Legal & General and Bruntwood have signed a deal which will see £360m invested into a new company to create 20,000 jobs, with a focus on science and technology assets in the North West, Birmingham, and Leeds.
Under the deal, a new company named Bruntwood SciTech will be formed, with Bruntwood’s chief executive Chris Oglesby acting as chairman, and Bruntwood chief commercial officer Phil Kemp as chief executive. The partnership is split 50/50 between Bruntwood and Legal & General.
The deal, which is claimed to be the largest investment made in science and technology property assets in Europe this year, will see the new company grow its assets from around 1.3m sq ft to over 6.2m sq ft over the next 10 years, increasing the value of its property portfolio to around £1.8bn.
The partners said its initial investments would focus on expanding its existing assets, focussed in the North West on properties such as Manchester’s CityLabs and Alderley Park in Cheshire. Other opportunities will be explored in the future, including in Liverpool which the company said “features strongly in its forward plans”.
Circle Square, Bruntwood’s flagship mixed-use development in central Manchester, will also fall under the new company’s banner.
The company’s board will also feature L&G Capital’s managing director of urban regeneration and clean energy, John Cummins, and director of regeneration Rachel Dickie; managing director of Manchester Science Partnerships Tom Renn; Chris Doherty, managing director of Alderley Park; and David Hardman, managing director of Innovation Birmingham.
Bruntwood’s Kate Lawlor and Peter Crowther will also join as finance director and property director respectively.
Bruntwood’s existing commercial office portfolio will remain unchanged, although Ciara Keeling has stepped up from her role as Bruntwood’s director of asset management to become chief executive of Bruntwood Works, the company’s regional investment business.
Manchester Science Partnerships will also continue to operate as normal with what was Bruntwood’s holding in the company now being transferred to Bruntwood Scitech; this means L&G now has a holding in MSP, via the newly-formed company.
Bruntwood chief executive Chris Oglesby said: “We are delighted to have formed a partnership with Legal & General, an organisation that shares our vision for unlocking growth in the science and technology sector in the UK regions. We are well suited and aligned in terms of our vision and approach to regeneration.
“Our focus is on creating thriving cities – breathing life into places where knowledge-based businesses can start and scale, driving growth for the UK economy. Bruntwood SciTech is aimed squarely at the many opportunities offered by the science and technology sector and with the backing of Legal & General we can greatly accelerate the scale and pace of what we can achieve.
“We have ambitious growth plans and see this activity as enabling the creation of around 20,000 new jobs over the next 10 years.”
Nigel Wilson, chief executive of Legal & General, said: “Although the UK is a great place to do business, years of chronic underinvestment have led to poor productivity, inadequate real wage growth and muted economic growth. Science and technology will be key to revitalising the UK economy and driving job creation. We need to keep investing to support the development of our UK regional cities.
“Through our investment in Bruntwood SciTech, we are partnering with a best in class management team at Bruntwood with a track record of delivering and developing major science and technology projects across the UK’s regions.”
Graham Barnes, executive director, CBRE Capital Advisors added: “This represents the largest science and technology transaction in the real estate market so far this year, demonstrating the continued appetite for corporate platform deals as investors seek alternative access to real estate in scale. $560billion of real estate M&A transactions completed last year globally, representing a 47% increase on 2016, and the trend has shown no signs of abating so far this year. It is fantastic to see such large-scale investment in the science and technology sector, one that will be instrumental in the evolution of the UK’s Northern Powerhouse and future socio-economic growth.”
CBRE and Addleshaw Goddard advised Bruntwood, while Savills, EY and CMS represented Legal & General.