Quintain Estates has entered a joint venture with Keystone Developers to deliver the next phase of its Wembley residential scheme in a deal totalling £32.3m.
The development will see £22.7m invested for the 1 ha development plot to build 475 homes, as well as a further £9.5m for future associated infrastructure.
Under the deal, Quintain will own 50 per cent of the equity and receive cash of £13.6m, paid from Keystone around the time of completion of the transaction, with a further £2.5m to be paid when construction of the first phase is complete, expected in 2016.
Keystone Developers is a subsidiary of Swiss real estate and private equity firm Keystone Group Holdings.
The 475-home scheme will be split between seven buildings arranged around private gardens.
Two of the buildings, covering 93,000 sq ft and containing 143 homes, will be constructed by Quintain, for which the company will pay the JV £37.1m.
Of this amount, £5.6m will be paid in May 2014, with the balance paid from its existing resources when the first phase is complete in 2016.
These homes will be retained by Quintain as new private rented sector accommodation and are expected to generate a “strong income stream”.
Quintain will also generate additional fee income of £3.3m as development and project manager for the project.
The investor said the JV will enable it to invest capital more quickly in its “growing London portfolio”.
The remaining development land at Wembley Park was valued at £312m in September 2013, including £73m spent on infrastructure across the wider site.
Consent is held to develop 5,000 new homes on the land, alongside 1.9m sq ft of office, leisure, retail and student development.
Quintain secured detailed planning consent from the London Borough of Brent for the 475 residential phase of the scheme in December 2013.
John Sisk & Son has won all of Quintain’s projects in Wembley Park to date, worth around £300m to the contractor.
However, speaking to Construction News last September, Quintain head of construction Matt Voyce said: “It isn’t just going to be one contractor that builds Wembley.”
On the JV, Quintain chief executive Maxwell James said: “This joint venture unlocks value for shareholders from our largest London asset, paving the way for the delivery of more new homes at Wembley into a supply-constrained London housing market.
“Strategically, this deal enables us to establish a sustainable development programme for Wembley Park while recycling capital into our growing London investment portfolio, with the objective of creating superior returns for our shareholders.”
Wembley Park development
The £2.1bn regeneration project promises 8.5m sq ft of development across 35 ha of land.
- Phase two of the four-phase masterplan includes 1,300 homes.
- The first project, comprising 475 residential units, is due to prequalify by the end of 2013 and tender in spring 2014 for a start on site in summer 2014.