L&G secures second RIO deal with £400m regeneration of Cardiff
22 September 2015
Legal & General announces that it has entered into a joint venture partnership with Cardiff-based developer,Rightacres, to deliver the Central Squaremasterplan designed by Foster + Partners, one of the City of Cardiff Council's priority regeneration schemes. The prime 12-acre mixed-use city centre regeneration scheme is set to create over 10,000 local jobs and facilitate significant economic growth.
One of Wales' prime development sites, located immediately to the north of Cardiff's central train station, the regeneration of Central Square will comprise one million sq ft of space in the heart of Cardiff city centre and is expected to become the focal point of the city's Enterprise Zone. The first phase of the project includes the development of two buildings – the proposed 150,000 sq ft BBC Wales HQ and One Central Square, a 135,000 sq ft office development that is part pre-let to national law firm, Blake Morgan, and due for completion in January 2016. Further phases will include a mix of commercial and residential buildings.
Having committed £1.5bn to co-investing its core capital beyond London, into critical regional urban regeneration projects that support the UK growth, the deal is the second project to be delivered through L&G's Regeneration Investment Organisation (RIO) partnership. As such, it follows the news last month that L&G has backed a £400m (GDV) regeneration scheme in East Leeds which it will develop in partnership with Scarborough Group, delivering 13,000 local jobs while unlocking the potential creation of 7,000 new homes.
Using its flexible capital and partnership model, L&G seeks to secure the viability of socially and economically important UK schemes, while in turn working with UKTI and leveraging is strong network of contacts to attract up to £15bn of investment into RIO pipeline projects. To do this, Legal & General Capital (LGC), which invests L&G's balance sheet into strategically important direct investments, is working closely with LGIM Real Assets, its specialist property and infrastructure asset manager.
Chancellor of the Exchequer, George Osborne, said: "Today we see a major vote of confidence in the Welsh economy with a new partnership between Legal & General and Rightacres. The £400 million regeneration project which will be delivered through this partnership is fantastic news for working people across Wales and will help transform Cardiff's city centre creating 10,000 new jobs."
Phil Bale, Leader of Cardiff City Council, commented: "Cardiff has a long established relationship with L&G, as one of the Cardiff capital region's major employers, and this latest news represents an exciting new chapter which clearly demonstrates their confidence in the region. Central Square is a major priority for the Council which will create a fabulous gateway to Cardiff and the rest of Wales."
Laura Mason, Director of Direct Investment at Legal & General Capital, commented: "Cardiff has been hugely successful in establishing itself as real player in the inward investment arena and Central Square represents the most exciting regeneration scheme due to come forward in Wales. Located in a prime city centre location, it is set to deliver major social and economic benefits, and proves the model for the public and private sectors working together in order to unlock real UK growth. We look forward to working closely with our new development partners and Cardiff City Council to deliver this major project and attract further investment to the area."
Paul McCarthy, Chief Executive of Rightacres, said: "Having a funding partner like Legal & General alongside us in Central Square will maintain the momentum we have been building around the scheme. L&G has a real understanding of the Cardiff market and they have demonstrated to us that they are able to react quickly to our proposals which will allow us to deliver the Central Square Masterplan over the next few years."
The First Minister, Carwyn Jones AM, said: "I'm delighted to see another significant investment in the heart of our Central Cardiff Enterprise Zone. It accords with the line of travel envisioned by the Financial & Professional Services sector for the Enterprise Zone and more widely for the Cardiff Capital Region."
Tom Roberts, Senior Transactions Manager at Legal & General Property, said: "Mae'r newydd yma yn arwyddocaol o bwysigrwydd dinas Caerdydd i Legal & General fel safle deniadol ar gyfer buddsoddiant. Rydym yn hynod o falch i gyfrannu tuag at adnewyddiad un o ardaloedd mwyaf pwysig y brifddinas sef Central Square. Mi fydd safon y pensaeriaeth a adeiladwaith yn creu awyrgylch bleserus i bobl Caerdydd fwynhau. Yn ogystal mi fydd y datblygiad yn creu argraff ffafriol gyda'r miloedd ar filoedd o ymwelwyr i Gaerdydd wrth iddyn nhw gyrraedd Caerdydd Canolog."
Knight Frank's Cardiff office acted for L&G.
Notes to editors
The City of Cardiff Council and Rightacres entered in to a Development Agreement in 2013 to deliver the Central Square Masterplan. At the centre of the development is the proposed new BBC Wales HQ which has been designed by Foster + Partners. Rightacres was selected as the preferred developer for the BBC in June 2014 and planning was granted in April 2015. Work is expected to start on site later this year. One Central Square (135,000 sq ft) is due for completion in Jan 2016. The Council is also working with Rightacres to develop a new transport Interchange as part of the regeneration scheme.
Regeneration Investment Organisation
The UK government is creating the ideal business environment for investment in regeneration projects across the UK. Under the Chairmanship of former Lord Mayor of the City of London, Sir Michael Bear, the Regeneration Investment Organisation (RIO) has a strong pipeline of urban renewal projects seeking investment in sectors including commercial, industrial, leisure, residential, retail and mixed use. These projects are at various development stages and typically are each worth over £100m in investment value. Over 40 regeneration projects are listed on RIO's website seeking more investment or development partners.
Rightacres is a family owned business based in Cardiff and chaired by founder Michael McCarthy. Now run by his son Paul, Rightacres has developed over two million square feet of commercial space in Cardiff. Previous JV's include Callaghan Square in Cardiff with MEPC and the Holland House Hotel chain with Macdonald Hotels.
Legal & General Capital
Legal & General Capital (LGC) was founded in 2013 to help actively invest L&G Group's balance sheet, improving its shareholders' quality earnings by increasing the business' exposure to strategically important direct investments. To date L&G Group has invested over £6.3bn in direct investments. LGC's four major strategic sectors comprise of UK Housing, UK Urban Regeneration, Alternative Finance a