LONDON, UK: Bruntwood SciTech, a leading UK property provider for the life science and tech sectors, has received £500 million of extra funding and welcomed Greater Manchester Pension Fund (GMPF), the UK’s biggest local authority pension fund, as a new partner.
GMPF is the first local government pension scheme to invest directly and actively in a UK-wide property platform that specialises in science, tech and innovation. The deal shows how such funds can support the regeneration of the UK’s towns and cities; creating high-skilled jobs, boosting productivity and increasing wages, while helping the UK achieve its goal of becoming a global science and technology leader by 2030.
Bruntwood SciTech plans to build a £5 billion UK-wide portfolio that can support 2,600 fast-growing businesses by 2032. The £500 million of new equity includes £150 million from GMPF, of which £99m is invested immediately, along with a significant rise in investment from existing shareholders, Legal & General and Bruntwood, through cash and asset transfer.
As a result of this deal, the Bruntwood Scitech Portfolio will have £1.8bn of property on day one plus a further £1bn+ secured development pipeline. The new capital will provide the resources to develop this pipeline. Bruntwood are initial 42% holders in the enlarged platform.
As part of structuring this deal, Bruntwood (outside of Scitech) has reduced its outstanding debt (including the £91m retail bond) from £615m to £154m. This is expected to have a positive impact on its loan to value ratio despite an expected significant fall in property values in line with market trends over the last 12 months at year end valuations (as at 30th September 2023).
Bruntwood will keep a £260m portfolio of workspaces, mainly located in suburban town centres, along with a £100m portfolio of town centre regeneration projects with Trafford and Bury Councils. This part of the business will focus on creating distinctive, sustainable, culturally rich and socially responsible communities. It will aim to make more acquisitions in the towns around the cities where Bruntwood SciTech operates and work to develop a symbiotic relationship between the innovation economies of the cities and their surrounding towns.
On completion of the deal, Bruntwood’s debt (outside Bruntwood Sci Tech) will consist of the £91m 6% retail eligible bonds due February 2025, £43m of loans secured against Bruntwood’s interest in joint ventures with local councils and a £50m facility with Natwest/HSBC/Barclays/Santander due April 2027. The latter facility is drawn to £40m but a £20m bridging loan to Bruntwood Scitech is expected to be repaid by the end of the calendar year reducing this to £20m.
The deal is significantly beneficial for Bruntwood and creates the resilience and headroom in the group to meet its debt service obligations even if the property market worsens further; while greatly advancing its strategic development ambitions in the Science and Tech sectors.