The Co-operative Group is close to securing a new partner for ?the £800m NOMA scheme in Manchester city centre after Delancey and Landid pulled out of a deal last year.
Hermes Real Estate is in exclusive talks to form a joint venture on the 4m sq ft project, with the institution proposing to inject capital to aid development in the short term.
Whether the Co-op will retain the freehold over the development, and the exact size of Hermes’ proposed capital injection, are still under discussion.
Hermes – which manages property investments on behalf of the BT Pension Scheme – is understood to have been attracted by the prospect of a long-term development play in the city in part as a response to the recent yield compression witnessed for large built office and retail assets.
Delancey and Landid pulled out of exclusive talks on the scheme in June, with all three parties coming to an “amicable” decision to end a year of nego-tiations after being unable to agree terms. The pair had edged out local developer Bruntwood in the original bidding process.
After those talks ended, the Co-op decided to press on with the development on its own, but the group refused to rule out working with future partners.
The original project plans envisaged delivery of offices, homes, shops and leisure space, as well as the refurbishment of around 1m sq ft of existing property. The Co-op embarked upon the 20-acre, 10-year regeneration programme in 2011.
NOMA director David Pringle said: “We remain in talks with potential joint venture partners, and hope to bring these discussions to a positive conclusion in due course.”
The Co-op declined to comment when asked if the scheme would be changed as a result of the potential deal.
Phase one of the scheme – the Co-op’s 328,000 sq ft head office known as One Angel Square – has now been completed and occupied under a lease expiring in 2038, with an option to extend. Deutsche Asset and Wealth Management and Chinese state-owned Gingko Tree Investment bought the building for £142m earlier this year.
WHR and Jones Lang LaSalle are acting for the Co-op; Hermes is unrepresented.
Hermes declined to comment.
