The M.O.D. Northwood London
UK MoD's £1.15bn Northwood PPP
The £1.15 billion (US$2.2bn) contract for the redevelopment, management and operation of facilities at the Northwood Headquarters site outside London stands out as a deal that signals the continued progress of UK Ministry of Defence (MoD) PPP programme
The Northwood deal was swiftly followed by the close of the MoD’s London real estate deal MoDEL on 3 August – which involved a capital requirement of £180 million (US$340m) – and takes the form of something more akin to a revolving facility.
The Northwood and MoDEL deals, of course, follow hot on the heels of the close earlier this year of the £2.5 billion Allenby Connaught MoD accommodation project, giving direction to the defence projects that was badly needed and that Nick Prior, head of the MoD project finance unit (PFU) was brought on to achieve.
The 25-year contract for Northwood was finalised with SPV Eastbury Park – the 50:50 joint venture between Carillion and HSBC.
The project sees the redevelopment of the 43-acre site at Northwood, Middlesex, the home of the Permanent Joint Headquarters (PJHQ) – which runs all UK military operations worldwide, Fleet and Nato HQ.
Carillion and HSBC closed the project which is expected to generate some £880 million (US$1.7bn) of revenue for Carillion over the 25-year concession contract, including construction, support services and Carillion’s share of revenue in the joint venture, special purpose company.
The JV partners will each invest some £10 million (US$18.9m) of equity in the project.
Carillion will carry out a £150 million (US$283m) construction programme over a five-year period and will also provide a wide range of support services, worth in the region of £440 million (US$832m) over the contract period.
Service delivery started immediately and includes domestic services, estate management, document production and handling stores, transport and waste disposal.
Carillion chief executive John McDonough says: ‘This contract, which closely follows Carillion’s success in securing the £12 billion Allenby Connaught project, reinforces our position in the PPP market and also as a major supplier in the defence sector.’
