Last checked at 16 Oct 2023 08:00
LEGAL & GENERAL, BRUNTWOOD AND GREATER MANCHESTER PENSION FUND INVEST £500 MILLION INTO THE UK'S SCIENCE, TECH & INNOVATION ECONOMY
Bruntwood SciTech Limited ("Bruntwood SciTech"), one of the UK's leading specialist property providers, founded by Bruntwood Limited ("Bruntwood") and Legal & General Capital in 2018 to support the growth of the life science and tech sectors, has secured £500 million of additional investment and welcomed the UK's largest local authority pension fund, Greater Manchester Pension Fund (GMPF), to the partnership.
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. The deal demonstrates the role that such funds can play in regenerating the UK's towns and cities; helping to create highly-skilled jobs, increase productivity and drive wage growth, while supporting the UK's target to become a global science and technology superpower by 2030.
Bruntwood SciTech aims to create a £5 billion UK-wide portfolio that can support 2,600 high-growth businesses by 2032. The £500 million of new equity sees GMPF commit £150 million, of which £99m is invested immediately, alongside a significant increase in investment from existing shareholders, Legal & General and Bruntwood, through cash and asset transfer.
As a result of this 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 are 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 30th September 2023) will show a significant fall in property values in line with market trends over the last 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 6% 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.
The transaction is significantly value enhancing for Bruntwood 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.