of the fund’s net assets to more than £10.4bn.

Its property ventures arm was set up in 1990 with an initial allocation of £25m but profits made on development projects undertaken since – such as the redevelopment of the Deva Centre and the Direct Line building in Manchester – have swelled the size of its available pot. The fund is managed by property consultancy GVA.

Grainger argues that the fact that it has ready cash at its disposal puts it in a healthier position than many of its competitors, who have the arduous task of trying to convince banks – many of whome are keen on reducing their exposure to property – to lend them money for schemes.

Indeed, the fund has even held talks with banks offering them the opportunity to work through schemes at stalled sites that are under the banks’ control.

“We’ve had some early discussions,” he said. “”we’re happy to work out a scheme and leave them a stake in a project if they require. And unlike other developers we won’t need to borow money from them to do it.”

Grainger said that the fund also has an advantage ocver competitors in its links with Greater Manchester’s ten local authorities, whose staff are the scheme’s main members. He added that it also offers to underwrite the costs of compulsory purchase orders for council.

In Stockport, the firm is currently costing preparatory works for its proposal to redevelop the ex-Royal Mail Sorting Office into an office-led mixed-use scheme with hotel accommodation, mirroring plans by the local authority for the neighbouring Grand Central site.

“What we are doing is drawing market responses from hoteliers to see what type of offer appeals,” he said. He added that there was “latent demand” for a hotel in Stockport, and although approval has been granted for several, none of the proposed schemes has begun.

“In three our four weeks we’ll have a real feel for what the market wants.”

Similarly, it has appointed architects to develop a masterplan for its 12.5-acre Calver Park industrial scheme in Warrington. Grainger said that it is considering several different options for redeveloping the park, each of which involves different sizes and types of units.

In Stalybridge, meanwhile, the firm is continuing with its site assembly work for a 6.5-acre mixed use development.

The fund has bought terraces of commercial properties and some former industrial units which it has begun to demolish where appropriate to clear the way for a major scheme which will be close to the town’s mainline train station.

He said that the reputation that Stalybridge had of being a party town – “Stalyvegas” – was beginning to wane as some of the pubs struggle to atract crowds in a more difficult economic environment.

“That might present an opportunity for more family-oriented leisure,” he said.

“Families mighthave been a bit scared off by the problems caused by drinkers but that seems to have petered out.”

He added that Urban Splash’s work on the nearby Longlands Mill scheme had reinjected some vitality back into the Western end of the town, and added that once its project moves along it could provide the spur for Network Rail to look at upgrading Stalybridge station.

“With Stalybridge, you’ve got the countryside around you but you can jump on a train and be in the city centre in ten minutes.”

The One St Peter’s Square scheme which it is developing alongside Argent is understood to be one of three schemes that KPMG’s estates division has shortlisted for its new 75,000 sq ft Manchester base.

“We are still negotiating with a potential tenant regarding a pre-let,” he said. “But there is demand and it’s ready to go.”