GVA: Merseyside Jessica primed for debut
The first developments to be backed by the Igloo consortium's new £60m development fund for Merseyside are ready to begin as soon as the European Investment Bank signs off the fund.
Iain Jenkinson, director at GVA, part of the Igloo consortium, gave an update on progress at the Place North West Future of Property Finance Forum on Thursday at One First Street in Manchester. Around 100 people attended the free half-day event sponsored by the Co-operative Bank, GVA and McGrigors.
Igloo is still awaiting formal launch and is working its way through the process of "policy testing" at EIB's head office in Luxembourg and the European Union in Brussels.
Jenkinson said: "The European Union has had to test some of its policies against the new fund as it is breaking new ground in terms of structural funds."
The Igloo fund is being established under the EU's Jessica programme – Joint European Support for Sustainable Investment in City Areas. Jessica covers the whole of the North West but there are two separate programmes; one for Merseyside as a legacy of its Objective One aid programme and another for the rest of region.
Jenkinson said: "Igloo was appointed preferred lender in November 2010 and we have not stopped working on the first projects that will be invested in whilst waiting for the official sign-off."
EIB rules dictate that investments by Igloo must be between £2m and £12m and be focused on job creation, shying away from more speculative schemes in favour of those with the most confidence of letting or pre-letting. The fund will provide loans or take equity in schemes alongside private developers must produce a return. The initial £60m is being provided by the North West Development Agency and European Regional Development Fund. The Igloo consortium consists of Igloo Regeneration Fund, Royal Bank of Canada and GVA. The Igloo Regeneration Fund is a partnership of pension, life and charity funds managed by Aviva Investors, which invests in sustainable urban regeneration across the UK.
The Igloo consortium is also in talks with the new Liverpool City Region Local Enterprise Partnership to become the LEP's delivery vehicle to fulfil its regeneration priorities.
Also addressing the conference was Rob Dawson, senior manager in the property finance unit at Co-operative Bank, who told delegates banks were beginning to move out of a phase of "navel-gazing…having addressed their problems" and are increasingly willing to lend. Banks are focusing on prime sites and developers with a strong track record and strong covenants.
Dawson said the banking sector had undertaken a huge amount of valuation work to understand the property on its books but clarity was emerging.
- Download the Co-operative Bank presentation
Alison Newton, head of regeneration at law firm McGrigors, presented on legal structures and joint ventures, asserting that given the number of JVs that failed in the downturn, in the future partnerships must be more thoroughly tested at an earlier stage, especially to understand bank's requirements.