News story

Government sells King’s Cross development stake to reduce the deficit

Investment in 67-acre site around King’s Cross sold for £371 million to help reduce the deficit and build economic security.

Kings Cross.

The government announced the £371 million sale to AustralianSuper of its investment in the iconic King’s Cross development today, Friday 22 January 2016.

This multi-million pound sale of the government’s investment in the 67-acre site, which is being redeveloped with offices, residential and leisure properties, has delivered real value-for-money for taxpayers through a competitive auction process, with all proceeds returning to the Treasury.

AustralianSuper, the largest pension fund in Australia, has grasped this significant opportunity for private capital to gain exposure to one of Europe’s most important city centre regeneration projects.

Announcing today’s sale, Department for Transport Minister of State Robert Goodwill said:

I am delighted that the sale of government’s shares in King’s Cross Central, an asset we no longer need to keep, has enabled us to realise its value for the taxpayer. This sale is an excellent example of how we are reducing the deficit and delivering lasting economic security for working people.

The decision to sell the investment in King’s Cross Central Limited Partnership (“KCCLP”), which is developing land around King’s Cross Station, was announced by the Chancellor in June, with the sale process starting in August 2015.

Chief Secretary to the Treasury Greg Hands said:

I am delighted that the government has sold its shares in King’s Cross, raising another £371 million for taxpayers.

At the Spending Review the Chancellor set out how the government will fix the public finances by eliminating Britain’s deficit by 2019-20.

Central to our plan is the sale of government assets to help pay down the national debt and ensure economic security for working people.

The government’s priority was maximising value for money for the taxpayer through a competitive sale process. Lazard, as financial adviser, conducted the sale process, supported by real estate advisers Savills and legal advisers Herbert Smith Freehills.

Government’s stake in King’s Cross is held by its wholly-owned subsidiary, LCR, which has overseen the development at King’s Cross on behalf of government for 20 years. Since the delivery of HS1 and the restoration of St. Pancras International in 2007, LCR has worked closely with Argent, Hermes and DHL Exel through KCCLP. Since then, significant progress has been made on the 8 million square foot development to put King’s Cross on the map as a destination for London.

AustralianSuper Head of Property Jack McGougan said:

We are pleased to have secured an increased stake in this iconic mixed use development and look forward to working with our co-investors and the Argent development team to create a vibrant, commercially successful neighbourhood in Central London.

King’s Cross is a 67-acre, 8 million square foot central London development comprising homes, offices, schools, restaurants and shops. The development, with 50 new and refurbished buildings will have 26 acres of public realm, including 10 new parks and squares, 20 new streets and three new bridges across the Regent’s Canal. It will also have close to 2,000 homes. Its occupiers include Google, the Aga Khan Development Network, and University of the Arts London. The development is home to 2 new schools: Frank Barnes School for Deaf Children and the primary school, King’s Cross Academy. The site is adjacent to King’s Cross Station, which services 6 London Underground lines, and St Pancras Station, from where Eurostar services connect to Paris and Brussels.

The Chairman of KCCLP, Sir David Clementi said:

The King’s Cross development partnership’s long-term approach has created one of Europe’s most exciting places to live, work, or visit — a real asset to London. I would like to thank LCR and DHL for their support for the project over many years. AustralianSuper’s increased share demonstrates its confidence in the remaining future growth in value of King’s Cross, as we enter the final 5 years of construction.

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Photo above by Miller Hare.

Published 22 January 2016