Structured finance specialist Babcock & Brown has emerged as the frontrunner to partner the Welsh Development Agency in a 1m sq ft property development partnership.
The WDA received more than 20 expressions of interest for its controversial Welsh Investment Strategic Partnership scheme, announced by Welsh economic development minister Andrew Davies earlier this year.
In return for funding a £200m building programme until 2020, the WDA and its fundholder, the Welsh Assembly Government, are guaranteeing 25-year leases, at 95% of open market value, on the offices and factories to be built under the WISP programme.
The WDA will appoint agents in the next few weeks to sublet the office buildings, which in the first phase will range in size from 40,000 sq ft to 45,000 sq ft.
The scheme has attracted criticism from developers, who have accused the WDA of state interference and undermining the private sector’s ability to attract occupiers on conventional lease terms.
Developers also fear the WDA will slash rents and provide further incentives if it fails to secure tenants.
Babcock & Brown, a global leader in asset management and cashflow-based investments, has a strong record in winning private finance initiative and public-private partnership contracts with UK public bodies.
It has been selected recently to fund a number of major health projects.
B&B is set to be named as the WISP partner in the next few days.
The selection was made from a final shortlist dominated by funder/developer partners including Topland, Interserve, Mansford, Liberty Properties, Sir Robert McAlpine and Cardiff-based Principality Building Society.
B&B will launch the WISP project by providing 125,000 sq ft of offices on three sites Newport city centre (45,000 sq ft), Parc Nantgarw on the northern outskirts of Cardiff (40,000 sq ft) and Swansea’s fast-emerging waterfront scheme, SA1 (40,000 sq ft).
It has appointed London- and Cardiff-based firm HMA Architects to design the first three buildings, but is yet to choose a contractor.
It will, however, have to follow strict quality and design guidelines laid down by the WDA.
Developers are reluctant to speak publicly about their concerns, but one agent on the losing side described WISP as being as close as the British property industry would ever get to a no-risk deal.
“This is a no-brainer for the winner,” he said.
Neither B&B nor the WDA would comment.
References: EGi News 07/11/05
