Barratt Developments PLC announced the formation of a new joint venture to act as the parent entity for the strategic alliance between Barratt and London and Quadrant (L&Q). This will provide a platform for the partners to continue to invest, in a disciplined way, in future opportunities in London.
Strategic alliance
Barratt and L&Q first partnered in 2010 for the development of Altitude, a 27-storey residential tower on Alie Street on the edge of the City of London. Since then, we have jointly acquired developments at Queensland Terrace in Islington and Fulham Riverside on the river in Fulham, and contracted on a site at Nine Elms, part of the major redevelopment of the area in Vauxhall. Together these JV sites will deliver a total of 1,700 units, with a gross development value of c. £1.2bn (approx. €1.42 billion).
The combined strengths of the partnership, both operationally and financially, have consolidated Barratt London’s position as one of the leading housebuilders in the capital. The JV partnership has enabled Barratt to optimize development opportunities across London whilst retaining a diversified portfolio and managing development specific investment levels. Barratt and L&Q will continue to pursue large scale, complex and financially attractive opportunities with a primary focus on the central London market where both partners have a strong record of delivering private and affordable housing.
The new JV parent entity is BDWZest Developments LLP. The three existing JV trading entities at Altitude, Queensland Terrace and Fulham Riverside have been transferred into BDWZest. There was nil consideration as Barratt and L&Q received an equal interest in BDWZest for their respective interests in the JV trading entities. Barratt’s share of the gross asset value of the three existing JV entities as at 30 June 2013 was £119 million (approx. €140.7 million).
The development at Nine Elms will be held in BDWZest when the purchase from Sainsbury’s becomes unconditional in early 2014. Summary information regarding the four developments is in Appendix 1.
Financing facility
A new five year revolving credit facility of £120 million (approx. €142 million has been arranged for BDWZest. This facility will initially repay a loan of c. £21 million (approx. €24.8 million) from L&Q that was made to the Altitude development in 2011. It will then be available to the JV for land and build expenditure. The JV will continue to be primarily equity funded by Barratt and L&Q.
Source: Barratt Developments PLC
