The University of Greenwich has announced plans to convert a disused second world war aircraft hangar into what is thought to be the country's first graduate teaching centre built using private finance.

Greenwich, which is about to complete the United Kingdom's first student accommodation complex to be built and run privately, plans to raise Pounds 12 million to convert the hangar at Kings Hill Business Park, near Maidstone, in Kent.

The university is seeking to secure the money itself on favourable terms from the open market. It would then effectively lend the money to an appropriate commercial partner which would build and run the centre.

In an innovative though complex arrangement, the operator would lease the building for a period of perhaps 30 years or so. The university would pay the operator a sum of rent and the operator would pay its financiers, which would be the university. The university then pays the original lenders.

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Greenwich's deputy vice chancellor John MacWilliam said: "For many new universities the Private Finance Initiative route should be seen as an opportunity and not a threat in terms of the development of capital projects."

Flexibility is to be the key to the new centre with a strong emphasis on catering for adult returners wishing to take masters or doctoral qualifications. Many such students will be employed and would make use of distance learning techniques though supplementing these with intensive weekend or week-long sessions at the centre.

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Nearly two-thirds of the university's 18,500 students are over 21 and it has a large part-time cohort. It is envisaged that the centre will eventually form part of the expanding Kings Hill Business Park which will incorporate a hotel - which can be used by short-stay students - and up to 3,000 houses.

A spokesman for the ³ÉÈËVRÊÓƵ Funding Council, which has between 150 and 200 PFI schemes registered, said that he was unaware of any other project to use PFI cash for a graduate centre. He also said that the university's approach to PFI was novel.

The Greenwich graduate centre plan is part of a process of rationalisation that aims to reduce its present 17 sites to just six campuses, split half and half between London and Kent. It has already been approved in principle as the main tenant for the former Royal Naval College at Greenwich, which will become the institution's flagship campus. Final details are expected from the Ministry of Defence in the next two weeks.