Transcript Chaired By Sir Michael Bear - UK Infrastructure and Regeneration

Regeneration in the UK
Regeneration Investment Organisation UKTI
Government Support to Major Regeneration Projects
www.ukti-regeneration.com
Regeneration in the UK
Sir Michael Bear
Chair, RIO & UK Special Envoy for
Sustainable Urbanisation - China
Regeneration in the UK
UK Government Mandate for RIO
..“A new one-stop-shop has been
set up (RIO) to help
international investors identify
and fund regeneration
opportunities in the UK.
These projects won’t just mean
new jobs in London or the South
East - but right across the whole
country”
The Prime Minister at the Lord Mayor’s Banquet
(11th November 2013).
Regeneration in the UK
UK Government Mandate
“We have a really strong supply of regeneration projects in the
UK - over £100 billion in capital value. But currently the offer is
fragmented with delays and it’s difficult for investors to
navigate. The Regeneration Investment Organisation provides
a great opportunity to announce a radical new approach to
helping boost investment into the UK”.
“RIO acts as the “honest broker” and provides a fantastic way of helping investors find and invest into
a credible range of UK wide pipeline of regeneration opportunities. It does this by having a dedicated
regional team and development experts, set project criteria in determining an “investible project”, and
by working with UK partners through a high level advisory board. It will therefore build on the success
of the investment secured at Battersea Power Station, by creating an easier point of entry for
investors. By creating stronger links with local and national partners, RIO will help to remove some of
the barriers faced by partners to project delivery, which will enable sustainable jobs and growth
across the regions within the UK”.
Sir Michael Bear, RIO Chairman
4
Regeneration in the UK
UKTI: Who we are …
UK Trade and Invest Strategic Relations and
Investment Team:
• High level relationships with the largest
institutional investors globally
• Access to UK based expertise and across
Whitehall
• Access to global network of UK Embassies
• Supporting key UK regeneration projects. Aim to
promote growth and jobs
• Under Lord Livingston
• Team of industry Experts/FCO/BIS
8
Regeneration in the UK
Why Invest in Regeneration in the UK?
High socio-economic
impact
 Building communities and accelerating jobs and growth
 Pipeline could create significant jobs and positively impact on GDP
 Opportunities are spread across major economic zones in UK
High quality pipeline
 High quality and diverse range of opportunities
 Over £100bn worth of projects, many of which are “shovel ready” 60%
 Strong private-sector support
Flexible investment
options
 A range of equity ticket sizes
 Equity, debt or mezzanine investment options
 Islamic financing structures are available
Strong developer base
& government support
 Large base of international developers with local expertise, successful
track-records and strong balance sheets
 UK ranked in the top 3 in the European Union for dealing with
construction permits1
 A range of government incentives - planning/business rates
1. Source: 2012 World Bank Ease of Doing Business
Regeneration in the UK
Government Unlocking Growth
•
Removing Barriers to Growth – RIO helps to unlock growth – the how will be
dealt with later
•
Making strategic investments to provide vital infrastructure –working with our
network of UK Embassies
•
Ease of Permits – World Bank Ease of Doing Business 2013 ranked UK as the
second best major economy G7 for dealing with construction permits
•
National Planning Framework - fast track economic and housing appeals –
88% major planning applications are granted in 6 months
7
Regeneration in the UK
Decentralising and Providing Incentives for Growth
•
39 Local Enterprise Partnerships – businesses & councils coming together to
help determine local priorities
•
24 Enterprise Zones – specific areas where a combination of financial
incentives and reduced planning restrictions apply
City Deals – these cities will negotiate deals with government with new powers
for greater responsibility and how public money is being spent – first wave 8
Core Cities & Wave 2 involves 20 Cities
Regional Growth Fund a £3.2 bn fund supports eligible projects that are also
raising private sector investment to create economic growth (round 6)
Local Growth Fund As part of Autumn Statement 2013 the Chancellor
announced that £50m of the Local Growth Fund will provide targeted support
Private Rented Sector – a £1 bn fund to support development of private
rented homes
•
•
•
•
Regeneration in the UK
Growing Demand
• Strong investor confidence in the UK and growing
demand for UK projects
• £1.13 Trillion firepower for the UK regeneration
• Move away from trophy London assets to greater
returns elsewhere
• Recent successes:
• London
– £1bn in Royal Albert Docks - ABP China
– £840m in 1 Nine Elms - Wanda (£90m purchase)
– £8.4bn Battersea PowerStation – SP Setia (£400m
purchase)
• Outside London
– £700m for residential development in Manchester
Liverpool, Solihul and London
7
Regeneration in the UK
Nahid Majid OBE
Chief Operating Officer RIO
11
Regeneration in the UK
RIO Principles
1. Regeneration – jobs and
growth in the UK
LEPs
C
2. Credible offer assessed by
industry criteria – our PID
Project Initiation Document
3. Transparency through our
Advisory Board acting as
the Honest Broker for
industry and investors
Local
Authorities
B
A
Approved by industry
Devolved
Administrations
Input and managed by
local partners
City
Councils
RIO approved projects are assessed on project value, job creation and
regional impact and planning status A: Shovel ready with planning
B: Early stage planning C: Concepts
Regeneration in the UK
RIO Advisory Board
Damian
Nussbaum and
Michael Boyd,
UKTI
David Prout,
Department for
Transport - HS2
Duncan
Sutherland,
Sigma
InPartnership
Jon Milward,
Deloitte
David Partridge,
Argent
John Herbert,
HSBC,
Neil McIvor,
Office of the
First Minister
and Deputy First
Minister of
Northern Ireland
Greg Ward, City
of Edinburgh
Council,
Scotland
James Price,
Welsh
Directorate of
Economy,
Science and
Transport
Peter Geraghty,
Royal Town
Planning
Institute,
Urban Planning &
Design
Stephen Dance,
HM Treasury
Jonathan Harris,
Macquarie
Regional
Representation
Phillip Cox,
Steven
Quartermain,
DCLG
Bill Oliver, St
Modwen
Industry, Finance &
Commerce
Government
Sir Howard
Bernstein,
Manchester City
Council
Chaired By Sir Michael Bear
Sir Edward
Lister, Greater
London
Authority,
Chris Murray,
Core Cities
Michael Newey,
Royal Institute of
Chartered
Surveyors
Michael
Parkinson CBE,
Liverpool
University
Regeneration in the UK
Delivery Model
• Strong pipeline of credible projects backed by industry, championed by
government - Supply Side confidence through our technical
assessments Project Initiation Document PID
• User-friendly online platform for promoting and showcasing projects
• Build and maintain strong relationships with international investors
understand the demand side
• Utilisation of UKTI’s network of UK embassies and 270 posts globally
• Intelligent matching of supply, assessed projects though an industry
technical team PIDs and a demand audit of “investor asks”
• Cross-Government Sounding Board and Expertise _ Quarterly reviews
with the RIO Advisory Board - Risks managed and mitigated
Reactive  Proactive  Risk Mitigation  Delivery Model  Review & Success
Regeneration in the UK
Project Selection Criteria – PID Project
Initiation Document
• Background information: project, size, location & development partner
• £100 million threshold – £3 plus billion (£50 million where substantial
regional jobs will be created) invetsment scale
• Market Demand - Appraisals
• Economic – likely Jobs and growth/supply change
• Key Timings. Messaging and transparency
• Land assembly and stage of planning
• Investment type – JV, developer partner, passive or active
• Potential Commercial Returns
13
Regeneration in the UK
What we can offer Project Promoters?
• Identifying key sites and packaging of proposals – capacity and scale
• Defining type of investment opportunity – Joint Ventures, full
acquisitions, developer partnerships
• Assessment against industry and Government backed national criteria
• Inclusion on the online RIO Project Pipeline and in the pitchbook
• Reaching out internationally to raise profile – through overseas posts
• Attracting/marketing inward investment – match making as the honest
broker
• Partnering with developers and investors
• Sharing Learning and Best Practice
• Continuous Dialogue through the UKTI team and RIO
20
Regeneration in the UK
Investor Portfolio and Asks
A range of investors and a range of requirements / investment type / risk appetite.
•
•
•
•
•
•
•
•
•
£100m + / project and scale
Clear commercial returns across a range of
diverse finance options
Relationships JV and legacy
Skills transfer to home markets
Strategic positioning within a sector or market
Finance and developer partnerships
Interest shifting out of competitive London market
Central and Local Government support or
incentives/guarantees/messaging and
transparency
Publicity
Challenges:
• Understanding and differentiating UK regions
• Reaching the preferred project scale (£100m)
• Project timings - Procurement, Regulations
17
Regeneration in the UK
Investor Asks
Q1
Which areas of the UK Regeneration space does the investor have an appetite for?
• Greenfield | Brownfield Land | Projects with or without planning permission
Q2
Which sectors does the investor have an appetite to invest in?
Q3
What type of role does the investor seek?
• Passive to active | Sole or Partnerships | Development | Joint venture to full acquisition
Q4
What is the Investors preferred project status?
• ‘shovel ready’ or ‘opportunity to shape concept’ | Long or short term investment.
Q5
What is the Investors preferred project scale?
• Preferred GDV (Gross Development Value) of project, minimum GDV to be over £100M
Q6
What are the investors preferred locations? Across all of UK
Q7
What is the Investors previous track record?
• Previous investments in the UK and Globally in Regeneration real estate sector
Q8
What are the target returns of the Investor?
• Mandated returns the fund needs to secure from its Capital | Targets | Return on Capital
(ROC)/Internal Rate of Return (IRR).
Regeneration in the UK
What we can offer Investors?
• Understanding key markets, regulatory regimes and investing in the UK
• Help for overseas investors navigating routes to market in UK
• Raising awareness of specific opportunities
• Building relationships and legacy with all stakeholders to understand
agendas, facilitate introductions and hold bilateral discussions
• Unblock key investment obstacles in the UK & with Overseas Posts and
UK Embassies
19
Regeneration in the UK
The RIO Project Pipeline - Online Portal
• Dynamic online platform
showcasing all RIO Projects
actively seeking investment
• Viewing by registered users
only
• Users prompted to submit
enquiries to the RIO team for
further follow-up
www.ukti-regeneration.com
Regeneration in the UK
Our Achievements to Date & Going Forward
• Strong partner relationships with private developers, LEPs and LA’s
• Project pipeline totals £100bn GDV of projects (90% outside London) potential 550,000 jobs.
• By asset class the projects break down by 90,000 residential units, 67m
ft2 of Commercial space and 39m ft2 of industrial space.
• Supply Side: We have over 100 projects being assessed PIDs
• Demand Side: A RIO Investor Strategy in Place – Priority Markets
• Our ‘shovel ready’ (those actively looking for investment) projects
currently total 38 with a value of £30bn and 170,000 potential jobs.
• There are a number of active commercial dialogues and MOUs in place
with over £10bn potential investment into the UK
• Next Steps for RIO – RIO Local and Regeneration Investment Vehicle
• Working alongside our expert partners will further enable RIO to
support and unlock major regeneration projects across the UK
Regeneration in the UK
A One-Stop-Shop for Regeneration Projects in the UK
www.ukti.gov.uk/RIO