Listed developer U+I has been selected to bring forward the £550m regeneration of a 24-acre site in central Manchester, despite being a late addition to the competition after Argent dropped out in April.
Mayfield Partnership, made up of London & Continental Railways, Manchester City Council and Transport for Greater Manchester, opened the search for a development partner for the Mayfield Quarter in September 2015.
In April, a shortlist made up of Argent, Urban & Civic, and a consortium of Ask, Carillion and Patrizia was announced, however later that month Argent dropped out of the competition and U+I was named replacement bidder.
Mayfield Quarter is set to create around 1,300 homes, 800,000 sq ft of offices, a 350-bedroom hotel, retail and leisure facilities and a new six-acre city park along a remediated River Medlock.
The project has long been linked with a large-scale Government office requirement. The regeneration framework drafted for the scheme in 2009 detailing plans for “a pioneering sustainable office campus aimed at setting new standards for the Civil Service estate”. Talks stalled when the coalition Government shelved its plans for a “Whitehall of the North”, but it is understood that the Government Property Unit is still considering Mayfield for up to 950,000 sq ft of offices.
Mayfield Quarter fits alongside Network Rail’s Northern Hub scheme which is scheduled to complete in 2018, and the proposed HS2 station at Piccadilly.
U+I was created following a merger between Development Securities and Cathedral Group in 2014.
The developer investor has had several projects in Manchester, including:
- Axis in Manchester city centre in a JV with Property Alliance Group, under construction and set to total 172 flats
- Acquisition of Chill Factore, Trafford, in partnership with Pemberstone Investments, in 2015 for £15m
- Residential and leisure development at The Square shopping centre and Connaught Place in Hale Barns, backed by CBRE Global Investors
- Manchester Arena, owned alongside Patron Capital Partners and sold in 2013 to Mansford Real Estate for £82m
In its preliminary results released in April for the period to February 2016, U+I reported its “second consecutive year of record development and trading gains”. It has an investment portfolio valued at £203m, and £161m of net debt. Its pre-tax profits for the financial year were £25.8m.
U+I declined to confirm its involvement in Mayfield, and would not give details on how it would fund the large-scale project. However, according to a statement on U+I’s website, its business model is “an equity-light approach” in which it limits financial exposure “by pre-funding or pre-selling our development projects or by securing public sector development land at limited entry costs”.
JLL is advising the Mayfield Partnership on the procurement process. A spokesman for JLL declined to comment, and said the procurement process was in a standstill period and confirmation of the successful developer would be released in the coming weeks.
U+I’s share price was down this morning by 3p to 181.5p.