Bruntwood SciTech Delivers Resilient Performance As A Result Of Strong Occupancy And Rental Growth
By Bruntwood SciTech
Bruntwood SciTech, the UK’s leading specialist property provider and joint venture between Bruntwood, Legal & General and the Greater Manchester Pension Fund (GMPF), announces a 52% increase in gross profits to £25.5m (2022: £16.8m). This uplift is thanks to strong occupancy levels, rental growth across its UK-wide portfolio, and the completion of lettings at the 400,000 sq ft No.1 and No.2 Circle Square.
Reflecting the resilience and quality of Bruntwood SciTech’s portfolio, particularly amidst challenging market conditions, operating profits increased eightfold to £9.4m (2022: £1.2m).
The results cover the period up to 30 September 2023, pre-dating a £500m new investment into the Bruntwood SciTech platform, which saw Greater Manchester Pension Fund become a third shareholder partner and inject £150m new investment, alongside a significant increase in investment from existing shareholders, Legal & General and Bruntwood, through cash and asset transfer.
The £500m investment deal was the first of its kind by a UK local authority pension fund and was one of the largest single real estate investments of 2023. It makes Bruntwood SciTech the largest dedicated property platform serving the UK’s innovation economy, with £1.5bn in assets across nine campus locations and 31 city centre innovation hubs, offering 4.8m sq ft of world-class specialist workspace, support, and like-minded communities for 1,100 high-growth start-ups, scale ups, and global businesses.
Bruntwood SciTech said that a number of external factors – including the bond market crisis and rising interests – drove a 12% decline in its portfolio valuation during the period – and subsequently led to a pre-tax loss of £111.1m, however, valuations across its portfolio compared favourably with those seen in some of the UK’s most prime markets.
The joint venture has continued to invest heavily in its portfolio through the period, with £62.1m spent on new lab and office developments and £18.2m on refurbishment of its existing office stock. Spend was partially funded by £23m further investment into the joint venture by Bruntwood and Legal & General.
Looking ahead, Bruntwood SciTech is focussed on the delivery of a secured 3.6m sq ft development pipeline which will expand and redevelop its existing science and technology campuses and city centre innovation hubs, delivering much-needed additional world-leading lab and office space in Manchester, Birmingham, Leeds, Liverpool, Glasgow and Cambridge, to support the UK’s target to become a global science and technology superpower by 2030.
This year is set to see the completion of the first phase of the Birmingham Health Innovation Campus and redevelopment of West Village in Leeds, topping out of No.3 Circle Square and Citylabs 4.0 in Manchester, and getting underway with several new developments; the third phase of Manchester Science Park’s masterplan - Greenheys, redevelopment of the iconic Met Tower in Glasgow into a tech hub, and a major refurbishment of the city-centre innovation hub Pall Mall in Manchester.
This follows significant milestones during 2023, including the formation of a new joint venture with Aston University and Birmingham City Council for the 49-acre Birmingham Innovation Quarter, the approval of the strategic regeneration framework for the £1.7bn ID Manchester in partnership with The University of Manchester, completion of Enterprise Wharf at Innovation Birmingham - doubling the size of the tech campus, completion of the Grade II-listed former Victorian bank Bond in Manchester, and commencing construction on No.3 Circle Square and Citylabs 4.0.
Commenting on the figures, Bruntwood SciTech CEO Chris Oglesby, said: “These numbers represent Bruntwood SciTech prior to its major new investment and portfolio acquisition that has fundamentally transformed its scale, and are a snapshot of UK real estate during one of its most difficult years in recent memory.
“But despite us seeing a paper loss created by some sizable valuation shifts, the performance of our portfolio didn't waver, with our gross profit performance pointing to the continuing appeal of our modern, world-class, specialist workspaces for science, tech and innovation-led companies of all sizes.
“As a long-term, patient capital operator we have never judged the success of our business over a 12 month accounting period, but instead the impact of our investments into the cities we are part of over many years. On that measure, we are pleased to have passed some significant milestones in 2023.
“We’re now a quarter of the way into our current financial year following the investment deal and with GMPF as our new JV partner. While being prudent about what we deliver and when, while both the real estate market and wider UK economy remains fragile, we continue to have confidence in the strength of our products, the sectors we are invested in supporting, and the opportunities within our 3.6m sq ft pipeline. We will continue to build and invest in our campuses and cities into 2024 as we work towards our target to create a UK-wide £5bn portfolio by 2032 that can support 2,600 high-growth businesses.”