Morgan Sindall’s Bournemouth LABV will start £40m of regeneration work after securing a government loan and a pension fund injection.
Morgan Sindall Investments Ltd is joining with Bournemouth Borough Council in a 50:50 partnership, or local asset backed vehicle, where the council provides land in exchange for cash.
The latest deal means the public-private partnership, called the Bournemouth Development Company, can begin redeveloping two council-owned surface car parks at Leyton Mount and Madeira Road.
Central government funding has been secured through a loan from the Homes and Communities Agency towards the financing of a five-storey block of 64 apartments at Leyton Mount and a 290 sq m (3,120 sq ft) commercial unit.
The partnership has also signed a deal with a blue-chip pension fund for three blocks of student accommodation on part of the nearby Madeira Road car park.
The structure of the deal that MSIL originally signed in February 2011 means it can bring other parts of the Morgan Sindall group into the supply chain.
MSIL director Richard Dixon said: “That the LABV has achieved such a milestone, within a relatively short timescale and in the context of a challenging environment for developers, is testament to the strength of the LABV model and the commitment of its partners.
“It represents an exemplar for other local authorities and public sector bodies, who are considering ways of unlocking value in surplus assets in order to help drive regeneration and improve their estates.”
Development director of the Bournemouth Development Company Duncan Johnston said: “This first wave of activity is great news for Bournemouth and demonstrates our commitment to this innovative project, allowing us to move forward with the shaping of the regeneration vision for the town.”
Under the 50:50 partnership, the council invests land assets, including car parks, when development is imminent. The assets investment is matched in cash value by MSIL.
Both partners maintain a 50 per cent share in the assets, the partnership and the profits arising, with the share of profits reinvested in new sites, infrastructure and open spaces.
Morgan Sindall is also partnering with Slough Borough Council on a £1bn LABV scheme.