North East LEP - Fund Manager for Commercial Property Investment Fund

II.1.1) Description of the procurement (maximum 4,000 characters):

(nature and quantity of works, supplies or services or indication of needs and requirements)

The procurement will involve a competitive dialogue procedure in which bidders may be invited to engage in dialogue with the Council and North East LEP.

The Selection Questionnaire for the procurement is available to view and download at: procontract.due-north.com ↗. Bidders are required to submit their Selection Questionnaire in the procurement portal by no later than 12:00 noon on 26 August 2021 . For further information please see the Selection Questionnaire.

Full details of the Council and the North East LEP's minimum requirements will be set out in the ITT.

The CPIF will be a revolving fund accompanied by separate pot(s) offering incentive funding to address market failure. It is estimated that the CPIF will initially be comprised of:

1. £35 million in senior or mezzanine debt; and
2. £15 million in incentive funding.

The CPIF is estimated to have a 15-year funding cycle. Subject to performance and the provision of further public funding, the CPIF will have the potential to increase in value and be extended for a further 5-year period (i.e. 20 years in total). The contract will also allow for early termination of the CPIF should it not achieve its expected levels of return (subject to a performance review in year 6, following the conclusion of the first funding cycle).

Revenue for the fund manager's services will be paid over the term of the contract and will be based on arrangement/exit fees charged in the administration of the CPIF. For value estimation purposes, North East LEP estimates that the £35 million senior or mezzanine debt will be utilised three times over the course of the 15-year funding cycle. Total senior or mezzanine debt over the initial term of the CPIF is therefore expected to be £105 million. This procurement is intended to cover the initial value and scope of the fund together with any increases in the scale of the CPIF as a result of additional fund resources being secured. Interested organisations should use this information to aid in their estimation of the revenue likely to be generated.

The services anticipated to be required by the North East LEP for the fund manager services are summarised below (though confirmation of the final expected scope will be set out in the ITT):

1. commercial property management, development and regeneration; and
2. financial and investment services.

At this stage, the above list of services is indicative only and contains the broad categorisation of services rather than particulars. Bidders should assume that the services actually required will broadly be within the scope of services listed above but will also include extensions to related or ancillary services within each categorisation. The actual scope of services required may be narrower than that set out above. The services shall also include any services required by the CPIF, which the fund manager will subsequently procure.

The legal structure of the CPIF will contain a mechanism to allow any body governed by public law and situated within the North East LEP boundary area to access the fund manager. Full details of the proposed legal structure of the CPIF will be set out in the ITT and draft contract documents.

Following feedback from interested organisations during preliminary market consultation, and to help to ensure that sufficient interest in the contract will be generated, the services being procured will not be divided into separate lots.