A chip off the old Bloc?
A FEW days ago Canal & River Trust (CaRT) issued a press release headlining as ‘New £20 million development planned for canalside site' writes Allan Richards.
Perhaps some will be hoodwinked into believing that its joint venture with Bloc will produce £20m that will go towards maintaining its waterways. Nothing could be further from the truth. The fact is that up to £20m will be 'invested' in the business park at Tyseley Wharf, Birmingham, in the hope of future income.
Joint ventures
CaRT's predecessor, British Waterways, had an addiction to dubious joint ventures. With a portfolio of land that was unneeded for operational use, instead of selling it and using the proceeds to maintain its waterways, it decided to develop in conjunction with various third parties. The goal, as defined by Chair Tony Hales and Chief Executive Robin Evans, was to make B W largely independent of government grant.
However, whilst the potential rewards were great (at one time BW was suggesting returns of nearly 30% on investments) so were the risks. As the years rolled on BW invested more and more with little or no return. The downturn in the economy in 2008 coincided with the time that everything was meant to come good. BW gambled by making further large investments and lost well over £100 millions (the true figure might have been nearer £200m). Needless to say, the massive returns on its investments which would leave it independent of government grant were never realised.
Little remains
Today, little remains of BW's joint ventures. BW wrote off its £33m investment in Gloucester Quays and gave away its interest in the partnership to avoid further financial commitments. Its Joint Pub Partnership went bust years ago with debts of £22m. H2O Urban, its joint venture with Bloc, was quietly wound up with its last set of accounts showing a loss of £300,000.
Its ‘New £20 million development' with Bloc is via a phoenix joint venture, H2O Urban (No 2) LLP. Its accounts showed that it was profitable last year. However, those profits were retained and did not contribute to CaRT's core business of maintaining its waterways.
Less speculative
H20's business park development is at Tyseley Wharf, which ceased to be used for loading and unloading of cargo over 60 years ago. Planning permission was obtained some 18 months back and at the time CaRT claimed that they were going to create wildlife habitats within the development. However, that promise does not seem to be repeated in the latest announcement.
The 18 month lag between obtaining planning permission and announcing the development, together with the decision that it will be ‘build to order' suggests a cautious and less speculative approach to this joint venture. That is to be welcome.
However, one is left wondering if the caution is due to the previous track record or simply that there is little need for a business park at Tyseley.