Quintain’s battle to bring forward its £5bn Greenwich Peninsula project turned a corner this week following a transformational deal with investor Knight Dragon.
The urban regeneration specialist has secured the vehicle, controlled by prolific Hong Kong investor Henry Cheng, to replace Lend Lease as its partner on the 14m sq ft scheme.
A crucial part of the deal was KD’s provision of a £300m, 20-year revolving development funding facility.
New chief executive Maxwell James, who replaced Adrian Wyatt at the helm of Quintain last month, said this funding was “equity to all intents and purposes” and could be leveraged to increase the jv’s firepower for the project.
The search for a new partner dates back to 2011 when former 50% partner Lend Lease indicated it was keen to exit the project.
Following this agreement, James said Quintain held discussions with “a small but meaningful number of global investment players” and found “one party with significant appetite for the transaction and the material means to do it.”
He said the family’s development of luxury London residential scheme The Knightsbridge, and its part-ownership of social housing operator Pinnacle, was “a confluence of elements that meant that Knight Dragon was the best partner for Greenwich”.
He added that KD has not looked at Quintain’s £2.5bn Wembley development where it is also keen to bring in a partner, and said he had “not got anywhere near” talking to the group about possible future involvement.
In total, Quintain will receive £150m in cash from the deal before future development profits.
This includes £78.8m for a 10% interest in the jv vehicle, Greenwich Peninsula Regeneration Ltd – leaving it with a 40% share – and £50m from the sale of a 60% of the 18.6-acre neighbouring Peninsula Quays site over the next six years.
Knight Dragon will buy Lend Lease’s 50% stake in GPRL to give it a controlling 60% interest.
Quintain will also receive around £80m over the next six years from development and project fees and the return of its infrastructure investment, which will be used to deliver the group’s £53m of net debt.
Its share price spiked 26.5% to 41.75p on news of the agreement, which is subject to shareholder approval in July.
The partners will now tweak the design of the 150-acre consented mixed-use masterplan, and bring forward the first phase of 611 homes at Peninsula Quays.
bridget.o’connell@estatesgazette.com
