Lone Star's £3bn sale of Quintain (developer of Wembley Park) shelved

Published on UK Homesearch LINK

US private equity group Lone Star has shelved the £3bn sale of its UK residential property company Quintain, blaming the worsening coronavirus situation. 

Formal bids for Quintain, which owns the Wembley Park development site, were due to be submitted later this month with the company expected to fetch about £3bn, said a person briefed on the deal.

A sale at that price would make the deal the largest ever in the UK’s rented housing sector. But the sales process was aborted after a dramatic spike in coronavirus cases prompted a third national lockdown.

“Lone Star has decided to terminate discussions because it’s crazy trying to do this deal now with the backdrop of Covid. It’s a huge asset, with a lot of financing involved,” said the person briefed on the deal.

The end of the sales process was first reported by React news. 

The 85-acre Wembley Park site in north-west London has planning permission for 8,000 rental homes, with 1,500 of those already built. As well as paying for the existing properties and the land, prospective buyers of Quintain would need to fund any further development on the site.

The company had attracted interest from three bidders: German fund manager Patrizia; Li Ka-shing-backed investment manager Long Harbour; and a consortium of investors behind Get Living, another major rental housing developer which owns the former Olympic Village in east London, said two people with knowledge of the process. 

But Lone Star pulled the deal after deciding it might complete a smoother transaction and for a better price once the pandemic had eased, said a banker advising one of the prospective bidders.

The banker said: “January 2021 is not the ideal time to execute a £3bn transaction in London which is based on a bunch of assumptions about [who will rent] homes, the future of retail and when Wembley Stadium might reopen. There are a raft of things which it would be difficult for a lender or an investor to take a view on . . . I can completely see why they would wait for a brighter day.”

It is the second time in a little over two years that the private equity firm has had a potential sale fade as it neared the finish line. In 2018, Lone Star came close to a sale to Get Living’s backers — Delancey, Oxford Properties, Qatari Diar and the Dutch pension fund APG — but the parties could not agree on a price. 

Lone Star, which took Quintain private in 2015 for £1bn including debt, will now continue to invest in the estate, developing the remainder of the planned apartments.

“Lone Star looks forward to continuing to work with the Quintain team to deliver on the next development phase for Wembley Park — with an another 850 units already under construction,” said the company.

 

There's more to Quintain's Wembley Stadium steps than meets the eye

There is rather more to the triumphant tweet by Quintain that yesterday announced the start on work to replace the Wembley Stadium pedway with steps.  Before Quintain was taken over by the American Lone Star company in 2015 LINK , the replacement of the pedway project was announced in 2007 as (para 3) 'One of the largest pieces of privately funded public spaces in the UK.'

By the time it got down to Planning Permission, Brent Council had agreed to use Community Infrastructure Levy money, paid by developers for infrastructure improvements, towards the costs of the new steps and other Olympic Way improvements.

 Iconic?

Brent Planning Officers waxed lyrical on the benefits:

To assist in achieving the vision for Wembley, a significant element in terms of place making is the provision of new and substantial steps to the stadium to replace the pedestrian way (‘pedway’) and works to the public realm between Wembley Park underground station and the National Stadium Wembley: Olympic Way. This will enhance the area, both from an aesthetic and functional requirement.

Olympic Way as a piece of public realm is showing its age. It does not present the type of quality considered consistent with the environment necessary for a world renowned iconic venue and the wider Wembley Park development. In the context of other pressing infrastructure needs and other Council revenue spending requirements, a response might be that a significant Council funding contribution 
towards these changes should be a low priority. Nevertheless, this would be a simplistic and does not take account of all factors, including limitations associated with funding streams generated from development.

CIL funding attained by the Council is specifically related to infrastructure and is not available to support Council general revenue spending. In addition this proposed change in public realm should be seen as part of a wider picture about what will be achieved in Wembley which will have far reaching positive impacts for Brent and its prospects.

As we argued at the time there are many improvements that need to be made to Brent's infrastructure that would benefit local people more. The aesthetic argument is weak and the functional one unpersuasive - are the steps really more functional (and safer) than the pedway?

But there was something else, Brent Council did a deal with Quintain as part of the scheme, whereby Quintain agreed NOT to build on the land next to Wembley Library/Civic Centre:

Cabinet were asked to:

Confirm or otherwise the contribution of up to £12.1 million +VAT towards Zone 
 C improvements, such contribution being contingent on Quintain: 

a.     Not pursuing development of site NW04 (see plan above) adjacent to the Civic Centre to the extent currently permitted in the parameters plans associated with outline planning permission 10/3032 


b.     Working with the Council to deliver a development that better complements the role and setting of the Civic Centre, in particular creating a significant new square outside the Civic Centre Library 


c.      Agreeing a business plan and agreement, between Quintain and the council, for the future sharing and reinvestment of the net income generated through assets on Olympic Way in Zones A, B and C. 


d.     Securing up to one third funding contribution from Wembley Stadium owners. 


So Quintain got the money partly because Brent Council did not want its building hemmed in by high rise flats.  Many councillors and staff were peeved about the high rise flats between them and the stadium., spoiling the view. 

The other part of the deal was that Brent would share in the income generated by shops, bars etc that would be built in the undercroft of the steps. Somehow or other it was thought that the steps themselves would make the estate more attractive to visitors and provide an economic bonus.

The plans hit a problem when it was announced that the owners of the Stadium were putting it on the market and it was not clear if the new owners would cough up their shares of the funds LINK  . Things were further complicated when Quintain attempted to sell off its estate LINK.

The steps were not ready as promised for Euro 2020 and did not get started but Quintain's press release promises that the steps will be ready in time for the deferred matches:

Quintain, the developer behind Wembley Park, has today started the final upgrade works to Olympic Way with the project to replace the pedestrian walkway (known as the ‘pedway’) with an iconic new entrance to the National Stadium. The centrepiece of these works is the Olympic Steps, which form the final stage of a wider package of upgrades to the length of Olympic Way. The steps will be operational in time for the Carabao Cup Final in 2021 and the UEFA Euro 2020 tournament, which will be held in June and July 2021 and hosted at Wembley Stadium.

Such speed, in the face of possible future Covid19 second and even third wave, seems optimistic, particularly when you factor in the previously published schedule of works:

The delivery of the project can be split into three main construction phases:

•       Phase 1 – Site Preparation and Substructure Works; 


•       Phase 2 – Pedway Demolition and Construction of Steps; 


•       Phase 3 – Landscaping and Fit Out. 


.        6.62  Phase 1 - The initial work activity will focus on clearing the site below and around the Pedway of those utilities and other items that will obstruct the Pedway demolition and subsequent staircase construction. As areas become clear, works to the foundations and substructure of the steps will commence.

•       6.63  The foundations to the steps will be constructed in and around the existing Pedway structure in advance of its demolition. Therefore, there will be a need to utilise small/specialist plant, such as restricted access piling rigs that will be able to access the low headroom areas beneath the existing Pedway to construct the piles. 


•       6.64  Phase 2 - This phase will commence within an agreed window of time to minimise the impact to WNSL. The first stage of demolition will focus on removing the Pedway structure from the area of the new staircase construction. Once this is removed, the demolition will focus on removing the remainder of the Pedway (as it runs across Engineers Way towards Olympic Way and Wembley Park station north of the Stadium). A road closure of Engineers Way will be required whilst the Pedway is removed across the carriageway area (details as to the number and timeframes required for the road closures are not yet available but will be agreed, at the proper time, with the Council). 


•       6.65  The construction of the staircase is anticipated to be a combination of pre-cast and cast in- situ concrete. It is anticipated that the bridge podium section that will connect to the Stadium will be cast in-situ and the staircase will be formed from precast structural elements. The staircase is of a modular construction and will follow a step by step process that will be prescribed by the designer and supplier. Throughout this phase of heavy lifting it may be necessary to have lane closure on Engineers Way to facilitate easy delivery and unloading of the precast elements. Pedestrian management will be a key feature of this phase to maintain safety exclusion zones around the works. 


•       6.66  Phase 3 - The fit out of the staircase undercroft will commence as soon as all overhead working is complete and it is safe to do so. The final landscaping will be constructed during the WNSL events season. Ahead of this phase there will be agreed processes and access routes to limit the level of non-working and disrupted time (as has been managed through the delivery of the Olympic Way Zone A works). 


•       6.67  The construction of the landscaping and public realm works will be undertaken in two sections that will run concurrently: Olympic Way (from the boundary of the Zone A works) to Engineers Way and the Olympic Steps area comprising land south of Engineers Way to the Stadium. 


Back in 2018 Wembley Matters considered how much disruption would be caused by the works LINK

There is more to the Olympic Way improvements that just the steps, although Brent's Infrastructure Delivery Plan for 2020-2014 only refers to the step,s a total of £40m is to to be spent  with a funding gap of £17m ,

There is of course another major project that has been delayed and for which no start or completion date has been confirmed.  That is the reconnection of North End Road to Bridge Road. The plan was regarded as  important to allow buses to avoid the stadium on event days and to make up for the loss of the road that currently runs beneath the pedway. Earlier plans appeared to envisage the removal of the ramp down to Olympic Way from Bridge Road but this illustration appears retains them. The Michaela School would now be on a through road rather than the present pedestrianised section. New high rise buildings are planned for the site presently occupied by the College of North West London and the Wembley Retail Park and temporary theatre on the former TV studio site.

The North End Road connection

 It is not clear from the documentation whether the £40m includes these plans. I wrote on July 1st 2019:

The works to reconnect North End Road, Wembley with Bridge Road (presently connected by steps and a ramp) were due to start today but Brent Council informs Wembley Matters that they have been postponed but are still due to be finished for January 2020.

In May Brent Council announced on its 'Current Wembley Regeneration Projects' page LINK:

The council will soon start work on connecting North End Road to Bridge Road. This will benefit existing residents by providing an alternative route across Wembley Park to access the North Circular Road, improving the traffic flow in the area. This route will not be affected by event day closures, enabling an available vehicular route at all times - particularly useful for residents of North End Road, who are impacted by the road closures on event days, and bus users.

The contractor delivering the works

VolkerLaser is undertaking the works at North End Road on behalf of Brent Council.

A VolkerLaser team will be on site from June 2019 to start the works, and the project is expected to be completed by early 2020. During this time, the team will endeavour to undertake the works with as minimal disruption to local residents and businesses as possible.

VolkerLaser is part of VolkerWessels UK and are one of the UK’s leading multi-functional contractors. They have a proven track record of success within the highway sector, completing some award-winning civil engineering projects across the last 25 years.

The original timetable published on  24.6.19 in the Brent Council 'Works Bulletin' listed works on Bridge Road for reconnection starting on May 20th 2019 and finishing on June 30th 2019, lasting 42 days. Associated works for reconnection at North End Road, including the road closure, were to last for 222 days from May 13th 2019 to 20th December 2019.  Clearly Brent Public Realm Scrutiny Committee will want some explanation for the delay and completion for January 2020 looks a real challenge.

There was some fumbling around on the site  but certainly nothing substantial and no completion in January 2020.

I wonder if the Public Realm Scrutiny Commitee could investigate?

Quintain up for sale again as Lone Star acts on post-Brexit concerns

The Financial Times LINK is reporting that the US private investment firm Lone Star that acquired Quintain in 2015 LINK is looking to off-load the Wembley developer to reduce its exposure to the London property market ahead of Brexit.

Lone Star acquired Quintain for about £1bn, including debt, in 2015 and the sale may raise more than £3bn.

The change of ownership last time produced accelerated, denser and higher development as well as the switch to the country's largest private 'build to rent scheme.

Who knows what the next owner will do with Wembley and whether the Labour Brent Council will continue its close relationship with them.

A spokesperson for Quintain told Wembley Matters this afternoon:

Lone Star is exploring options to introduce a new strategic investor into the ownership of Quintain. It is likely that any new investor will acquire all or part of Lone Star’s shareholding and make available new long term capital for the next phases of the development of Wembley Park. This process is in its early stages. If a transaction does go ahead, and there is no certainty that one will, it is simply an “equity reshuffle” amongst the top shareholding base and will have no impact on the management team, strategy or day to day running of the company.

Whose Wembley? Is Quintain delivering for local people?

The PR and the actuality of the regeneration of the area around Wembley by Quintain Estates (taken over by a US private finance company in July sometimes seem at odds.

On the ground as the video shows the new developments seem cluttered and clashing and the amount of high rise more than originally expected.

Quintain could argue that you cannot judge the development until all phases are completed. Certainly true regarding the open space but I had a look today at the 'Alto' housing development.

I was shown a 2 bedroomed flat price £515,000 for a lease of 299 years (apparently the last one sold for £485,000) . The small print showed that in addition to this there is a ground rent of £500. A 'Reservation' deposit of £2000 is required and then 10% deposit payable within 21 days of exchange of contracts, a further 10% deposit from the initial exchange and, and the 80% balance due on completion.  The service charge will include  24 hr concierge and security, building insurance, garden maintenenace and use of the resdients' gym. It is estimated at £3.65 per sq feet per annum which works out at about £2,858 per annum for a 783 sq foot 2 bedroomed apartment.

The apartment itself seemed nothing special. The rooms were small and there was little storage built in. I was unable to find out what happened to waste disposal.

But really it isn't the apartment itself that is being sold but its location and life style:

Wembley Park is home to the iconic Wembley Stadium the SSE Arena Wembley and the Hilton London Wembley.

Savvy shoppers will find retail heaven in the super smart London designer Outlet where there are 50 fashion brands of generously discounted prcies, 20 restaurants and coffee shops and a 9 screen 1800 seat cinema comple. The new Wembley Theatre, an innovative revolving auditorium with 1300 seats, opens in May 2016.

There were only a few apartments left unsold from this phase of the development. This is a plan for one of the two-bedroomed apartments:

 Clearly the question of affordability comes up even for those in full-time work. The median gross weekly pay in Brent in 2013 was £537.50 compared with the London average of £613.50. Zoopla issued the following housing statistics last week. House price rises and rent increases in Brent are amongst the highest in London.

When it comes to future plans the Quintain Wembley Masterplan is rather vague on what type of housing is envisaged LINK

We are committed to building homes that meet the lifetime homes standard and follow the GLA’s housing design guidance. Discussions are underway with Brent Council regarding priorities around borough-wide infrastructure and affordable housing.

 ■ Around 4,000 much-needed new high-quality homes for Brent

You can provide feedback on Quintain's plans here: info@wembleypark.com

Huge chunk of Wembley Park to go to US company in Quintain deal

Quintain Estates and Development are recommending a  £700m bid by US private finance company Lone Star to shareholders. Quintain own land around Wembley Stadium and Wembley Arena as well as the London Designer Outlet.

This is how Business Insider reported a dealing frenzy this morning:

Quintain has planning permission to build 5,500 homes in the area and 835 are currently under construction.

Angus Dodd of Lone Star in a statement said:

The proposed acquisition represents a unique opportunity for Lone Star to gain further exposure to resdiential and commercial assets in London

Wembley Park is one of the largest and most exciting urban renewal projects in Europe and complements our experience in this segmewnt of the market.

We intend to contribute significant additional financial resources to help Quintain in its next phase of growth to accelearte delivery at Wembley Park, building more homes more quickly and continuing the creation of a cohesive and exciting new community.

I wonder how many of the new homes will be social housing?

It will be interesting to see how Brent Council, Quintain's development partner, get on with the new landowners.

Reuters report HERE
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