Two of the UK’s largest pension fund managers are taking on the City Corporation in a rights of light dispute over Goldman Sachs’ proposed new headquarters at the Fleet Buildings and Plumtree Court , EC4.
Aberdeen Asset Management and Royal London Asset Management are considering legal action against the City if it pursues plans to use controversial planning powers to intervene on behalf of the US investment bank.
The fund managers, which are among the largest investors in the Square Mile, are understood to be the owners of two buildings that neighbour Goldman Sachs’ proposed development and that have yet to agree on compensation for the loss of light the consented 850,000 sq ft redevelopment would cause.
Goldman has appealed to the City to help solve the standoff, prompting the City planning officer to recommend the use of section 237 powers, which would effectively see the City buy a temporary stake in the scheme and dictate a settlement.
The City’s planning and transport committee will today vote on the use of the powers, with JLL due to speak in objection of the proposal on behalf of Aberdeen and RLAM.
In a joint statement released to EG, Aberdeen and RLAM said that while they recognised the benefit the development would bring, consideration needed to be given to the owners of the neighbouring building.
They said: “The underlying owners of these buildings – pension funds, insurance policyholders and other investors – need to be adequately and appropriately compensated.
“Aberdeen and Royal London are acting in the best interests of their clients and hope a commercial settlement fair to all parties can be agreed.”
Should the committee agree to back the City planning officer’s recommendation and invoke section 237 powers, both Aberdeen and RLAM are expected to take legal action in an attempt to block the move.
The case would test the question of whether such intervention by local authorities is appropriate.
For the City the decision to intervene comes after a succession of major US investment banks quit the Square Mile for Canary Wharf in part because of the lack of large floor plates available in London’s historic financial heartland.
The City has sought to stem the tide of occupiers moving to the Docklands by backing developments which rival the scale of buildings at Canary Wharf, including a series of new towers.
It has previously threatened the use of section 237 powers to facilitate the development of the Walkie Talkie skyscraper at 20 Fenchurch Street , EC3.
Its willingness to intervene in such cases is unique among local authorities, which have tended avoided using s237 to intervene in development disputes, usually due to sensitivities with local residents.
A total of14 buildings are affected by Goldman Sachs’ proposed development.
Releases of rights of light have been signed with the owners of 11 of the buildings, according to the City planning officer’s report.
While the report does not identify which buildings have yet to agree settlements with Goldman, EG understands that the buildings at 14-21 Holborn Viaduct, 34-35 Farringdon Street , 32, 33 and 33A Farringdon Street are among those that have not yet been subject to agreements.
According to the planning officer’s report, the City has obtained its own independent estimates for “reasonable compensation figures” for the outstanding rights of light owned by Aberdeen and RLAM.
The estimates of £1.2m for each of Aberdeen and RLAM’s rights are higher than what Goldman had offered but less than what the institutions had asked for, it said.
However, following mediation with the City, Goldman has agreed to pay the £1.2m estimate while Aberdeen and RLAM have sought to negotiate further.
“It is considered that the developer has acted reasonably in agreeing to settle at the sum proposed by the City, and that failure of the two adjoining owners to indicate that they are prepared to settle at the £1.2m figure [each] is likely to prevent the development (or some similar development) from being carried out,” the report said.
The City Planning and Transport Committee meeting will take place at 10:30 this morning.
jack.sidders@estatesgazette.com
