REAL ESTATE - Cash to spend and an eye for the long term make pension funds the ideal investment partners to build the UK’s 2012 Olympic village, according to its real estate advisers – yet pension funds approached by IPE Real Estate indicated little or no interest.
Ewan Denny, a spokesman for the London Pension Funds Authority (LPFA), said the authority would not pursue a bid because the Olympic city was “outside our normal area of activity and not in line with our pensions strategy”.
The LPFA is the third-party administrator for the pension funds not only of Newham, which will house the Olympic village, but also of nearby London boroughs Hackney, Hammersmith and Westminster.
A spokesman for Islington, another inner-city borough, said: “It doesn’t sound like our kind of thing.”
Yet Chris Jolly of Jones Lang Lasalle, which is advising the process, said he expected interest in the project mainly from “pension fund-type institutional investors”.
“Many pension funds also manage funds such as regeneration funds, for instance, so I’d expect interest from a broad range of this kind of investor,” he said.
The Olympic Delivery Authority has promised the project to the “most economically advantageous” bid.
The successful bidder will partner London & Continental Railways and Westfield, which in June acquired Stratford City Developments, the delivery agent for the project.
“In the short term, the successful bidder will put up a considerable amount of money – in the billions” for the development of the site, said Jolly. “There is a strong commercial element.”
He added: “It’s a very large project. A developer or construction firm is a possibility, but there also needs to be long-term financing.”
Consortia – possibly involving a pension fund, certainly including property developers – would seem likely contenders.
The tender includes not only the construction of the athletes’ village “and associated facilities” to the 2012 deadline but the subsequent long-term development of Stratford City in the UK’s largest regeneration programme to date.