Joint Venture

4 Jul 2006 10:59

Berkeley Group Holdings (The) PLC04 July 2006 JOINT VENTURE BETWEEN PRUDENTIAL AND THE BERKELEY GROUP The Prudential Assurance Company Limited ("Prudential") and The Berkeley GroupHoldings plc ("Berkeley") are delighted to announce that they have today agreedon the establishment of a new joint venture. The new business will trade as StEdward Homes Limited and will develop major residential and mixed-usedevelopment schemes across the UK. PRUPIM has facilitated the agreement on behalf of its client Prudential. PRUPIMwill work in conjunction with Berkeley to pursue land and properties for majorredevelopment to deliver sustainable residential, commercial and mixed-useschemes. The joint venture's initial focus will be to develop three major residentialschemes in the South East with a land bank of over 2,500 homes. The arrangement is conditional on St Edward Homes finalising terms to acquirePrudential's land at GreenPark in Reading and a building in Kensington. Berkeleywill also provide land and properties for the joint venture, which are currentlybeing identified. The consideration for these sites and the cost of theirsubsequent development will be partly funded from initial equity and bank debtof the joint venture company and partly from profits generated. The acquisitionand pricing of these sites is conditional upon their unencumbered release fordevelopment and the receipt of necessary planning permission. It is PRUPIM andBerkeley's ambition to commence development activity on the first site in 2007. Berkeley and Prudential will become shareholders of St Edward Homes Limited,each owning 50% of the equity. Funding will be through a combination ofshareholder loans and bank funding at an equity to debt ratio of approximately50:50. The initial equity investment of each shareholder will be £12 million,which when combined with bank debt, will result in the joint venture havingavailable funding of approximately £48 million. These funds will be drawn downto meet the working capital requirements of the joint venture company as theyfall due. Sufficient working capital will be retained in the business to fundon-going activity with any surplus returned to Berkeley and Prudential as agreedbetween them. The acquisition and development of further sites will be funded from profitsgenerated and retained by the joint venture company and also from additionalshareholder funding if necessary. Martin Moore, Managing Director of PRUPIM described the joint venture, St EdwardHomes, as a logical and powerful combination of two companies' strengths andcomplementary skills. "We are hugely excited about the potential for St Edward Homes. Over many yearswe have built a substantial land portfolio extending across the UK. Today, wecan bring the fruits of our forward thinking to this partnership and begin tounleash the tremendous latent value from this portfolio alongside further sitesthat the joint venture may acquire. With a clear demand for more homes, a strongperforming residential sector, and a specialist partner, we believe the timingcould not be better for this strategic and powerful combination," said Moore. PRUPIM has been undertaking major urban development projects across the retail,office and industrial sectors since the 1970's. "This is a major opportunity for us to further expand our development operationinto the highly specialist residential sector. We currently manage over 5million square feet of commercial projects throughout the UK, however we areconstantly looking to grow and expand our business to produce even higherreturns for our investors. With Berkeley as our long-term partner, I believe wehave created the best possible vehicle for Prudential to enter the excitingresidential sector." PRUPIM is one of the leading real estate investment managers in the UK managingin excess of £17.2 billion of real estate assets for a wide variety of clients.PRUPIM provides core services and expertise in fund management, asset managementand property management. Berkeley is a mixed-use urban regenerator operating at the forefront of the landdevelopment industry. With a highly skilled management team, Berkeley combinesthe vision and commitment necessary to drive the renaissance of neglected partsof towns and cities, creating communities which people choose as a destinationfor work, for pleasure and for making their home. Berkeley has historically carried out a number of joint ventures with a widerange of partners including Land Securities, Development Securities andChelsfield and these arrangements are an ongoing part of Berkeley's ordinarybusiness. Current joint ventures include St James with Thames Water and a numberof joint ventures with Saad Investments. Commenting on the new joint venture, A W Pidgley, the Group Managing Director ofBerkeley, said: "We are delighted to be forming this new joint venture, whichfrom the outset will be driven by a remarkably powerful combination ofcomplementary skills. Prudential's financial strength and PRUPIM's commercialdevelopment expertise, working in combination with Berkeley's passion and talentfor creating sustainable new communities, is an inspiring prospect and shouldensure an exciting future for St Edward Homes. This is a unique opportunity andI relish this opportunity to be in a joint venture with one of the mostrespected and admired companies in the United Kingdom." Ends Notes to Editors PRUPIM PRUPIM is one of the largest property investors in the UK with over £17.2billion invested in a broad spread of properties across all UK sectors andoverseas (as at 31/12/05). PRUPIM is part of M&G, the investment arm ofPrudential plc in the UK and Europe. For further information, please contact: A W Pidgley, Berkeley (01932 868555) Natalie Brooke, PRUPIM (0207 548 6976) R C Perrins, Berkeley (01932 868555) Martin Moore, PRUPIM (0207 548 6571) This information is provided by RNS The company news service from the London Stock Exchange