St. Modwen Properties PLC today announces that VINCI St. Modwen (“VSM”), its 50/50 joint venture with VINCI plc, has exchanged contracts for the sale of its interest in the 10-acre Nine Elms Square site in Nine Elms, London to Wanda Commercial Properties (Hong Kong) Co Ltd (“Wanda HK”), for a cash consideration totalling £470m. Completion is expected to occur later in the summer, following demolition of the former flower market.
Taking into account its stake in the joint venture and the joint venture’s contractual obligations to the Covent Garden Market Authority (“CGMA”), St. Modwen expects its share of VSM’s cash proceeds after overage, enabling costs, and tax to be £190m upon contractual completion, of which £70m will be held in a restricted development account to fund its share of future obligations in respect of completion of 500,000 sq ft of new purpose built market facilities and associated infrastructure (£140m in total for VSM).
The remaining proceeds will be used by St. Modwen to reduce Group borrowings as well as fund ongoing development activity. The Company expects to report an outcome for the transaction in line with book value, which includes a full provision for its share of future market construction obligations.
Following the sale and over the course of the next 10 years, VSM will remain closely involved in the wider regeneration of the Nine Elms area through its development agreement with CGMA which will see it provide new market facilities for New Covent Garden Market and in doing so, safe-guarding the existing 2,500 market jobs. As the joint venture progresses with the delivery of the new market, the remaining 10 acres of development land will be released in phases for future transformation into three distinct character areas; to be known as Nine Elms Gardens, Nine Elms Grove and Thessaly Road that will feature a vibrant mix of residential, commercial, retail and leisure uses.
VSM will have no involvement in the future development of the Nine Elms Square site itself which will now be progressed by Wanda HK.
Mark Allan, Chief Executive, St. Modwen Properties PLC, said:
“The sale of Nine Elms Square is an important milestone, which will realise the capital required to fund the construction of over 500,000 sq ft of new market facilities. It also crystallises a significant element of the value we have been able to create on this complex, inner London development site. Together with our joint venture partner, VINCI plc, we remain very much committed to the longer term regeneration of Nine Elms and are excited about the opportunities ahead.”