Australian firm's £700m Preston deal
The cost of Preston's Tithebarn project has soared to £700 million and the company behind the scheme is doing a deal with an Australian developer to ensure it finishes on time.
Grosvenor is expected to reach a deal in the coming weeks with Lend Lease, the Olympic Village builder, to share 50% of the burden of the Tithebarn development. And a further buy-out has not been ruled out.
The negotiations by the Duke of Westminster's Grovesnor follow recent criticism of the spiralling 950 million costs of its Liverpool One development in Merseyside.
Despite talks for the Tithebarn getting underway at the beginning of 2007, an official announcement was only due to be made at the Town Hall next week. And the entire deal will need the full backing of councillors in the next few weeks before it can proceed.
Jim Carr, chief executive of Preston Council said the move was a positive one and denied Lend Lease was rescuing the deal. He said this step was always a possibility, according to the terms of the development agreement between the council and Grosvenor.
He said: "Lend Lease would not come in if they thought Grosvenor were going to back out. We're excited about the partners Grosvenor has chosen because Lend Lease has got tremendous experience in key shopping developments. That's a lot stronger in terms of them being able to drive it forward in the timescale."
And Mr Carr scotched speculation that Grosvenor has struggled to secure both tenants and financial backing for the project as "grossly inaccurate".
He said: "Attracting tenants to the development is the least of my concerns because I think it will be such an attractive proposition."
It is understood Grosvenor had been looking for financial partners in the retail-led project, but Lend Lease is reported to be looking for a more active role that will see it take over management of the project and of the completed development.
Philip Clark, spokesman for the firm based in New South Wales, Australia, said that it had been in negotiations with Grosvenor since January after the developer had begun its search for interested partners at the end of last year. He added that negotiations were not expected to conclude imminently.
In a statement to the Australian Stock Exchange, the company said: "Lend Lease confirms that it is in exclusive negotiations with Grosvenor Group Ltd to enter into a joint venture to develop the Tithebarn regeneration scheme in Preston, UK."
>> Slideshow of developments in Preston
And a source close to the company said Lend Lease would want to take over the management of the shopping centre once it is complete.
Grosvenor marketing director Ayo Daramola-Martin confirmed that talks were underway with Lend Lease, but was unable to confirm when talks were likely to be concluded.
Coun Ken Hudson, leader of the council and chairman of the city centre committee, said: "The appointment of such a partner would be an important milestone for Tithebarn and we would look forward to considering any proposals in detail at the next city centre committee."
Frank McKenna, chairman of private sector business group Downtown Preston in Business, said the announcement indicated that Grosvenor had found a partner capable of helping it deliver on the Tithebarn vision.
He said: "When a company like Grosvenor looks at a development of this size, they do not just look at the cost they look at the expertise they require and, in this instance, it sounds as if they may have found a suitable partner.
"That is someone which cannot just share half the financial risk, but add real value to delivering the project."
Babs Murphy, chief executive of the Preston-based North and Western Lancashire Chamber of Commerce, said the announcement would put the project site "back into productive use".
Richard Sullivan, joint chief executive of the Preston Chamber of Trade, said he hoped that any arrival of a new partner would ensure the project did not endure any more delays."
Lend Lease, which has UK offices in Cheadle, Cheshire and Manchester, is involved in some of the country's largest regeneration projects, including the 4bn Olympic village in East London, the 950m Park Place development in Croydon, and a 1.5bn regeneration of Elephant and Castle in South London.
The Tithebarn picture has been a complicated one, particularly since the signing of the development agreement between Preston Council and Grosvenor in October 2005.
It was then confirmed the project would include 85 new shops, over 20 new restaurants, a refurbished market, multi-screen cinema, other leisure facilities, dozens of new homes, a health and fitness centre and over 2,700 car parking spaces.
In January, John Lewis finally agreed to anchor scheme with a 230,000 sq ft department store. However, completion is not expected until 2013.
>> 2013 target for Tithebarn
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Wednesday 23 May 2012
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