It is no surprise that property investors have long been struggling to find commercial property funding on economic terms - similarly a number of public sector development projects have been mothballed while the government tries to balance the books. There does now appear to be an alternative source of finance on the horizon however - this year we saw pension fund/insurance giant Aviva step into the ring and provide funding for Kirsh's acquisition of the Nat West Tower to the tune of £60 million.We now see evidence that pension fund finance may be made available for public sector projects. 

We now see evidence that this type of finance is expanding to the public sector. Last week, Chief Executive Alan Foster, of the North Tees and Hartlepool NHS Foundation Trust, announced that the next stage of procurement would commence on a landmark new hospital at Wynyard following an independent review of "pension fund holder solution" by the NHS regulator Monitor and the Trust's advisors.

This long awaited project will bring together clinical care for the people of Hartlepool, Stockton and Easington and Sedgefield on a £9.6 million site bought by the Trust. The Wynyard scheme was originally scrapped by the Coalition in July 2010 as being "unaffordable". Alan Foster reported that initial indicators were that the business case for "annuity finance" presented a substantial cost saving on other available funding sources examined in tandem.

It is an exciting time for the NHS Estate - cost savings in the region of £20 billion by 2014 are indicated on the Department of Health website.

2012 also saw the creation by the Department of Health of NHS Property Company Limited due to inherit a landbank worth in excess of £4 billion and circa 2500 employees following abolition of Strategic Health Authorities and Primary Care Trusts under the Health and Social Care Act 2012 reforms.

We suspect - whilst the people of the north east are likely to welcome the Board's announcement yesterday - there is likely to be a long drawn out consultation and due diligence process given private finance has been attacked as the reason for the financial turmoil facing a number of hospitals this year (including the South London Healthcare NHS Trust - placed in administration on 12 July 2012).