Legal & General has ploughed £162m into a major regeneration project in Leeds, the first to be delivered as a result of the institutional investor’s partnership with the government’s Regeneration Investment Organisation (RIO).
The investor has bought a 50 per cent stake in the 200-acre Thorpe Park Leeds site, entering a joint venture with existing developer Scarborough Group International.
The JV will work on the delivery of the 1.35m-sq ft mixed-use second phase of the Thorpe Park scheme, which already has planning consent.
The project will include the construction of the first section of the East Leeds Orbital Road; it could create 13,000 jobs and unlock the construction of 7,000 new homes in the area.
L&G will provide the finance for the scheme over a five-year period. The deal is part of L&G’s agreement with RIO, struck in January, which will see the investor commit £1.5bn to pipeline regeneration projects.
RIO was set up in November 2013 to work with the government’s inward investment body, UK Trade & Investment, to attract institutional investment, particularly from overseas investors, to kickstart regeneration projects.
In an interview with Construction News earlier this year, RIO chairman Sir Michael Bear said the organisation had a 184-strong pipeline worth £100bn, of which £40bn-worth was “shovel-ready”.
The organisation is primarily focused on work outside of London.
Previous projects on which RIO has worked include the development of Airport City Manchester, on which Beijing Construction Engineering Group partnered with Carillion and the Greater Manchester Pension Fund.
Commenting on the Thorpe Park deal, Sir Michael said: “The United Kingdom is known internationally as an attractive place in which to invest in large-scale regeneration and infrastructure projects.
“For too long, however, investment has been focused on London and the South-east.
“I am pleased that Legal & General have announced their first investment, under their partnership with UK Trade & Investment’s Regeneration Investment Organisation.
“Following the recent successful visit to Singapore and Malaysia, I would hope that investors from Singapore and Malaysia, and other dynamic economies, would follow the lead of a leading domestic player by investing in the significant growth opportunity the Northern powerhouse represents.”
Legal & General Capital director of direct investments Laura Mason added: “Leeds has done an outstanding job in completing the first RIO deal with L&G.
“This major development will help bring the Northern powerhouse to life, supporting the wider Leeds economy and acting as a major catalyst for further investment in the UK’s cities and regions.
“Providing an excellent match for our long-term money, we have worked in close partnership with our property asset management arm, regeneration specialist partners and the public sector to complete this transaction.
“Our approach demonstrates that we can deliver strong financial returns for our shareholders and policyholders, while unlocking major infrastructure projects that support the economic growth prospects of the UK by closing the funding gap.
“L&G’s investment in Thorpe Park also highlights to international investors the attractiveness of working with local partners to access high-quality investment opportunities in other parts of the UK that they may not have previously explored.”