The North West Evergreen Fund, which invests in real estate projects in Greater Manchester, Cumbria, Cheshire and Lancashire, has made an early investment, providing a loan of £6 million to the Soapworks regeneration development project in Salford, which is owned by global alternative asset manager, The Carlyle Group and its joint venture partners Nikal Developments and Abstract Securities.
The Evergreen investment will support the delivery of the second 210,000 sq ft phase of the proposed 400,000 sq ft Grade A office redevelopment of the former Colgate-Palmolive factory in Salford Quays’ new Media City boundary. The Carlyle Group’s Soapworks is a major regeneration project with a gross development value of circa £70 million that is set to transform the historic site into a commercial hub, creating new employment opportunities and revitalising the Exchange Quay area. The Evergreen-funded part of the project alone is set to deliver 1,350 jobs and will act as a catalyst for further phases of the Soapworks development which will create up to 2,500 jobs.
The secured financing will allow construction of the second phase of the Soapworks development, blocks A, B and C, to commence early in 2013, with completion expected by the end of that year, providing c.210,000 sq ft of Grade A, shell and core office space. This follows the completion in October 2011 of the first phase of the project, the 20,000 sq ft Boilerhouse, which is already fully let to engineering firm Vital Services. The final phase of the Soapworks project, Block D, will add a further 170,000 sq ft of office space when it is completed at a later date.
The North West Evergreen Fund, which is made up of 16 local authority limited partners was established to provide funding to support real estate projects which are critical to the region’s economy, generating jobs and growth. It is capitalised through the European Regional Development Fund (ERDF) and other public money allocated under the Joint European Support for Sustainable Investment in City Areas (or “JESSICA”) initiative, which is managed by the European Investment Bank in the North West on behalf of the Homes and Communities Agency. The application to the EIB was led by the Association of Greater Manchester Authorities. The Soapworks project exceeded the regeneration targets covering employment, remediation and floorspace outputs and, as such, was granted the maximum amount that the Evergreen Fund could provide.
The Evergreen model provides loan funding to be invested in projects which will generate a financial return and will then be recycled back into the fund to help support further projects. The fund is advised by CBRE Indirect Investment Services Limited, the FSA regulated arm of CBRE Real Estate Finance, and co-chaired by Manchester City Council and Lancashire County Council.
Tony Martin, Head of Investment Advisory, CBRE, said: “Evergreen provides developers with an opportunity to secure much-needed finance for strategic sites that will make a significant contribution to the success of the North West’s economy. The Soapworks investment fulfils every criterion for the fund, most particularly that it is expected to be a catalyst for the regeneration and employment prospects for the wider area. We look forward to growing Evergreen’s investment portfolio and are in advanced negotiations with a number of other parties on schemes of differing sizes and focus, and hope to announce a follow on investment in the very near future.”
Lord Peter Smith, Chair of the Association of Greater Manchester Authorities, commented: “The Evergreen Fund is an innovative use of public funding to support private enterprise in these challenging times. We will be investing in priority schemes which will deliver real jobs and growth, as well as financial returns, unlocking opportunities and stimulating the success of the region.”
Ben Du Boulay, Director at The Carlyle Group, said: “To be selected as a recipient and to be granted the maximum amount of funding from the North West Evergreen Fund is a real endorsement of the potential of the Soapworks scheme and the positive impact that the project will have on the regeneration of the Salford Quays area. As the recent letting of the Boilerhouse demonstrates, there is a clear demand for high quality, good value, flexible space within Salford Quay’s Media City and we are confident that the completion of the second phase of the project will add to the area’s success.”
Salford City Mayor, Ian Stewart, added: “This is a welcome boost to job prospects in Salford and will further speed the regeneration of this area of the city. It’s a positive example of the public sector working imaginatively with the private sector to deliver growth and development. This project will transform an historic central site in Salford into a commercial hub, creating new job opportunities and revitalising the Exchange Quay area.”
Deborah McLaughlin, North West Executive Director at the HCA, said: “The HCA is committed to supporting economic growth by helping communities realise their aspirations for prosperity. Investment in major schemes like the Soapworks plays a crucial role in helping to revitalise the area and create much needed employment opportunities for local people. I look forward to continuing our work with partners and watching the development progress over the coming months.”
Wragge & Co advised The Evergreen Fund, and Eversheds advised The Carlyle Group.
