Venus offers half million boost to Mersey communities

A speculative Liverpool city region industrial development was let to Amazon, who created 163 new jobs, and profit from the scheme will see community groups share £480,000. Tony McDonough reports

Venus 217
Venus 217 in Knowsley was completed in 2019 and later changed hands in a deal worth £29.59m

 

Community and voluntary groups across Liverpool city region will benefit to the tune to £480,000 thanks to the success of a mull-million pound industrial development.

In spring 2019 developer Flintrock completed the 218,000 sq ft Venus 217, a speculative  industrial ‘big shed’ development at Knowsley Industrial Park. It was the largest speculative unit to be built in the city region for more than a decade.

It is the sister project to Venus 110 which was completed in 2015 and was occupied by online retail giant Amazon. Venus 217 is now also occupied by Amazon and it has led to the creation of 163 new jobs. In October this year Flintrock sold the building to RTP Global RE Investment for just under £30m.

Venus 217 was funded with £9.4m of loans. Knowlsey Council provided £4m with the remaining £5.4m coming from the city region Chrysalis Fund. Chrysalis is a £35m revolving fund that has supported more than £100m worth of development activity since 2012.

These include the £25m Liverpool Life Sciences Accelerator, shipping giant ACL’s headquarters in Duke Street, built by Network Space, and the Watson Building in the city centre. The fund will continue until at least 2022. In August Metro Mayor Steve Rotheram said Chrysalis was being given access to a further £30m funding pot.

This money is available because schemes that had previously received loans from the funds, have now successfully completed and the funds have been paid back, allowing a pot of money to become available to property developers and owner-occupiers.

Due to a profit share provision at the completion of the Venus 217 project, £480,000 has been made available for a new Liverpool City Region Combined Authority fund, that will support community and voluntary groups, building on the work of LCR Cares.

Set up by the Combined Authority and administered by the Community Foundation for Merseyside, LCR Cares raised and distributed more than £2.5m to community groups during the pandemic.

Building Venus 217 was a significant gamble for the developer and for potential lenders, so traditional lenders weren’t lining up to get involved. It is on such projects where the involvement of the Chrysalis fund can become critical. 

The deal was agreed, and the project started on site in late 2018. However, there was an concern about finding an occupier for such a large site. During the pandemic Amazon founded it needed more space to meet soaring demand and it signed an agreement to occupy the site at the end of 2020.

Robert Wood, fund manager for the Chrysalis Fund, said: “There had always been a risk element involved with Venus 217, the developer was fairly small and building speculatively, so we knew the route to repayment could be a difficult one – hence why traditional lenders were not prepared to back the project.

“We obviously needed the developer to repay the loan in order that we could reinvest into new projects across the city region. Amazon was already reaping the benefits of being located at Knowsley Business Park and as the business grew, it saw the potential of committing to the larger unit.

Steve Rotheram
Liverpool City Region Metro Mayor Steve Rotheram. Picture by Tony McDonough

 

“All loans were repaid at the end of March 2021 when the Amazon letting was imminent. The interesting aspect to the deal however, was that when it was agreed, in recognition of the risks the lenders were taking, it was agreed that if the developer’s scheme was successful, it would pay the lenders a share of the development profit.

“This was a successful outcome for all parties, as the developer made a profit, both lenders received a commercial return, as well as a significant profit share, to be recycled back into the fund for other projects.

“Furthermore, Knowsley Council had a fantastic new building in the borough with a highly successful operator, which brought more jobs to the area, new rates revenue, as well as an additional profit share which could then be ploughed into other services for taxpayers. It was a “win / win” all ‘round.”

Chrysalis is managed by igloo Investment Management with support from Avison Young. The fund is supported by the 2007-2013 European Regional Development Fund for the North West.

Raphael Miller, head of investment at the Liverpool City Region Combined Authority, added: “Venus 217 is a perfect example of why we are investing commercially through these funds. The profit share was split between the lenders and, as a Combined Authority, we were also able to use the money to create a fund to support voluntary and community sector organisations.”

“The funds are actively inviting new development projects that meet their investment criteria and can contribute to their economic development goals, including the creation of jobs, employment floor space and land remediation.”

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