Regeneration Investment Organisation UKTI

Regeneration in the UK

Regeneration Investment Organisation UKTI

Government Support to Major Regeneration Projectswww.ukti-regeneration.com


Sir Michael BearChair, RIO & UK Special Envoy for Sustainable Urbanisation - China


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).


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


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

4


Why Invest in Regeneration in the UK? 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 and diverse range of opportunities Over £100bn worth of projects, many of which are “shovel ready”

60% Strong private-sector support

A range of equity ticket sizes Equity, debt or mezzanine investment options Islamic financing structures are available

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

High socio-economic impact

High quality pipeline

Strong developer base & government support

Flexible investment options

1. Source: 2012 World Bank Ease of Doing Business

8


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


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


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


Nahid Majid OBE

Chief Operating Officer RIO


RIO Principles

C

Input and managed by local partners

B

Approved by industry

A

Local Authorities

City Councils

LEPs

Devolved Administrations

11

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

1. Regeneration – jobs and growth in the UK

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


RIO Advisory Board Chaired By Sir Michael Bear


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


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


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


Investor Portfolio and Asks

• £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

A range of investors and a range of requirements / investment type / risk appetite.


Investor AsksQ1 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).


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


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


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


A One-Stop-Shop for Regeneration Projects in the UK www.ukti.gov.uk/RIO

Regeneration Investment Organisation UKTI

Documents