Document No. AA/3/1
Town and Country Planning Act 1990
Acquisition of Land Act 1981
Inquiry into:
CITY OF WESTMINSTER (VICTORIA REGENERATION PHASE ONE) COMPULSORY PURCHASE ORDER 2011
Proof of Evidence
of
Colette O'Shea MSc, MRICS
of LAND SECURITIES GROUP PLC
On matters relating to compulsory purchase
24 May 2011
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1 INTRODUCTION
Qualifications
1.1 My name is Colette O'Shea. I am a Chartered Surveyor and a Member of
the Royal I nstitution of Chartered Surveyors. I also have a Master of
Science degree (MSc) in Property Development and Management
1.2 For the purposes of RICS rules I confirm I am not acting as an expert
witness in this matter. My evidence is given as Head of Development for
the London Portfolio of Land Securities Group PLC ("Land Securities").
Experience
1.3 I joined Land Securities in August 2003. I am Head of Development for the
London Portfolio, a role to which I was appointed in 2007. Prior to that I
was a Development Director and have over 20 years experience in the
delivery of developments in London.
1.4 In my current role at Land Securities I am responsible for all current and
proposed developments within the London Portfolio. These are
predominantly located in the City of London, Westminster and Southwark.
1.5 I lead a 50-strong team that is entirely focused on managing our London
developments.
The development
1.6 I have been involved in the proposed development of the Order Lands for
just under 8 years. As I will explain in more detail, Land Securities is hugely
committed to the Victoria area and in particular to the delivery of this
development. It will form one of the final pieces in our Victoria development
pipeline bringing us very close to realising our vision for this very important
part of London.
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Land Securities
1.7 Land Securities Group PLC is a FTSE 100 company and the largest real
estate investment trust (REIT) in the UK on the basis of market
capitalisation. Its principal business is owning, developing and managing
commercial real estate. Our national portfolio of commercial property
includes some of the UK's best-known shopping centres and landmark
buildings in London.
1.8 The Land Securities' business is split, in the main, into two divisions:
1.8.1 the Retail Portfolio; and
1.8.2 the London Portfolio,
between which we now own and manage more than 2.7 million sq.m of
commercial property.
1.9 Within the London Portfolio we develop and manage prime London assets
with an emphasis on mixed-use schemes. The value of land holdings within
the London Portfolio alone amounted to approximately £5.735 billion as at
March 2011.
LC25 Limited
1.10 It is common practice for larger companies to have a number of subsidiary
companies through which property is held and development proposals
advanced. Ownership of property within the Land Securities group is
shared between a number of subsidiary companies. One such company,
within the London Portfolio, is LC25 Limited and I am one of its directors.
1.11 The entire issued share capital of LC25 Limited is owned (via other
subsidiary cOWJ:lanies) by the ultimate parent company Land Securities
Group PLC.
1.12 LC25 Limited owns numerous freehold interests in this part of Victoria and
within the land comprised/included in the City of Westminster (Victoria
Regeneration Phase One) Compulsory Purchase Order 2011 (the "Order
Land"). LC25 Limited does not own any other property and is, therefore,
totally focused on the regeneration of Victoria.
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1.13 In the year to 31 March 2010, LC25 Limited had a gross property income of
£13.196m. Its property interests had an asset value of approximately
£137m. LC25 Limited is, therefore, a substantial company in its own right.
1.14 LC25 Limited is the developer under the terms of the Indemnity agreement
(the "CPOIA") which it entered into with Westminster City Council (the
"Council") on 2 December 2010. It should also be noted that the CPOIA
requires that the Council's consent is obtained if LC25 Limited disposes of
its interests in the Order Land and wishes to retain the benefit of the
CPOIA. This ensures that the covenant strength of LC25 Limited (or any
successor to its landholdings) will remain adequate to ensure it is capable
of complying with its obligations under the CPOIA.
1.15 Management and decision making for LC25 Limited is the same as for Land
Securities. Therefore, at a practical level, LC25 Limited benefits from all the
experience and resources available within the Land Securities group.
When reference is made to Land Securities in the remainder of my
evidence (save for where it is specific reference to Land Securities Group
PLC) one should consider the term to include LC25 Limited.
2 SCOPE OF EVIDENCE
My evidence will cover a number of issues.
The principal activities of Land Securities Group PLC
2.1 I will demonstrate the substantial and diverse nature of our property
portfolio and proven track record in the field of property investment,
development and management. By way of example, I will make reference
to our expertise across the UK in respect of specific development projects.
Commitment to Victoria
2.2 I will provide an overview of Land Securities' involvement in Victoria and
explain the extensive amount of work undertaken to date, together with our
ongoing commitment and confidence in this and other projects in Victoria.
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Deliverability
2.3 My evidence will demonstrate that we have the experience, depth of
resources and financial capacity successfully to deliver the development.
2.4 I should make clear from the outset of my evidence that Land Securities
requires all the plots included in the Order Land of the City of Westminster
(Victoria Regeneration Phase One) Compulsory Purchase Order 2011
("CPO") in order to deliver Permission 1 of the VTI2 scheme. More detail is
provided on this aspect in Mr Kelly's evidence. I would also agree with
Graham King that the use of compulsory purchase powers over all the
Order Land is necessary in order to deliver the development.
Specific issues raised by Objectors
2.5 I will make comment, as appropriate, on specific issues raised by objectors
to the CPO.
3 LAND SECURITIES' BUSINESS POSITION
3.1 Land Securities is at the forefront of urban and retail renaissance through
our multi-billion pound development programme, transforming regional city
centres and key sites in London.
3.2 We are ahead of the majority of our competitors, as evidenced by our
delivery of a number of award winning schemes before, during and since
the recession. This is further evidenced by Property Week naming us
"Developer of the Year" in their awards ceremony in April of this year and
our being crowned "Property Company of the Year" in the EG Regional
Awards for London on 11 May.
3.3 Our robust balance sheet and sizeable development pipeline put us in an
excellent position to push forward and deliver developments into the supply
constrained market that was caused by the recession and banking crisis.
3.4 Land Securities was first to restart development in London following the
downturn, announcing in January 2010 that it would start work at Wellington
House and 62 Buckingham Gate. These developments are due to
complete in summer 2012 and spring 2013 respectively. In addition, we
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started construction of Park House on Oxford Street, London W1 in May
2010. Subsequently we have committed to the redevelopment of 110
Cannon Street, EC4 and 123 Victoria Street, SW1.
National development
3.5 Outside of the City of Westminster we have recently completed or are in the
process of delivering a number of world class developments. Although my
responsibility extends only to the London Portfolio and therefore not all of
the developments listed below, Land Securities as a whole has recently
completed:
3.5.1 Exeter
Princesshay is an award winning, 50,000 sq.m retail and residential quarter
at the heart of Exeter's historic city centre, with views of the city's beautiful
medieval Cathedral.
Launched in September 2007, Princesshay has over 50 shops including
anchor store Debenhams and, for the fashion conscious, a selection of
popular brand names from Topshop, Next and Zara to Reiss, LK Bennett
and All Saints.
3.5.2 St David's Shopping Centre, Cardiff
We opened St David's, a shopping centre with retail space of 130,000 sq.m,
in October 2009. Created with our partner, Capital Shopping Centres PLC,
the centre is anchored by a new John Lewis department shore which is the
first in Wales and the largest outside London.
3.5.3 One New Change, EC4
This exceptional building, occupying a 2.5 acres site overlooking St Paul's
Cathedral and designed by Jean Nouvel, opened on 28 October 2010.
Comprising 20,500 sq.m of retail space and 31,500 sq.m of office space it is
a tremendous addition to London and a multi-purpose commercial
powerhouse for the Square Mile.
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We are currently in the process of delivering:
3.5.4 20 Fenchurch Street, EC3
This is a landmark development of 63,000 sq.m designed by Rafael Vinoly
Architects to deliver a tall building which will add to the City skyline. We
entered a joint venture with Canary Wharf in autumn 2010, started piling on
site in January 2011 and anticipate to have completed the substructure
including two basement levels to grade by March 2012.
3.5.5 Park House, W1
This scheme covers an entire city block of just over an acre on a prime
Mayfair site with frontage onto Park Street, North Row and Oxford Street. It
will provide 15,000 sq.m of offices, 8,100 sq.m of retail and 5,000 sq.m of
residential in 39 units. Construction is underway for completion in late
2012. Whilst Land Securities sold its land interest to Barwa in June 2010,
we remain heavily involved in the delivery of the scheme as Development
Manager and in respect of a further payment of sales proceeds.
3.5.6 Leeds Trinity Shopping Centre
We obtained planning permission to provide 70,000 sq.m of new retail
space in 2008. We started construction in 2010 and are due to complete
the development in 2013.
Development within the City of Westminster
3.6 Since 2000 Land Securities has undertaken a new generation of major
development within the City of Westminster, the most noteworthy of which,
sitting just to the east of Bressenden Place, is our Cardinal Place
development. This is a landmark site encompassing office space and retail
accommodation within a striking trio of buildings together totalling 47,500
sq.m which was completed in January 2006. It is home to 24 retailers, all
new to the area and including a 3,400 sq.m Marks & Spencer "anchor
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store", plus several blue-chip businesses. There is also an art gallery and
public art installations.
3.7 In addition to Cardinal Place the list of our other recent developments is
extensive:
3.7.1 The View, 20 Palace Street
The refurbishment of over 100 residential apartments was completed in
2005.
3.7.2 50 Queen Anne's Gate
This 30,200sq.m refurbishment for the Government, now occupied by the
Ministry of Justice, was completed in April 2008.
3.7.3 Wilton Plaza (on the corner of Wilt on Road and Gillingham Street):
This mixed use scheme, providing 74 units of affordable housing, 37 units
of private housing, 158 student units and retail space, was completed in
spring 2009.
3.8 Our ongoing commitment to the Victoria area and the City of Westminster is
also evidenced by our current development pipeline. As well as VTI2 this
includes:
3.8.1 Wellington House, Buckingham Gate, SW1
This scheme will create a residential development of 6,100 sq.m providing
59 high quality contemporary residential apartments. Construction has
started and delivery is scheduled for summer 2012. 91% of the space has
already been pre-sold.
3.8.2 62 Buckingham Gate, SW1 (formerly Selborne House)
Selborne House, an outdated 1960's office building, is being replaced by a
high quality new building that will create 23,500 sq.m of premium office
accommodation. It will also create street-level shops and restaurant/cafe
spaces. Demolition is complete, construction has started and we expect to
complete the scheme in spring 2013.
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3.8.3 123 Victoria Street SW1
Planning permission was granted in December 2010 for the comprehensive
refurbishment of the 16,500 sq.m 1970's office and retail building. Work
commenced in March 2011 and practical completion is anticipated in June
2012.
3.8.4 Arundel Great Court, the Strand, WC2
In November 2009 we secured planning consent for a 61,900 sq.m mixed
use development encompassing office, residential and retail space as well
as a hotel. We anticipate demolition commencing within the next 12
months.
3.9 Kingsgate House SW1
Finally we have recently submitted a planning application to redevelop
Kingsgate House, SW1 into approximately 32,000 sq.m of contemporary
office, residential and retail accommodation. This development would
involve the replacement of an outdated post-war building with two new
buildings and an extended public realm. Construction is expected to start in
March 2012 with completion in November 2015.
Many of the developments mentioned above are depicted in the visuals in
exhibit AA/3/2 - 1 to my evidence.
4 VICTORIA
4.1 Although it has central location, proximity to Royal Parks, the river and
many of London's landmark historic buildings, Victoria has in recent
decades been sidelined as a poor relation to other parts of the West End.
4.2 Victoria is known to most as a station, an interchange, a place to pass
through to get to somewhere else. But Land Securities believes this is a
misguided stereotype, ignoring its historic role as seat for the UK's
constitutional power. With Buckingham Palace at the westerly end and
Westminster Palace and Westminster Abbey at its eastern border Victoria
has long been attractive as a destination to the global tourist. Now, with
continuing improvements to the office stock and larger floor plates than the
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Core West End market, together with its central and convenient access to
public transport nodes, global business is recognising its potential too.
4.3 Land Securities intends to give Victoria a new lease of life as a distinct and
vibrant destination bringing this part of the capital the recognition it
deserves.
4.4 36% of Land Securities' London Portfolio by 2011 year end capital value is
within Victoria.
4.5 Land Securities has been developing in Victoria for over 40 years. Cardinal
Place, completed in 2006, an important step forward in the realisation of
Land Securities' long term commitment to regenerate Victoria, bringing
renewed energy and drawing new companies, including Microsoft and 3i to
Victoria.
4.6 Land Securities was a founding partner in the Victoria Partnership - an
organisation set up to represent the local business community, to promote
Victoria as a place to do business and to work with local businesses and
residents to deliver to a comprehensive socio-economic agenda that will
benefit businesses, visitors and residents in the area. The Victoria
Partnership has now become the Business Improvement District (BID)
organisation and is formally structured to deliver improvements to Victoria in
four sectors; economic growth, safety and security, public realm and
destination marketing. Land Securities plays its part in all these sectors.
4.7 Regeneration of the wider Victoria area is in the public interest and
supported by planning policy at all levels, as explained by Graham King and
Hugh Bullock in their evidence. The proposed regeneration optimises the
opportunity for economic and social development in this highly sustainable
location.
4.B Land Securities' commitment to the regeneration of Victoria is evidenced by
our previous developments, future development pipeline and importantly the
promotion of the planning permission reference OB/OB205/FULL dated 9
October 2009 ("Permission 1 "), our entering into the associated S 106
Agreement and now our commitment to this CPO process.
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4.9 Our aspirations are in step with the Council's interests to deliver a
significant transformation of the area and it is for this reason that the
Council has fully supported us in promoting the delivery of Permission 1
using its CPO powers.
4.10 I describe briefly below the genesis of Land Securities' proposals for a
redevelopment of this part of Victoria, from 2003 to date. Throughout this
period our development strategy has been informed by our ongoing
dialogue with the Council and the community and advice from specialist
commercial and residential property consultants/agents.
4.11 Our objective is to see the delivery of development that will achieve the
regeneration of the Victoria area. Therefore we have been liaising closely
with London Underground Limited to see Permission 1 implemented
alongside the Victoria Station Upgrade ("VSU"). These coordinated plans
will benefit all those who live, work, shop and travel in the area by
minimising disruption during delivery of both Permission 1 and VSU.
Land Securities Corporate Responsibility - Investment In Victoria
4.12 Land Securities has a dedicated community investment team which is
responsible for the delivery of corporate community investment and the
corporate responsibility strategy across the business.
4.13 Our strategy has its focus on education (with an emphasis on employability
and tackling worklessness), housing/homelessness and young people,
particularly those not in education or training.
4.14 For 2010-11 the value of our community investment in London is over
£1,800,000. The majority of this commitment was delivered within
Westminster and a significant proportion specifically in Victoria.
4.15 London Portfolio's charitable giving includes the establishment of the
Capital Commitment Fund in 2004 which has given out over £660,000 in
small grants to over 130 community groups in Westminster, Southwark,
Tower Hamlets, Islington and Camden. In 2009 we also launched the
Westminster Fund and the Kent Link Fund, supporting community and
charitable goals. The value of the Westminster Fund is over £350,000.
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4.16 We are developing a highly significant employment skills training
programme that will be delivered across our London developments. The
programme has already been piloted at our schemes on Victoria Street,
where some of the trainees are now working on our sites.
4.17 We have developed strong relationships with charities and community
groups in Victoria and are undertaking a large number of projects, including
funding apprentice training and education/skills based schemes and
supporting local youth clubs and large scale volunteering projects.
Land Securities land interests in Victoria
4.18 Our overarching strategy is to reposition Victoria by creating a desirable
destination, which more fully achieves its potential as an important
commercial location with attractive public realm, at a significant gateway
into London. Land Securities is in a unique position to achieve this through
its significant land holdings and historic connections to the area.
4.19 Land Securities has owned property in the Victoria area since the 1940s.
4.20 Land Securities started to implement a site assembly strategy for the Order
Lands in 2006. Since then we have acquired the significant number of
acquired the freehold interests listed below on the following dates:
4.20.1 152-154 Victoria Street (1 August 2008);
4.20.2 156-158 Victoria Street (29 June 2006);
4.20.3 160-162 Victoria Street (7 December 2007);
4.20.4 The Stage Door Public House, 3 Allington Street (25 February 2008);
4.20.5 The King's Arms Public House, 77 Buckingham Palace Road (25 February
2008);
4.20.6 79 Buckingham Palace Road (28 November 2008);
4.20.7 166-172 Victoria Street (23 April 2008);
4.20.8 Allington Court (20 December 2006);
4.20.9 89 Buckingham Palace Road (6 January 2011); and
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4.20.10 15 Allington Street (12 May 2011).
5 THE VICTORIA TRANSPORT INTERCHANGE ("VTI") DEVELOPMENTS
Early Stages of Land Securities' VTI Regeneration Proposals
5.1 Land Securities started feasibility work on their property holding in Victoria
during 2002. The initial work concentrated on the properties known as Lake
Court, 1 Warwick Row, Elliot House, 3 - 11 Bressenden Place and 120 -
124 Victoria Street, and a draft scheme was drawn up by architects KPF.
5.2 Land Securities first began the promotion of a major regeneration scheme
in Victoria in 2003 through conversations with the Council, GLA and
Transport for London ('TfL")/London Underground Limited ("LUL").
2003 Land Securities' Track 1 and Track 3 Proposals
5.3 . Land Securities began discussions with the Council in 2003 for two parallel
mixed use schemes, "Track 1" (which encompassed Lake View Court,
Carrier House, The Stag, Elliot House, 120-124 Victoria Street and 3-11
Bressenden Place) and "Track 3" (which covered all land from the north of
Victoria Station to Bressenden Place). The Council preferred the
comprehensive solution offered by Track 3. The Track 3 proposals
subsequently developed into the VTI1 proposals.
Earlier VTI Proposals: 2005 - 2007
5.4 Discussions then commenced between Land Securities, the Council,
TfLlLUL and the GLA on the VTI project in early 2005. We progressed a
comprehensive regeneration scheme that included the land owned by TfL at
Terminus Place. The Masterplan sought to accommodate upgrades to the
Victoria mainline, bus and underground stations.
5.5 The Council published for consultation the first draft of its revised Victoria
Area Planning Brief ("VAPB") in February 2005. We responded with
comments on the draft. One of those comments was a request that the
Council acknowledge that it may be in the proper planning interests of the
area to use compulsory purchase powers. The Council sought views on
this point when it reconsulted on the VAPB in November 2005.
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5.6 In parallel with our representations on the draft VAPB an initial Masterplan
was submitted to the Council in November 2005.
5.7 The Council consulted on our Masterplan in conjunction with its draft VAPB
(as to which see below).
5.8 A more detailed Masterplan was prepared and submitted in March 2006.
This was considered by officers in their report to Committee at the end of
March 2006 along with the revised VAPB which was being recommended
for adoption at that Committee. Officers accepted that the VAPB should
contemplate the future use of compulsory powers.
VTI1
5.9 Following the adoption of VAPB, Land Securities prepared a planning
application for the development of what became our original Victoria
Transport Interchange scheme ("VTI1 ").
5.10 In August 2007 Land Securities made a planning application to the Council
for VT11. The proposals included TfL's land at Terminus Place and Land
Securities' Portland House, and proposed three tall buildings. The
underground bus station that had been included in the 2005 Masterplan
was replaced by a surface solution designed by TfL.
The Council's Interim Report on VTI1
5.11 We had agreed with the Council, as the local planning authority, that they
would aim to determine the VTI1 application in the spring of 2008, but with
an interim report being made to the Council's Planning and City
Development Committee in December 2007. The purpose of the interim
report to Committee was to allow Members the opportunity to comment on
the application as it was progressing, and therefore to have the opportunity
of giving an informal "steer" prior to having to make a final determination of
the application. While this was "informal" in the sense that it is not a
determination of the application, the process was nevertheless an open and
comprehensive analysis of the application as it then stood.
5.12 The interim meeting of the Planning and City Development Committee took
place on 6 December 2007.
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5.13 By the time the report to Committee was finalised officers of the Council had
expressed concerns about certain elements of the scheme. Ultimately
these concerns were shared by Members and were reflected in the
resolution passed at the Committee meeting. Notwithstanding the concerns
about the detail of VT11, the Members accepted that:
5.13.1 a comprehensive approach to the redevelopment of the site was welcomed
and represented the best opportunity to achieve the complex aspirations set
out in the Council's adopted planning brief, and
5.13.2 the physical regeneration effects of the intended investment in the Victoria
area were highly significant and welcomed.
5.14 Accordingly Land Securities undertook further work to review VT11, in the
context of the comments made by officers and Members, with a view to
addressing the matters raised by the Council in respect of VT11.
6 VTI2/PERMISSION 1
Introduction to the VTI2 Scheme
6.1 Mark Kelly's evidence explains the evolution of the VTI2 scheme and how it
has been split into 3 separate planning permissions to facilitate the
commencement of the VSU works. This separation, supported by a legal
agreement between Land Securities and LUL, enables Land Securities to
implement Permission 1 while the VSU works are being carried out.
Key Aspects of Permission 1
6.2 The Order Land area is a tired and worn out area in significant need of
regeneration. The built environment as a whole, including the public realm
and the pedestrian experience, is poor.
6.3 The development will comprise world class office accommodation, a lUxury
residential building and complimentary retail and leisure uses in the context
of uplifting and vibrant public realm.
6.4 The proposition is founded on economic, social and environmental
sustainability. All office buildings will target a minimum "Excellent"
BREEAM rating with Building 7b &7c aspiring to "Outstanding". Residential
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buildings will be code for Sustainable Homes Level 3, and retail will target
BREEAM "Very Good". The exceptional public transport access, combined
cooling, heat and power plant in a central energy centre and wider initiatives
provide a foundation for an exemplar sustainable mixed use development.
6.5 All buildings are designed to provide exceptional space that exceeds
industry standards in terms of performance and flexibility and anticipates
the needs of occupiers.
6.6 Permission 1 includes one high quality private residential building with 170
apartments aimed at the owner/occupier and investment markets. The
building offers a highly attractive place to live in and an environment that
replicates elements of Belgravia whilst offering a balance of convenience
and haven with park and palace views. The two office buildings offer Grade
A space with a specification beyond British Council of Offices guidelines,
configured to meet demand for SUbstantial pre-Iets as well as larger office
occupiers targeting the primary London markets. Floor plates offering up to
30,000 sq.ft net are optimal for major corporate occupiers and two
entrances for each at ground and first floors offer great flexibility, add to the
public realm and enable a bespoke entrance for one or two major occupiers
if required.
6.7 In total, the scheme will deliver 65,653 sq.m. of office space, 11,497 sq.m.
of retail and 31,006 sq.m of residential. In combination, the new jobs,
homes, activity and amenity generated will transform Victoria into the
envisioned destination and complement its neighbourhood and community.
6.8 As set out in the statement of case, a report by Volterra Consulting
calculated that Permission 1 would provide:
6.8.1 492 local and 672 regional jobs during the demolition and constructions
phases leading to an additional anticipated £1.6m additional local spend by
construction workers each year; and
6.8.2 approximately 4,893 additional local and regional jobs on completion
providing an estimated net local spend by workers of £1.4m a year (with
residents spending an additional £1.1 m each year in Westminster and
£2.1 m each year in London as a whole).
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6.9 As I have explained above, Land Securities is totally committed to the
regeneration of Victoria and is hugely motivated to see the benefits of
Permission 1 turned into a reality for the benefit of the local residents,
businesses and visitors as well as our substantial portfolio of properties in
Victoria.
6.10 The implementation of Permission 1 will replace a large outdated pocket of
post-war buildings with new homes, offices, shops, cafes, restaurant, public
amenities and open spaces. The design will introduce the best of the new
while respecting the area's existing Regency and Victorian urban fabric, by
retention of the Victoria Palace Theatre and the Duke of York pub, for
example.
6.11 The wider benefits that can be created by Permission 1 were at the forefront
of our minds when we developed the design of Permission 1 and included
the pedestrian permeability and public space as described in detail in the
evidence of Mark Kelly.
6.12 The regenerative benefits of Permission 1 include creating the prospect of a
ripple effect for regeneration across Victoria. The commitment of a major
developer like Land Securities to a significant scheme like Permission 1 has
a realistic prospect of encouraging other developers to come forward with
their own proposals to support the regeneration of Victoria because, in my
experience, major investment such as this signals confidence to others and
hence attracts them to invest themselves. The Permission 1 development
would be expected to act as a catalyst for more wide-ranging regenerative
schemes in Victoria. Expectation has already promoted Terrace Hill's
Howick Place development.
7 DELlVERABILlTY
7.1 As explained in Hugh Bullock's evidence, compulsory purchase order policy
is set out in ODPM Circular 06/2004. One of the factors the Secretary of
State for Communities and Local Government will consider in confirming an
order is the deliverability of the scheme for which the land is being acquired.
7.2 The reason for the CPO is covered in both Hugh Bullock's and Graham
King's evidence. However, the site assembly for the scheme has taken
place over many years and the site is formed from many separate
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ownerships that have been bought subject to existing leases, some of which
have security of tenure. Some of these, and one freeholder in the south
west corner of the site, have resisted agreement through negotiation and
reasonable offers to acquire their interests, seeking to retain their interests
or maximise their negotiating position. These parties necessitated the CPO
and some have objected to it.
7.3 In relation to delivery, Land Securities track record that I referred to in
Section 3, together with our commitment to date should leave you in no
doubt that this scheme can be built.
Land Securities' CPO experience
7.4 In recent years Land Securities has been involved in 5 developments (retail
developments in Exeter, Glasgow, Leeds, Cardiff and Bristol) in which CPO
powers have been used. In all such cases it has gone on to complete, or is
in the process of constructing, the development.
The availability of resources and funding
7.5 Our track record shows that we have the experience and expertise to fund
our developments successfully.
7.6 We do so through a variety of means either through our own corporate
resources i.e. debt and equity available on our balance sheet or through
third party debt finance, typically via the bank market and occasionally via
the capital markets. Major factors in this decision making process are the
cost at which we can raise finance under our corporate facilities versus
what we would pay for bespoke development finance and our funding
needs going forward. Previous and current developments have therefore
been funded using different finance options.
7.7 As an example, 20 Fenchurch Street is presently being developed pursuant
to a 50/50 joint venture with the Canary Wharf Group entered into in 2010.
Joint ventures are very common in the market and Land Securities has a
long history of attracting word class investors and developers (such as the
Ontario Teachers' Pension Fund, Delancey, Hammerson Plc. Peal Group
Limited (previous Henderson Global Investors Limited), British Land Plc,
BarWa and Capital Shopping Centres Plc.
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7.8 Consistent with our experience we will investigate a joint venture in this
case in order to free up capital to enable us to bring forward additional
schemes. Our business position, however, means that we are capable of
funding development of Permission 1 from our own resources. In my view
therefore there is every prospect that Permission 1 can be delivered.
The delivery of the development
7.9 With the benefit of the CPO our very clear intention is to serve vesting
notices early in 2012. This would enable us to serve notices on our tenants
and obtain vacant possession of the Permission 1 land in time for us to start
on site in September 2012. This is in line with our current programme and
should enable us to complete the development in 2016.
7.10 The site will be ready for demolition and phased construction in September
2012 to maximise value from the construction industry, deliver as close as
possible to the forthcoming gap in development pipeline and growth in the
economic cycle. In our view it is important that occupation of the site is
available to us as targeted in 2012 in order for us to deliver Permission 1 to
the market at the correct time.
7.11 Completion of the scheme in 2016 will provide world class office buildings
and residential accommodation for occupation in parallel with the
completion of the northern ticket hall and major infrastructure works within
VSU. In addition, continued constrained debt markets will, in our opinion,
restrict development pipeline which should lead to constrained supply
relative to projected demand in office, retail and residential markets.
Land Securities commitment to the development
7.12 Since Permission 1 was granted, our continuing commitment to the
development is clear from the ongoing work we have undertaken and costs
of more than £5m that we have incurred (in the context of the approved
£48m in total, both figures excluding site acquisitions) in:
7.12.1 furthering negotiations with LUL after the parties entered into the VSU
compromise deed;
7.12.2 continuing negotiations/documenting deals with the Victoria Palace Theatre
(VPT);
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7.12.3 working to discharge the Permission 1 pre-commencement conditions;
7.12.4 negotiations with statutory undertakers and carrying out or contributing
towards site enabling works;
7.12.5 obtaining the Sutton House listed building consent;
7.12.6 progressing the planning application to re-locate Sutton House; and
7.12.7 negotiations with freeholders and tenants to obtain vacant possession of the
Permission 1 site.
7.13 There are numerous reasons to carry out Permission 1:
7.13.1 Victoria's investment performance matches the core West End market and
offers unique office product in a great, accessible location adjacent to some
of the most attractive living environments in London.
7.13.2 The Victoria office market is unique within London's West End in its ability
to provide a large supply of office buildings in significant concentration.
Permission 1 will provide fresh stock for existing Victoria occupiers who
face lease breaks or expiries later this decade.
7.13.3 Prime headline rents in Victoria have typically traded at a 20-30% discount
relative to the core West End market. This reinforces the ability to secure
high profile occupiers and should mean that Victoria will keep pace with or
exceed rental growth and investment performance elsewhere in the West
End.
7.13.4 Victoria's retail offering has improved significantly during the last decade
and the ground and first floor provision within the scheme will strengthen
the retail, cafe and restaurant amenity. It will help build the destination that
forms part of our vision for Victoria.
7.13.5 The residential market in Victoria provides an excellent, prime location
which is good value relative to comparable and adjacent locations.
Improving stock will strengthen this market over the next few years and
evidence, including our Wellington House development in Buckingham Gate
to which I referred earlier, points to the potential for the residential element
of the scheme.
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7.13.6 During the last 8 to 10 years average yields on Victoria office properties
have been on a par with those elsewhere in the West End. Further
improvements to Victoria's office stock will only reinforce and sustain this
close alignment.
7.14 Land Securities is a vastly experienced developer of large mixed use
schemes of the type of Permission 1 and our track record clearly
demonstrates that we understand the markets in which we operate to a very
high degree. The combination of the experience at Land Securities and the
advice of our specialist property consultants and agents, means that we are
in the best position to judge the market to best time our delivery of space to
the market. This has been evidenced by our commencing development at
Cardinal Place in a relatively flat market, thus delivering it into a significantly
improving market.
7.15 We intend delivering Permission 1 by commencing in autumn 2012 and
completing development in 2016. We fully expect to be delivering this
space into an improving market.
7.16 We are committed to the continued progress of Permission 1 and
expenditure has been approved in excess of £48 million to reach the
present point on VT12. I know from personal experience that if the company
had serious doubts as to the long term viability of Permission 1 or the point
at which it will be delivered to the market this expenditure would not have
been approved.
Failure to confirm the CPO
7.17 It is inevitably the case that any delay to the commencement of our
development will substantially increase the risk that it does not happen at all
because delay will inevitably and substantially increase the number of
unknown factors influencing our investment decisions.
7.18 In my view this scheme should be considered a unique opportunity to
deliver major regeneration to Victoria in line with the VAPB which should be
grasped and taken now rather than lost.
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7.19 The scheme holds in prospect a major improvement in the quality of
commercial space in the Victoria area, which ought to be facilitated now in
order to address the need for improved provision in the area, rather than
allowing the current deficiencies to persist for a potentially unknown period
of time.
8 OBJECTORS
OBJ 2 & OBJ 3 - 164 Victoria Street, 166-172 Victoria Street and 81-85
Buckingham Palace Road - Victoria Street (Jersey) No.1 Ltd and
Victoria Street (Jersey) No.2 Ltd - (Plot 8,9,10,11 & 12)
8.1 Objectors 2 and 3 contend that there are inadequate grounds to
demonstrate financial viability of VTI2 or Permission 1.
I have addressed the viability of the scheme above and in my view there is,
at the very least, a reasonable prospect of the scheme proceeding.
8.2 Objectors 2 and 3 also contend that there has been a failure to
demonstrate:
8.2.1 sufficient grounds for financial viability of VTI2 and/or Permission 1 having
regard to the economic effect of meeting requirements for affordable
housing, and payments to the Council, TfL and other parties as required by
the section 106 agreements;
8.2.2 timing of funding is sufficient/appropriate having regard to present and
foreseeable economic conditions and duration of implementation of VT12;
8.2.3 that LC25 Limited has sufficient financial capacity for delivery of
VTl2/Permission 1 will be implemented; and
8.2.4 that VTl2/Permission 1 is likely to proceed within the period of validity of the
CPO if confirmed.
My evidence deals with these points.
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OBJ 11 - 79 Buckingham Palace Road - Mr & Mrs Boitotla L'Arco
Restaurant - (Plot 14)
8.3 Objector 11 states that there has been a failure to substantiate viability of
scheme (lack of evidence in relation to occupier interest, specific occupier
commitments and lack of economic certainty due to present economic
climate).
For the reasons explained above the scheme can be delivered.
9 SUMMARY AND CONCLUSIONS
9.1 Victoria is an area crying out for major investment and regeneration.
9.2 In this instance such benefits are not achievable without the Council
exercising its CPO powers.
9.3 Land Securities is one of the country's premier development companies
with the experience, depth of resources and financial capacity successfully
to deliver the proposed development.
9.4 Land Securities has made a commitment to Victoria which is second to
none as evidenced by its landholdings in the area and its development
pipeline. Its commitment to this development in particular cannot be
seriously questioned.
9.5 Permission 1 is a high quality development which will bring further world
class office accommodation, lUxury residential accommodation and retail
and leisure uses to Victoria in the context of uplifting and vibrant public
realm which will benefit the whole community. This represents a unique
opportunity to deliver major regeneration to Victoria which should not be
lost.
9.6 The interaction between VTI2 and VSU and the commercial imperative to
deliver Permission 1 to the market at the right time in the cycle mean that it
is important that occupation of the site is available to us as targeted in 2012.
In conclusion I contend that:
9.7 Permission 1 is a very real and deliverable scheme to which Land
Securities is committed and well placed to see completed.
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9.8 Given the development track record of Land Securities as the UK's largest
Real Estate Investment Trust, its balance sheet and ability to fund major
schemes, its asset base and commitment to Victoria ·in both existing
investment and development pipeline terms I am confident that the
Permission 1 scheme can proceed and have a transformational impact on
Victoria and beyond.
Colette O'Shea
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Appendix No. AA/3/2-1
Town and Country Planning Act 1990
Acquisition of Land Act 1981
Inquiry into:
CITY OF WESTMINSTER (VICTORIA REGENERATION PHASE ONE) COMPULSORY PURCHASE ORDER 2011
Appendix AAl3/2-1 to Proof of Evidence
of
Colette O'Shea MSc, MRICS
of LAND SECURITIES GROUP PLC
On matters relating to compulsory purchase
24 May 2011
City of London
As Built
CGI One New Change
20 Fenchurch Street
City of Westminster
123 Victoria Street CG I Park House CGI
The View CGI
Cardinal Place CGI
Cardinal Place As Built
City of Westminster
Arundel Great Court CGI
Wellington House CGI
62 Buckingham Gate CGI
Kingsgate House CGI
Regional Developments
Princesshay, Exeter As Built
Cardiff St Davids As Built
Leeds Trinity CGI