UK’s largest dedicated property platform serving the growth of the nation’s science, tech and innovation sectors releases annual accounts for year ending September 30, 2024.
Bruntwood SciTech, a joint venture between Bruntwood, Legal & General and Greater Manchester Pension Fund (GMPF), announces operating profit of £30 million (2023: £9 million) and 10% like-for-like rental uplift in lettings in the first year following its £500 million equity investment which included welcoming GMPF as a third shareholder into the partnership. Despite challenging market conditions, its portfolio is now worth £1.5 billion in gross assets (2023: £864 million), distributed across six of the UK’s fastest-growing innovation hubs: Manchester, Leeds, Liverpool, Birmingham, Cambridge, and most recently London.
The firm has been underway with developments and refurbishments totalling £314 million, spread across 11 campus locations and 31 city centre innovation hubs. Bruntwood SciTech’s leading locations offer 5.2 million sq ft of world-class specialist workspace, growth support, and like-minded communities for 1,100 high-growth start-ups, scale ups, and global businesses. Net assets reached £666 million (2023: £238 million).
Bruntwood SciTech said that the fall in market valuations had contributed to a loss before taxation of £163 million (2023: £111 million loss), with £148 million of that attributed to market revaluation movements. Though an increased loss, the asset portfolio in 2024 was significantly bigger, following the acquisition of 29 of Bruntwood’s city centre assets, with revaluation movements therefore affecting a much larger total pool of properties. However, the firm noted that valuations across its portfolio compared favourably with those seen in some of the UK’s most prime markets.
The firm emphasised its position as a long-term investor, with its projects operating for much longer than a financial year and economic cycle. Bruntwood SciTech is confident its investments into its cities of choice and the high growth sectors that it supports will underpin future growth and see a rebound in profits in the years ahead. It also noted that having brought together an income-led portfolio [in the portfolio acquired from Bruntwood] with its existing development-led business [model of previous Bruntwood SciTech portfolio] had helped to stabilise and provide opportunities for future growth.
Despite these challenges, the joint venture doubled down on its commitment to the UK’s ‘knowledge economy’, and got underway with refurbishing and developing 1.45 million sq ft of state-of-the-art workspace. Within the year it acquired the Pinnacle workplace in Manchester city centre for a second phase to its £30m Pall Mall scheme, and completed the redevelopment of West Village and 14 King Street in Leeds, Cornerblock in Birmingham, and the first refurbishment at the £1.7 billion innovation district, Sister – formerly known as ID Manchester – with its JV partner the University of Manchester.
It also made significant construction progress on developments at Birmingham Health Innovation Campus, Greenheys at Manchester Science Park, No.3 Circle Square, Citylabs 4.0, Kings House, 117 Portland Street & Pall Mall in Manchester, and Centre City in Birmingham. All of these developments, with the exception of Greenheys, will complete in 2025.
Bruntwood SciTech has also enabled strong growth and retention across its customer base: the joint venture has supported the expansion of 63 businesses, welcomed over 200 new companies into its ecosystem community, and seen 67% of existing customers retain their existing space.
These included global insurtech firm QBE at Platform in Leeds; Bryt Energy at Cornerblock in Birmingham; Australian technology data company Safety Culture at Bond and AO at 111 Piccadilly, both in Manchester city centre; Corteva Agriscience at Melbourn Science Park in Cambridgeshire; established data science consultancy VLDB Group at The Plaza in Liverpool; and Third Equation at Alderley Park, alongside securing UK Biobank as a new customer, with their new HQ to locate at Greenheys in Manchester Science Park.
Commenting on the results, Bruntwood SciTech CEO Chris Oglesby, said: “It’s been an exciting year for Bruntwood SciTech and we are proud to have moved forward with major projects that are redefining the innovation ecosystems of some of the UK’s most exciting growth cities. When we announced our new shareholder GMPF, and all three shareholders committed to invest a further £500m into the UK’s fastest growing and economically important sectors, we said that we would maintain our momentum to bring forward world-class infrastructure to support its growth, and we have done just that this past year.
“What is clear, though, is that changes to market valuations have impacted both us and our peers, mirroring the sentiment of the UK economy this past year and in some of the most challenging times in recent memory. But, we are pleased to have improved our underlying profitability as the business continues to deliver with clear focus and efficiency, grow our like-minded customer base and rental income while continuing to deliver significant capital investment.
“We have always been, and continue to be, a long-term, patient investor. We remain steadfast in our business plan and are confident that we will see profits rebound in the years ahead as our investment strategy matures and the cycle returns to valuations stabilising and eventually rising once more. At the same time, our customers are doubling down on their commitments and we’re welcoming new businesses to our portfolio in their hundreds – a sure sign of the resilience of the market.
“Ultimately, our measure of success remains the impact that we are able to deliver across our UK-wide, and city-wide innovation ecosystems and this is an area where we have not slowed down, as evidenced through our ongoing development, refurbishment pipeline and successful partnerships with world-leading academic institutions, NHS and local and national government. We’re looking forward to seeing many of these projects complete and launch in the year ahead as we continue forward with our ambitions to create a £5 billion portfolio supporting more than 2,600 innovation-led high growth businesses.”
Looking ahead, Bruntwood SciTech will continue with this momentum across its development activity, remaining focused on the delivery of its £150 million, 2.3m sq ft committed development pipeline. This includes £50 million earmarked for investment into the retrofit and regular refurbishment of existing assets, reaffirming the joint venture’s commitment to providing best-in-class workspaces for its customers and meeting its net zero targets. As the firm continues to make improvements across its portfolio, this year it announced that all co-working, serviced offices and shared spaces across its assets – as well as its own offices – are all now run with 100% renewable energy driven by Kirk Hill wind farm, which Bruntwood owns 42.4% of – an industry first investment.
Since year end, Bruntwood SciTech has announced a major new partnership and investment with Imperial College London, committing £200m to a new innovation centre at its White City Campus. This marks Bruntwood SciTech’s first move into the capital, helping to connect its existing regional ecosystems with investment opportunities in London. It has also announced further investment in Birmingham, commencing refurbishment of its Mclaren innovation hub adjacent to the future HS2 station terminus.
Most recently, Bruntwood SciTech unveiled a significant letting to the UK’s largest digital automotive marketplace, Auto Trader, at No. 3 Circle Square in Manchester, which is now 50% pre-let, in a positive sign for continued occupier activity in the year ahead.
