Building a private equity-backed micro city

Many law firms will have experience of undertaking discrete elements of legal work in delivering housing developments; few will have advised across the full-range of legal disciplines in the delivery of an entire town and associated infrastructure. Fewer still will have done so while delivering a first-in-kind private equity investment into affordable housing. Yet that was exactly what was required in the delivery of the £1bn Winchburgh Village development in Scotland.

The challenge

One of the most significant challenges facing society today is the housing crisis - particularly affordable housing - and the delivery of new schools.

Pinsent Masons played a pivotal role in helping Winchburgh Developments Ltd, a joint venture between private equity house West Coast Capital and CALA, to help address these challenges by delivering one of the largest, most complex and ambitious development schemes in the UK.

Winchburgh Village is a programme to develop a £1billion town near Edinburgh. Pinsent Masons has been involved since the outset, providing a full spectrum of legal advice and delivering several precedent-setting innovations. In particular, we developed a unique contractual structure to underpin a ground-breaking funding model, and a similarly novel Development Management Scheme to ensure the long-term integrity of the development.

Stewart Carlile

Investment Manager, West Coast Capital

If we had what I would call traditional lawyers who were not as proactive I do not think we would be here in our current position. Pinsent Masons do not act without instruction, but they do their own thinking and bring that to you.

Many law firms will have experience of delivering advice in one or more disciplines on a discrete housing development, but few of delivering the full range of legal advice required to deliver a fully-functioning town.

To give a sense of it, Winchburgh Village will ultimately comprise: 3,500 homes (25% affordable housing); four state-of the art schools; a potential railway station; a motorway junction; a new marina; 35 acres of employment land; several new bridges; retail units and community facilities, and 75 acres of district park for communal use.

The solution

Pinsent Masons’ advice has covered property, planning and environment through to tax, projects, construction, corporate, litigation, funding and more besides.

The number and sophistication of counterparties involved in the contractual ecosystem drives complexity. We led negotiations concurrently with over 20 different public and private sector stakeholders including: the Scottish Government and various related agencies; West Lothian Council; West Lothian Housing Partnership; Network Rail; Scottish Canals; six different private housing developers; multiple landowners; a major retailer and more besides.

Delivering the project required a series of transactions to fund and progress the project which were interlinked, resulting in innumerable moving parts. This resulted in a simultaneous completion with those various parties in December 2018.

John Hamilton

CEO, Winchburgh Developments Ltd

Considering the number of transactions that they had in place here, it meant that how the deal was finally put together was very complicated, and it was not within any single parties' control. Pinsent Masons really responded brilliantly….It was faultless.

Critical to a project of this longevity and complexity is the ability to (i) project-manage effectively – for which the team drew upon its significant experience and training in this area in addition to technology solutions, and (ii) identify issues before they become problems. Examples of this include:

  • The development needs schools to encourage buyers into the area. With public finances constrained, a first-of-its-kind funding mechanism was required. A structure was devised in collaboration with WDL to support West Lothian Council borrowing to forward fund the new schools, which will be paid back through developer contributions and underwritten by guarantees from The Scottish Government and our client. Pinsent Masons prepared and negotiated the financing for a first-of-a kind public / private collaboration.
  • It was essential that extensive open spaces could be developed and maintained for current and future generations. We created a first of its kind Development Management Scheme that, in essence, gives home owners part ownership of public spaces in the development by way of a statutory Owners Association. This is the first DMS to be used in Scotland on such a huge scale (all 3500 house owners will be involved) since legal changes were introduced allowing for this mechanism.

The result

Winchburgh represents a blueprint for public/private collaboration, winning several awards in its own right. Russell Munro and the Pinsent Masons team have been key to ensuring the delivery of the project from a legal perspective.


Out-Law / Your daily need to know

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