Greater Manchester Pension Fund takes equity stake in Bruntwood SciTech
Family owned property empire Bruntwood is rolling several key assets into its joint venture with Legal & General and the Greater Manchester Pension Fund (GMPF) in order to invest in several UK cities, while the fund has taken a bigger equity stake.
GMPF is the first local government pension scheme to make a direct and active investment into a UK-wide science, tech and innovation specialist property platform.
Cllr Ged Cooney, leader of Tameside and chair of the fund has been quoted as saying: “We have long admired Bruntwood SciTech and seen its impact on our doorstep in Manchester, not least in leveraging the strength of its universities to create innovation districts with a genuine global reputation that are capable of attracting companies like Roku and Qiagen to the city.
“We’re investing from society for society by deploying our capital to benefit the UK’s regional economies for the long-term, helping develop the innovation infrastructure they need in order to scale in world-leading workspaces and supporting them to attract the best, and most highly skilled talent, enter new markets, and be supported in accessing new funds.
“We’re excited about how we can now help to bring forward Bruntwood SciTech’s pipeline of transformational, world-class developments and for a future in which we spread its impact even more so in its existing cities, and into new ones.”
Greater Manchester Pension Fund has taken an equity stake in Bruntwood SciTech, investing £150m alongside Legal and General.
The project is designed to focus on property assets that serve the life sciences sector and include the development project of the University of Manchester’s North Campus, known as ID Manchester, but also include several more traditional regional office projects such as 111 Piccadilly, Pall Mall, and Alberton in Manchester and West Village and 14 King Street in Leeds.
Liverpool’s city centre Plaza building and Centre City in Birmingham have also been rolled into SciTech.
Legal & General has also invested a substantial share of the £500m investment into the joint venture.
Now the largest dedicated property platform serving the UK’s innovation economy, Bruntwood SciTech aims to create a £5bn UK-wide portfolio that can support 2,600 high growth businesses by 2032.
Chris Oglesby, executive chair of Bruntwood SciTech and CEO of Bruntwood, said: “In GMPF we have found a partner who shares mutual strategic vision, values, cultural alignment and passion for the key sectors of the UK economy which have the biggest potential for growth.
Chris Oglesby
“Bruntwood, Legal & General and GMPF are each committed to creating thriving cities, are deeply rooted in the places in which we invest, and are focused on the application of long term, patient capital to support the UK’s economy, with a particular focus on its regional cities.
“GMPF’s investment, alongside the additional capital from Legal & General and assets from Bruntwood, will elevate the potential of Bruntwood SciTech even further, accelerate the delivery of our expansion pipeline, and maintain our market leading position as the workspace provider of choice for innovation-led businesses. We will also be able to further support the delivery of strategic city visions and innovation strategies in the UK’s fastest growing regional cities.”
As a result of today’s transaction, the Bruntwood Scitech Portfolio will have £1.8bn of property day one in addition to a further £1bn+ secured development pipeline. The new capital will provide the resources to develop this pipeline. Bruntwood is initial 42% holders in the enlarged platform.
As part of structuring this transaction, Bruntwood, outside of Scitech, has reduced its outstanding debt, including the £91m retail bond, from £615m to £154m.
It is anticipated that this will have a positive impact on its loan to value ratio despite an expectation that year end valuations, as at September 30, 2023, will show a significant fall in property values in line with market trends over the past 12 months.
Bruntwood will retain a £260m portfolio of workspaces, primarily located in suburban town centres, alongside a £100m portfolio of town centre regeneration projects with Trafford and Bury Councils.
This part of the business will focus on creating locally distinctive, sustainable, culturally rich and socially responsible communities. It will aim to make further acquisitions in the towns surrounding the cities in which Bruntwood SciTech operates and work to develop a symbiotic relationship between the innovation economies of the cities and their surrounding towns.
On completion of the transaction, Bruntwood’s debt, outside Bruntwood Sci Tech, will consist of the £91m six per cent retail eligible bonds due February 2025, £43m of loans secured against Bruntwood’s interest in joint ventures with local councils, and a £50m facility with Natwest/HSBC/Barclays/Santander due April 2027.
The latter facility is drawn to £40m but a £20m bridging loan to Bruntwood Scitech is expected to be repaid by the calendar year end reducing this to £20m.
Bruntwood says the transaction is significantly value enhancing and creates the resilience and headroom in the group to meet its debt service obligations even if the property market deteriorates further, while significantly advancing its strategic development ambitions in the Science and Tech sectors.
