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National Grid is set to unlock the value of its brownfield property portfolio by developing its land across the South-East of England in partnership with property developers Berkeley Group.
The UK’s transmission system operator said in its half-year financial results that it will be able to realise a higher value for its property portfolio, currently at £500 million, by forming a joint-venture with Berkely to develop residential and mixed-use development schemes across London and the South East.
“By bringing together Berkeley’s development expertise with National Grid Property sites, we hope to transform redundant land that was once at the heart of the industrial revolution to meet the housing and commercial needs of the 21st century,” National Grid chief executive Steve Holliday said in a statement.
National Grid UK executive director John Pettigrew told Utility Week that the company has some “very attractive sites in London” made redundant because its gas-holders, which are still on some brownfield sites, are no longer in use.
He added that the company would not be “going into property development” as such, but will “stick to pipes and wires” while Berkeley handles the development side of the venture. National Grid will be responsible for taking down the obsolete gas-holders and cleaning the land before Berkely takes over the projects, Pettigrew added.
The two companies will split the profits made from the developments, Pettigrews added.
The joint-venture, called St William, will have up to £700 million of available funding, making it one of the top ten residential developers in the UK. St. William aims to develop more than 7,000 new homes, transforming 84 acres of former industrial land and contributing over £150 million to local infrastructure and amenities, a statement from Berkeley said.
National Grid’s investment in the 50:50 joint-venture will be limited to the value of the sites acquired by St William while the funding will be through a combination of shareholder equity and bank funding.
National Grid announced its new venture in Friday’s six month financial results, ending 30 September, which show the company on track to meet full year expectations.
“Our UK businesses continue to deliver strong performance within their clear, long-term, regulatory arrangements. We expect to deliver overall improvements in both totex and revenue incentive outcomes this year compared to 2013/14,” Holliday said.
The company posted adjusted operating profits 2 per cent higher at £1,611 million and is on track to deliver investment of £3.1 – 3.3 billion to bring regulated asset growth to 5 per cent.
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