I revealed last week that another major Olympics development site is coming forward. It is significant because it is one of the last remaining sites within London & Continental Railways’ Stratford portfolio. As the story explains, the government is talking to LCR about how best to manage its multi-billion-pound property portfolio in order to ensure the taxpayer gets the best return from the initial 1997 investment in LCR and the Channel Tunnel Rail Link. Any way, I am back from holiday now and thought it best to give the story a full airing on the blog. Here it is:
CoStar News has also learned that LCR, which is 100% owned by the Department of Transport, is preparing to go to market seeking a development partner for a new 15-acre mixed-use development opportunity next to Westfield’s £1.95bn Stratford City at London’s Olympic Park as part of its drive to unlock value from the business.
The Department of Transport has confirmed Channel Tunnel Rail Link builder LCR’s future following the £2bn sale of CTRL – now called High Speed 1 – to Canadian pension funds Borealis Infrastructure and Ontario Teachers’ Pension at the end of last year.
There are two remaining parts of the business, which was set up in 1996 to build CTRL – a 40% stake in Eurostar, which could be sold, and the property arm. Since 2008 and the completion of High Speed 1 successive governments have been considering the future for the business.
David Joy, chief executive, London & Continental Railways, said that the focus for the next two to three years will be a possible Eurostar sale and creating a “clean” property business, which can then either be sold or held for the long-term purely as a property company.
The company already has significant stakes in some of the UK’s most valuable developments (see LCR’s Property Goldmine below) thanks to large landholdings in Stratford’s Olympics zone and at King’s Cross St Pancras in London.
However, Joy said the Department of Transport and LCR were also considering injecting a raft of other UK-wide sites owned by the Department into the company in a move that would create one of the largest developers in the country. This is one of the possible options from the winding up of BRB(R) via the Public Bodies Bill by 2013.
Joy said: “With the possible sale of the Eurostar stake in two to three years’ time LCR will be a clean property company. The discussions will then focus on whether the government sells the business or retains it, and whether it expands the portfolio with other pieces of DFT-owned land across the country.”
CoStar News can reveal that LCR is also in discussions with Newham council and East Thames Housing to form a joint venture that will pool together 15 acres of jointly owned land adjacent to Westfield’s Stratford City at Chobham Farm North for a major residential mixed-use scheme.
LRC owns the freehold to around 9.4 acres that the Olympic Delivery Authority currently holds on a short-term lease which ends in 2013.
The jv partners have appointed architect PTEA Architects and Knight Frank to help draw up plans for a scheme that proposes up to 1,200 principally family homes as well as shops and a new park.
The plans will be lodged in the Autumn and the partners expect to go to market seeking a development partner in the spring of next year.
LCR also has a similar arrangement with the Olympic Delivery Authority on two other significant development opportunities in the area – the 4.6-acre Chobham South site, which is earmarked in the Stratford Metropolitan Masterplan for 1,200 homes and the two acre Angel Lane site which has outline consent for 270 homes. Australian shopping centre giant Westfield has a development option on these sites which it is still to decide on taking up.
As part of its decision to focus on property development, in April LCR restructured its Board appointing Lorraine Baldry as chairman and promoting Joy to chief executive.
LCR’s property gold mine
London & Continental Railway acquired around 240 acres of development land at sites in Stratford, east London, King’s Cross and Ashford in Kent from the Department of Transport in 1996 to make way for the Channel Tunnel Rail Link. It was the then biggest CPO since the second World War.
It has sold on some of the land, most notably 40 acres to Westfield for the £1.95bn Stratford City complex. Its land at the Olympic Village was transferred to the Olympic Delivery Authority.
However, it has retained 22 acres where it is developing a 4m sq ft business district with Lend Lease called the International Business Quarter.
At King’s Cross Central, LCR owns 49 acres of the 67-acre site and has created a limited partnership with the remaining landowner Exel and development partners Argent and Hermes.
It also owns the former Midland Grand Hotel in St Pancras where Manhattan Loft Corporation has developed a 244 bed Marriott Renaissance hotel and 67 private apartments and penthouses in the upper floors.
The group has sold all of its sites at Ashford International.