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LABVs are still sound
Published: 2010-05-24 12:33:31
In an exclusive interview with Jamie Kerr, director of regeneration and education at John Laing, SocInvest asked about the scope for LABVs in today’s economic conditions.
"Some people say LABVs are very difficult in the current market and that authorities should not commit their assets to these vehicles," said Kerr. "But that's not the case. It is not necessary to fix land values at the outset – these partnerships can work up projects and add value for authorities both in terms of land value but also in progressing regeneration faster."
The economy may still be crawling out of recession, but asset-backed vehicles remain a sound option for regeneration projects in many circumstances, according to Kerr.
He pointed to recently announced projects, as well as the LABVs in which his company is involved in Croydon and Tunbridge Wells, as evidence of their continuing relevance. But is now a good time to launch a LABV? With a number of caveats, Kerr's answer was that they can still be the best option.
"They are a way of using assets to deliver regeneration and generate cash for local authorities," he said. "But local authorities have to be realistic about land values. It all depends on where you happen to be. There is no point in utilising this method in areas where land values are very low, unless other funding is available, and authorities have to be realistic about current day values."
Given that asset values make the LABV case stand up, local authorities can increase the chances of launching a successful project. "Those who are willing to take a little more risk can see better returns," Kerr said.
He identified a number of other success factors. "Local authorities should look for strong cross-party support from councillors. It's important that all parties recognise that it is about regeneration and economic development.
"Local authorities also need to build a good internal team and appoint the right advisors," he added.
As the developer partner in the first LABV at Croydon in London, John Laing has had a chance to see what it takes to keep projects on track. "We've learned that it's like any other business. There will always be pressures, but providing you are fleet of foot and don't simply throw up your hands when problems occur, you can make it work. You've got to be prepared to be flexible and change your strategy as you go along to drive the best solutions."
Jamie Kerr is speaking about LABVs and next-generation partnerships at SocInvest 2010 on June 16.