The second Evergreen fund, a European Union vehicle designed to support development projects in England’s North West, has written its first loan to support the construction of a science campus in the centre of Manchester.
The fund, which is managed by CBRE’s investment advisory unit, has provided £12.5 million (€14 million) of an £18.5 million facility to fund the Citylabs 2.0 scheme, located in the area of the city being promoted as the ‘Oxford Road Corridor’ science and innovation district. The balance of the loan will come from the original Evergreen fund.
The deal demonstrates the role public funding is playing in some UK regions where there is a lack of development finance from banking sources. According to its website, the original Evergreen fund, which was also managed by CBRE, provides debt funding for commercial property and regeneration projects in the North West of England at “highly competitive commercial rates”.
In total, Evergreen 2 is a £45 million fund, supported by the 2014-20 European Regional Development Fund programme. The first Evergreen fund of £60 million provided more than £115 million of debt finance through recycling capital. Schemes funded included Allied London’s mixed-use St John’s scheme and elements of Peel’s MediaCity in Salford.
“Traditional clearing banks remain averse to lending outside of core areas or where significant pre-lets have not been agreed,” explained Andrew Antoniades, senior director, CBRE Investment Advisory. “There is therefore an opportunity for alternative lenders like Evergreen 2 to achieve attractive returns whilst simultaneously acting as the catalyst for developments that will have wide-reaching socio-economic benefits for the region in the long term.”
The second fund’s maiden loan has been provided to Manchester Science Partnerships, an operator of science and technology campuses which counts locally based property company Bruntwood as its main shareholder. Bruntwood will develop the Citylabs 2.0 scheme on behalf of the partnership in a joint venture with Manchester University NHS Foundation Trust.
Citylabs 2.0 will also be part-funded by the European Regional Development Fund. The scheme will provide a total of 92,000 square feet of laboratory and office facilities. The scheme is the successor of Citylabs 1.0 – a biomedical facility which launched in 2014. A third scheme – Citylabs 3.0 – is being planned.
“This funding from Evergreen 2 means we can soon begin construction work on the first stage of our plan to expand the campus in partnership with MFT,” said Tom Renn, managing director of Manchester Science Partnerships.
“The city region’s £6 billion devolved healthcare budget, its world-class universities, skilled talent pool and strong track record of academic, clinical and commercial partnerships has made us a gateway for healthcare talent, which we are looking to support with this development,” he added.