Bruntwood and Legal & General Capital have formed a joint venture to create a property company targeting science and technology occupiers with an initial £1.8bn of projects.
The 50:50 venture, Bruntwood SciTech, will be seeded with projects currently worth £360m from Bruntwood’s portfolio.
L&G will pay Bruntwood half this amount, much of which Bruntwood will use to reinvest into SciTech and build the schemes out.
There is currently 1.3m sq ft of completed space across eight schemes which will be built out to 6.2m sq ft over the next 10 years.
The company currently has a North West and Midlands-focused portfolio, reflecting Bruntwood’s traditional geographical stronghold but it will now start to look to expand its reach across the UK with new acquisitions.
Future acquisitions and purchases will be made with equal funding from both partners.
SciTech’s assets
- Manchester Science Park
- Alderley Park, Cheshire
- Citylabs 1.0, Manchester
- Manchester Technology Centre
- Platform, Leeds
- Innovation Birmingham
- Circle Square, Manchester
It is expected the assets will be held for the long-term, although it is possible that Legal & General may use different funds or structure as the business evolves rather than just the company’s balance sheet, which is utilised by L&G.
SciTech will be chaired by Bruntwood chief executive Chris Oglesby and led by chief executive Phil Kemp, who is currently Bruntwood’s chief commercial officer.
Bruntwood’s Kate Lawlor will be finance director and Peter Crowther its property director.
As well as being a traditional landlord, the company will aim to create an ecosystem for its tenants to interact with each other in order to help them grow.
The portfolio already features specialist incubators focused on digital technology and innovation at Manchester Technology Centre and Platform in Leeds, a post-accelerator partnership with Cisco at Manchester Science Park and a bioscience accelerator at Alderley Park in Cheshire.
Rachel Dickie, L&G Capital’s director of regeneration, who will also sit on the board of SciTech, said: “In line with what L&G Capital is doing elsewhere, ultimately we will look to create an institutional asset class out of the science and technology sectors, which has had disparate ownership.
“We feel there is a real benefit in having a platform, which has been evident when it has been done in the US, and we will look to do that in the UK.”
Bruntwood’s Oglesby added: “The success of the cities we are focusing on are dependent upon the ability to unlock and make the most of what they are best at.
“They have differing strengths in science and technology and we see an opportunity to work with those cities and the universities in those cities and that’s what we believe will drive the UK economy going forward.”
Bruntwood has long been positioning itself as one of the leading players in the science and technology sector within the real estate industry and it has played a major part in establishing Manchester’s Oxford Road as one of the focal points for innovation in the UK.
L&G has been investing in markets that play to evolving long-term themes where it can continue to deploy capital for time horizons as long as 50 years, particularly in housing, infrastructure and SME finance. It is hoped that by focusing on these long-term fundamentals that it is more protected from short-term economic and political instability.
It is not the first time the pair have worked together. The fund manager provided the property company with a £120m, 10-year loan to refinance seven office assets in 2013.
CBRE advised Bruntwood. Savills and EY advised L&G.
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