propertyweek.com PROFESSIONAL

Newmarket’s racing form p62Interview for senior staff p65

MARKETSHants, Dorset + Wiltshire p41CoreNet Global salary survey p48

ANALYSIS Labour view p29Heron Tower’s hour p30

NEWS HMV pleads for monthly rents p5CBRE boss’s £11.5m pay p17

CB Richard Ellis goes Countrywide9 World’s biggest property adviser taps into UK residential market with huge estate agency partnership

08|04|11

By NiCk JohNstoNE

CB Richard Ellis has taken a huge leap into the lucrative residential property market through a tie-up with the UK’s largest estate agency.

The world’s biggest property services firm has entered into a financially binding agreement with Countrywide to offer joint regional residential sales.

Countrywide owns 46 high street brands and 1,300 branches. Its network includes Bairstow Eves, Beresford Adams, John D Wood, Wilson Peacock, Gascoigne-Pees, Alan de Maid and Austin & Wyatt.

Staff were informed this week of the tie-up.Countrywide agents will pitch alongside CBRE staff and co-brand on instructions.

A joint executive board, chaired on a rotational basis by CBRE UK managing director Martin Samworth and Countywide chief executive Grenville Turner, will lead the venture.

It is unusual for a leading commercial-led agency to join a high street chain, but the two worlds’ interests are converging. Mixed-use development is driving the change. Commercial firms in particular are attracted by fees that are typically higher in the residential sector. Residential development fees can top 2% — at least double most commercial fees.

In a first mandate, David Wilson Homes has instructed CBRE and Countrywide brand Chappell & Matthews to sell 40 semi-detached homes in Bristol’s Barrow Guerney.

The agreement is also a widening of CBRE’s joint venture with south-east agent Hamptons International, which has existed since 2003. Countrywide bought Hamptons in June last year. It then began negotiations with CBRE to expand the agreement from Hamptons’ 64 branches to Countrywide’s 1,300.

CBRE has long sought to rival firms such as Savills

and Knight Frank in areas such as local residential sales, land valuations and social housing advice.

The plan is that CBRE clients, such as government departments, will now have access to local knowledge and advice on the timing of land disposals or the local residential market.

It is the latest development in a rapid expansion of CBRE’s residential team. Former Harrods Estates chief Mark Collins has been recruited to replace Nick Jopling as head of residential, following Jopling’s departure for listed landlord Grainger. Former Grainger managing director Andrew Pratt was then appointed as a consultant.

Collins; CBRE executive director for residential Chris Lacey; Hamptons residential development director Godfrey Winterton; and Countrywide divisional director Tom Harris will be on the executive board. Continued on p4

£4.95

Berkeley’s banked (from left): Berkeley chairman Tony Pidgley, comedian Michael McIntyre and British Land chief executive Chris Grigg were the big stars at Tuesday night’s Property Awards. More than 1,300 people packed into London’s Grosvenor House for the event, organised by Property Week. Go to propertyweek.com/awards2011

phot

ogra

phS:

oLI

VEr

KNIg

ht

››

propertyweek.com

NEWS

Seven days @ 70 Gracechurch deal on tableThe Irish owner of 70 Gracechurch Street in the City is in talks to sell the building, which houses Marks & Spencer and Exel, for around £200m.9 Full story at propertyweek.com

Mailbox deal deliveredBrockton Capital and Milligan have completed their purchase of the Mailbox in Birmingham for £127.1m.9 Details at propertyweek.com

Irish McInerney goes underThe UK arm of Irish housebuilder McInerney Homes was placed into administration this week.9 More at propertyweek.com

4 08|04|11

BY NICK JOHNSTONE AND MIKE PHILLIPS

Developers working on prime London residential schemes are receiving a windfall, as overseas buyers continue to snap up off -plan sales in record time.

A joint venture between Frogmore and Galliard has sold 80% of the fl ats it is developing at Marconi House on London’s Strand, just eight weeks after it started marketing them.

Land Securities is understood to have sold 51 of the 59 units at its Wellington House scheme in Victoria. The penthouses at both schemes have been held back for sale at later date.

Sixty per cent of Heron International’s 284 fl ats at the Heron next to the Barbican in the City have been sold. Heron has halted the sale of units, so it can

sell the rest at higher prices later on. Heron is also close to completing a

deal to buy International House on Chiltern Street from Deloitte, the administrator to the collapsed subsidiaries of Targetfollow. It will then be converted to residential.

Prices being achieved at these schemes are between £1,500-£2,000/sq ft. The off -plan sales underline the hot performance of the City residential market, where high-end fl ats are being sold to Asian investors months before project completion.

Frogmore and Galliard sold 60 of the 65 units to overseas investors and 17 of the Marconi fl ats are worth more than £2m.

Research from King Sturge shows 69% of overseas buyers in London are buying for investment and only 7% for their own occupation.

International investors are attracted by the fact that sterling has devalued by around 20% against its 10-year average. Exchange gains have created a window of opportunity to acquire London stock at a discount.

Tim Wright, partner at King Sturge selling Marconi House, said: “Central London is very diff erent from the rest of the UK. Most of it is bought by the super-rich. The interest is being generated from the huge wealth coming out of China. With the Olympics next year, now is a good chance to get into the market.”

James Thomas, head of residential property at Jones Lang LaSalle, said: “There are several factors driving this performance. Currency is certainly an issue; people see central London residential as a status symbol; and the tax conditions are favourable.”

US insurance fi rm WR Berkley has bought a City offi ce that could become its UK headquarters.

In its second UK property purchase, the company has agreed to buy 52-54 Lime Street and 27 Leadenhall Street (pictured) — one of seller Prupim’s longest-held

assets — for around £38m.The properties total 98,000

sq ft and could be refurbished or redeveloped. WR Berkley is understood to be contemplating moving its UK headquarters to the buildings from nearby 40 Lime Street.

The company made its UK debut in January, when it

bought 33 Grosvenor Gardens in Victoria for £160m.

WR Berkley is listed on the New York Stock Exchange and specialises in property casualty insurance.

Jones Lang LaSalle advised Prupim. DTZ advised WR Berkley. All parties declined to comment.

CB Richard Ellis goes Countrywide

Asians fuel London resi fire9 Frogmore and Galliard, Land Securities and Heron International all cash in on red-hot market

continued from front pageSamworth said

Countrywide’s local sales skills would allow the fi rm to off er clients a more local approach to residential marketing.

He told Property Week: “This is an extension of our existing relationship with Hamptons. Countrywide has a much greater reach than Hamptons on its own.

“We’re dealing with a lot of land developments that have residential elements, and we need to improve our residential sales capability

by using their infrastructure.“On new home sales where

we are involved, we will use the most relevant Countrywide brand to drive sales.

“In addition, if we need information on residential values in a certain part of the country, for example, we will get that with a phone call.”

Turner said: “Some of the big commercial practices have been London based and require expertise elsewhere in the UK. You have agents who are really commercial agents working on mixed-use schemes.”

«

Given wings: Heron has sold 60% of the Heron in City (pictured) and will hold the rest until prices rise

WR Berkley buys prized Prupim asset

NEWS

propertyweek.com

Morgans checking out of London Morgans Hotel Group aims to sell its Sanderson and St Martins Lane hotels in London for more than £210m.9  Details at propertyweek.com

John Lewis At Home in NewburyJohn Lewis has confirmed it will open a 40,000 sq ft At Home at Standard Life Investments’ Parkway shopping centre in Newbury in October.9  Full story at propertyweek.com

Essex hub for Sainsbury’s Sainsbury’s is to develop a new logistics hub after buying an Essex industrial estate from Valad Europe.9  More at propertyweek.com

Councils will not get RDA assets The government has rejected calls to transfer ownership of regional development agency assets to local authorities and will sell them instead.9  Full story at propertyweek.com

UK

08|04|11 5

Landlords dance to HMV’s tune 9 Retailer’s request to pay rents monthly accepted by most

by Kat baKer

Struggling music and book retailer HMV Group has entered into negotiations with landlords to pay rent across its portfolio on a monthly basis.

Landlords told Property Week they have received requests from both HMV  and Waterstone’s over the  past fortnight to pay rent monthly rather than  quarterly in advance for  an indefinite period.

The request has been made as the group tries to exit around 60 leases as they this year come up for renewal. This week HMV Group issued its third profit warning in four months.

It is thought most landlords have accepted the requests from HMV and Waterstone’s, but some have placed their own restrictions on the agreements.

One landlord said: “This really indicates that they are throwing everything at trying 

to sort the business out and this will help to a degree. HMV are very difficult for us to refuse because of the volume of sales they still do. If you take them out of a shopping centre, you would have a lot of complaints and landlords need their offer for balance on their schemes.”

HMV and Waterstone’s also tend to occupy large units, which is why it is thought landlords have been more receptive to their requests.

In a profit warning this week, HMV revealed trading had remained difficult, as sales  of DVDs and books have continued to decline. Full-year pretax profits are expected to be £30m, down from the £45m forecast in March.

HMV also secured a stay  of execution this week on its banking covenants after its lenders, led by Lloyds Banking Group and the Royal Bank of Scotland, agreed to move the measurement period for all 

relevant financial covenant tests from the year to 30 April 2011 to the year to 2 July 2011.

HMV is expected to sell its Waterstone’s brand. The bookseller’s founder Tim Waterstone and Russian oligarch Alexander Mamut  are thought to have been  given until the end of April  to table an offer.

High street retailers have faced a tough few weeks. Consumer spending and confidence is dropping and retailers are struggling to stay afloat. American Apparel has warned that it may have to file for bankruptcy, while Dixons and Mothercare have both issued profit warnings. Officers Club, Oddbins, and Alworths have recently been placed into administration. All Saints is also said to be facing administration if it cannot secure an investor by the end of this week.

HMV Group declined  to comment.

Henderson Global Investors is selling a selection of industrial assets for £110m, and the sale of the largest is due to complete imminently.

The global fund manager is marketing the £50m Cyrus portfolio, alongside the £35m Gillingham Business Park and £27m of ex-Chancerygate business centres.

The Cyrus portfolio is thought to contain three industrial assets in the south- east and has attracted a shortlist of six bidders.

A spokeswoman for Henderson said: “The portfolio

is at bidding process and Henderson is confident that it will attract a strong price.”

Henderson Indirect Property Fund Europe (HIP), a €419m fund of funds, bought stakes in two UK property funds this week for €23.5m.

The deal marks the fund’s first investment in the UK property market.

It has paid €11.7m for units in the Standard Life Core UK Shopping Centre Trust and €11.8m for units in the Unite UK Student Accommodation Fund.

Industrial trio for £110m

Heineken refreshes West end Heineken has taken 13,500 sq ft at Great Portland Estates’ Elsley Court on 20-30 Great Titchfield Street in London’s West End.

The brewer has taken two floors on a 10-year lease with no breaks at £46.50/sq ft. It plans to open its first London-dedicated marketing office in the space. The floors were refurbished after the previous tenant, iLevel, vacated them last year.

Edward Charles and Robert Irving Burns advised Great Portland; Montagu Evans advised Heineken.

phot

ogra

ph:m

axw

ell

ham

ilton

propertyweek.com

NEWSUK

08|04|11 7

Prupim takes £50m hit on Dundee’s Wellgate mall 9 Further woes for secondary retail as Invista places shopping centre under offer for less than half Prupim paid

by kat baker

Invista Real Estate Investment Management is poised to buy the Wellgate Shopping Centre in Dundee for 62% less than owner Prupim paid for it.

Invista has agreed to buy the 340,000 sq ft shopping centre on behalf of its St James’s Place Fund, for around £31m, which will reflect a net initial yield of around 11%.

Prupim paid £80.3m for Wellgate in January 2007 to HBG UK (now BAM), at the height of the market.

The drop in value has been

exacerbated by a fall in rents at the centre and a 15% vacancy rate.

The reduction in value is also indicative of concern among investors about secondary shopping centres that have to compete with nearby prime schemes when consumer confidence and spending is dropping.

Wellgate faces competition from the dominant Overgate Shopping Centre. Land Securities bought the centre for just less than £140m, reflecting a 6.75% yield, in November.

Similarly, in December the Mall fund sold the Mall Galleries in Bristol for

£50.2m to HSBC European Active Real Estate Trust.

The Mall paid Norwich Union £123m for the 330,000 sq ft shopping centre in 2004, but it then had to compete with Hammerson and Land Securities’ 1.1m sq ft Cabot Circus shopping centre, which opened in 2008.

The sale of Wellgate, whose tenants include BHS, TJ Hughes, Iceland, Argos and Peacocks, is expected to exchange next week.

In January Invista agreed a sale to Prupim of a 12.5% share of its 50% stake in the Fort shopping park in

Birmingham for around £26m, reflecting a 5.5% yield, as revealed by Property Week (news, 11.02.11).

The remainder of Invista’s stake was sold to Henderson Global Investors, the Merseyside Pension Fund and Aberdeen Asset Management.

Invista is also bringing its 50% stake in Cardiff Bay retail park to the market on behalf of its Equitable Life fund for around £27m, at a yield of 6.25%.

FG Burnett acted for Invista; Cushman & Wakefield and Smith Cole Wright acted for Prupim.

All parties declined to comment.

Lambert Smith Hampton has recruited Sean Brew from DTZ to head its national property and asset management service.

LSH has been seeking to expand its corporate finance and asset management teams to win more business from institutional investors.

Last year it lured John Knowles, also from DTZ, to head its corporate finance business.

Brew is a senior director at DTZ and is head of UK portfolio asset management.

Ezra Nahome, LSH CEO, said: “This is a key appointment.”

Rio Tinto is poised to sign the first new office letting at Development Securities’ Paddington Central scheme for 18 months.

The mining company is understood to have placed under offer 25,000 sq ft on a 15-year lease at £57.50/sq ft at the 230,000 sq ft Two Kingdom Street.

The letting would be a boost for the £600m Paddington Central development, where there has been little news since Two Kingdom Street was completed in February 2010.

The last letting was in October 2009, when AstraZeneca took two floors and an option on the third, leaving 160,000 sq ft remaining.

This new letting at Paddington would be confirmation of Rio Tinto’s intention not to return to its former headquarters at 6 St James’s Square, which is being

redeveloped by Exemplar Properties. The conglomerate had planned

to move executive staff from offices at 5 Aldermanbury Square in the City, back to St James’s, but those plans are now understood to have been shelved.

Most other workers at 6 St James’s Square were moved in 2007 to Derwent London’s nearby Telstar House.

The decision not to reoccupy the building could prompt Rio Tinto to sell the luxury office and residential scheme once it has been redeveloped.

Rio Tinto is believed to have been drawn to Paddington Central because it is near Telstar House.

Savills and CB Richard Ellis are the letting agents on Paddington Central; Cushman & Wakefield advises Rio Tinto.

All parties declined to comment.

Mount Anvil, the London developer, has bought a second site in Wandsworth, south London, for a £155m development.

Cockpen House on Buckhold Road — a former office and warehouse block — has planning consent for a mixed-use development.

Mount Anvil plans a £75m scheme with 207 flats in four residential blocks with ground-floor retail and offices.

Mount Anvil announced last month that it

plans an £80m scheme next door to Cockpen House with Workspace Group. It will comprise 80,000 sq ft of offices and 209 flats.

Killian Hurley, Mount Anvil’s chief executive, said: “We worked closely with Workspace on this deal as the

two sites are next to each other and together represent a

comprehensive development, enhancing both residential

values and rents for the new Workspace facility.”

Work will start on Cockpen House this

summer and is scheduled for completion in 2014.

Wandsworth double for Mount anvilrio tinto digs in at Paddington

Lambert Smith Hampton fancies brew

NEWS

propertyweek.com

UK

08|04|11 9

Law firm goes off Aldgate Tower 9 “Tight timetable” at Stanhope City scheme too risky for Trowers & Hamlins

BY MIKE PHILLIPS

Trowers & Hamlins has backed away from taking a prelet at the Aldgate Tower on the fringe of the City of London, as Stanhope completes the purchase of the development site.

The prospective letting has been watched with interest in the City, as the law fi rm was considered one of the fi rst in a wave of occupiers to take prelets at City schemes under development.

Trowers was expected to take around 100,000 sq ft at the scheme.

Stanhope and Aldgate Holdings, its joint venture partner, completed the purchase of the site for the 300,000 sq ft tower this week. They have appointed Sir Robert McAlpine as contractor, with a view to starting construction in the middle of this year for completion by early 2013.

Trowers & Hamlins senior partner

Jonathan Adlington said: “Our steering committee has been working with Stanhope and their professional team on Aldgate Tower since late last year.

“We have been working to deliver this new development for our partnership’s occupation by late 2012, to coincide with our lease expiry in Sceptre Court. 

“We have now, however, concluded that the tight timetable for occupation late 2012 is not a business risk that we can prudently take.

“We remain convinced that Aldgate Tower will provide high-quality and attractively priced offi ces in an improving area of the City.”

Trowers is advised by Knight Frank and is understood to be reviewing its options, which could include preleasing another scheme or moving to an already completed building.

The law fi rm occupies space in 40 Sceptre Court near Tower Hill,

and is looking for expansion space.David Camp, chief executive of

Stanhope, said: “We are well advanced with all activities to enable a start on site at Aldgate Tower this year.

“With the market improving and very limited committed grade A stock, we have strong tenant interest for this product, which we can deliver from 20,000 to 300,000 sq ft at very competitive rents.

“We are naturally disappointed that Trowers & Hamlins are not coming to the scheme but fully understand their decision.”

Savills acted for Stanhope on the purchase and is the letting agent.

Among the other occupiers understood to be considering prelets in the City are Schroders, CMS Cameron McKenna and Aon, which is close to agreeing to take offi ce space at British Land’s 122 Leadenhall Street.

Delancey with Qatari Diar, Hutchison Whampoa, and Wellcome Trust have been shortlisted by the Olympic Delivery Authority (ODA) to buy and manage the £500m Olympic Village

in east London (above) after the 2012 games.

The three parties were picked on Wednesday to make fi nal detailed off ers and deliver 2,818 homes, which include 1,379 bought

by housing association Triathlon Homes.

Last month it was revealed that the Wellcome Trust has made a £1bn off er to buy the freehold for the other Olympic venues,

including the 1m sq ft International Broadcast and Media Centre, Olympic Stadium and the Aquatics Centre. Its plans to develop a science and research park after the games.

Following competitive submissions, selected private sector organisations were invited to submit detailed proposals in January 2011.

Among the bidders that did not made to the fi nal round were Galliard Homes; Grainger with Moorfi eld Group; US real estate company the LeFrak Organisation with insurer Aviva and bank JP Morgan; Raymond Mould and Patrick Vaughan’s London & Stamford Property with housebuilder David Wilson and contractor Sir Robert McAlpine; and William Pears Group with Urban Splash.

More than 50 parties have expressed an interest in buying the Leadenhall Triangle site in the City, formerly owned by clients of Investream.

PWC, administrator of AM Holdings, DB5, DB6 and Optimum Properties has appointed Cooke & Powell to market fi ve adjacent City of London offi ces (pictured) known as Leadenhall Triangle to the market.

The fi ve properties total 460,000 sq ft of offi ce and retail accommodation and there are more than 50 tenants, among them several substantial insurance sector occupiers. The estimated rental value of the properties is more than £12m a year.

Administrator Mark Batten of PWC said: “This sale provides a unique opportunity to purchase a multilet investment in the heart of London’s insurance district with great development and asset management potential. Furthermore, the corporate sale provides potential purchasers the opportunity to benefi t from valuable tax attributes.”

Brookfi eld has been buying up properties on the island site to gain an advantage over rival bidders.

A shortlist of buyers will be chosen within three weeks.

St Katharine Docks up for saleF&C Reit Asset Management and Area Property Partners have appointed Franc Warwick to sell St Katharine Docks by London’s Tower Bridge for around £170m. The £167m debt secured against the property matured last summer.

Colliers assigns Aldar man in CityColliers International has appointed John Campbell as a director in its City agency team to handle offi ce disposals and acquisitions. Campbell joins from Aldar Properties PJSC, the largest developer in Abu Dhabi, where he was the head of offi ce leasing for the last two years.

IN BRIEF

Three Olympic finalists in running

Leadenhall Triangle attracts 50 suitors

Haribo is sweet on Leeds distribution site 9 “Squeezed” confectionery manufacturer to expand into former Pioneer facility

BY PATRICK GOWER

German sweet manufacturer Haribo has bought a 46 acre site near Leeds on which it plans to develop a 500,000 sq ft production and distribution facility.

Haribo purchased the site for around £6m.

The fi rm is understood to be “squeezed” inside its present headquarters in Pontefract, Wakefi eld, after double-digit year-on-year sales growth for the past three years.

It has been looking for a suitable area to expand nearby.

Pioneer Electronics formerly owned the site, which comprises the 200,000 sq ft Pioneer House warehouse on a 15 acre plot and an adjacent 21 acre plot that has been allocated for expansion.

Normanton has emerged as a leading distribution location in West Yorkshire in recent years. Asda, TK Maxx, Carlsberg, Tetley and Tibbett & Britten occupy nearby distribution facilities.

A developer is yet to be appointed but an architect has been recruited and the tendering process for construction will begin once planning has been approved.

King Sturge was the sales agent.Haribo confi rmed the transaction

and said it would not move out of its two-storey factory in Pontefract, where it employs 545 people.

Herwig Vennekens, managing

director of Haribo UK, said: “Any developments agreed by the company are in addition to and as an extension of our current facilities and headquarters based in Pontefract.”

Haribo arrived in the UK in 1972 after buying a stake in Yorkshire company Dunhills, which it bought outright in 1994.

The fi rm sells an average of around 250 million bags of sweets in the UK each year. Last year’s sales were £114.8m.

The purchase follows an announcement by Waitrose

this week of an agreement with Evander Properties and British Airways Pension Fund to build a 400,000 sq ft distribution centre in Chorley, Lancashire.

Subject to planning consent, the 30 acre former BAE Systems site will become the supermarket’s fi fth regional distribution centre. Waitrose is pursuing rapid expansion in the north.

Evander will develop the buildings with £35m provided by British Airways Pension Fund. Waitrose will carry out fi t-out works and will lease the site from the pension fund for 25 years.

Axa’s Voyager of discoverySavills ushers in new northern eraAxa Real Estate Investment Managers and Canmoor Developments have completed the purchase of an 8.5 acre site in Farnborough from Terrace Hill. 

The site will be branded as Voyager and is on the Farnborough Aerospace Centre, next to Farnborough airport.

The site has access to the airport and the M3 motorway at junctions 4 and 4a. 

The partners are targeting prelets of between 40,000 sq ft and 200,000 sq ft and will consider a wide range of uses, subject to planning, such as warehouse and industrial, offi ces and research and development.

Dowley Turner Real Estate advised on the purchase of the site for Axa REIM and Canmmor Developments and is marketing the site with joint agent Hollis Hockley.

Savills is due to announce that it has appointed Peter Mallinder as head of the northern region and Patrick Joynson as head of its Manchester o£ ce.

The appointments coincide with the fi rm’s relocation to Belvedere at 12 Booth Street in Manchester on 18 April.

The duo take over from Howard Morgan, who has led the Manchester o£ ce since 2008.

Morgan will continue to

lead the fi rm’s building consultancy team in Manchester, which he has built up over the last 13 years.

Savills established the Manchester o£ ce in 1996 with three people: commercial chairman Mark Ridley, Peter Mallinder and Patrick Joynson.

After 15 years, the o£ ce now employs more than 150 members of staff .

Investment director Mallinder and o£ ce agency

director Joynson will continue with their fee-earning roles.

Mark Ridley, chairman and chief executive of Savills commercial, said: “As our northern operation aims to grow further, with Savills Manchester o£ ce the largest outside London, it was felt that dual-responsibility leadership, with Peter and Patrick at the helm, is the best way of taking the o£ ce and region forward.”

Everyone loves it so: Haribo needs to expand after huge sales growth

TNT Post receives Swift packageTNT Post, the direct mail supplier, has signed a 10-year lease with a fi ve-year break at £3.50/sq ft for 115,000 sq ft at Swift Valley Industrial Estate in Rugby. Strutt & Parker advised TNT.

Benson refi nances Milton Keynes siteBenson Elliot has raised £12.4m by refi nancing its CBXII building in Milton Keynes. It has let 7,000 sq ft to Global Radio on a 10-year lease at an undisclosed rent. The offi ce is now fully let. Benson Elliot bought the property in March 2010.

Grange plans Tower Hill hotelGrange Hotels has placed the 100 Minories site in London’s Tower Hill under off er for around £20m. The site was put up for sale by London Metropolitan University. Grange is expected to create a 250-bed hotel. Drivers Jonas Deloitte advised London Met. All parties declined to comment.

Luminar to offl oad three more clubsLuminar Leisure will sell a further three of its nightclubs: the 25,000 sq ft Liquid and Envy on Stevenage Leisure Park in Stevenage; the 16,412 sq ft Elements and Legends on King Street in Wigan; and the 16,894 sq ft Fuse on Church Road in Redditch.

Hammerson progresses Didcot planHammerson has entered an agreement with South Oxfordshire District Council to kickstart the £125m regeneration of Didcot town centre. The project will comprise a shopping complex and town centre amenities on a 10 acre site next to the Orchard Centre, which opened in 2005.

IN BRIEF

PHOT

OGRA

PH: F

DECO

MIT

E

NEWS

propertyweek.com

UK

08|04|11 11

propertyweek.com12 08|04|11

NEWS UK

Delancey buys City’s Plantation Place for £460m 9 Jamie Ritblat seals purchase of debt-laden scheme developed by his father when at British Land

BY MIKE PHILLIPS

Jamie Ritblat’s Delancey has agreed to buy Plantation Place, the City of London scheme that was developed by his father, for around £460m, refl ecting a 5.75% yield.

Delancey is understood to be in the fi nal stages of negotiating the purchase of the 550,000 sq ft property, which was developed by Sir John Ritblat when he was chief executive of British Land.

Delancey is understood to be backed by a division of the Qatar Investment Authority. Propertyweek.com revealed that Delancey had teamed up with

Qatar to bid for the property (18.03.11).A consortium that included Invista

Foundation Property Trust, Starion and Stobart Group bought Plantation Place in 2005 for £525m.

Delancey is thought to be buying the units in the fund created to hold the property. It will put in cash to pay down debt and rectify the breach of loan-to-value covenant that has been outstanding for more than two years.

The building was last valued at £425m, and there is £435m of debt secured against it.

It will pay a fee up front to the unit holders, who will also keep a right to

future profi ts if the building is sold on for a higher value at a later date. Another fee is payable in 2013.

Last year Delancey, which holds some of the debt secured against the building, used its position to block proposals to sell the property on the open market.

It is this blocking stake that has allowed it to secure the purchase.

Delancey is at the vanguard of opportunity funds that are seeking to buy into complex debt situations where companies or assets are overleveraged.

Last December it agreed to asset manage a portfolio of assets with

£900m of Royal Bank of Scotland debt secured against it that was bought by Glenn Maud’s Propinvest.

Delancey has also completed several other transactions with RBS.

The deal at Plantation Place will mark the end of one of the City’s longest-running restructuring sagas.

Investors such as MGPA have proposed alternative restructurings, but until now bond holders have not agreed to any.

GM Real Estate and Brookland Partners are advising the owners of Plantation Place.

All parties declined to comment.

Bericote recruits SpencerBericote Properties has appointed Simon Spencer (right) as development director.

Founder of specialist developer Isis Land, Spencer spent two years working with Bericote directors Richard Grass and Steven Ferris from 2005 at Astral Developments, before it was sold to Prologis for around £20m in 2007.

The takeover gave Prologis control of 30 development

sites across the UK.Spencer left

Prologis in 2008 and set up Isis Land shortly afterwards.

He brings with him

management mandates from

Aviva Investors and RREEF in Northampton

and Leeds.Bericote director Richard

Saint said: “We have a land bank of more than 200 acres which provides for more than 4m sq ft of distribution development.”

Roxhill Developments is to develop a 400,000 sq ft business park in Inverness.

Roxhill this week entered into a joint venture with Inverness Airport Business Park to develop its 30 acre site. It is the developer’s fi rst deal since it received funding from Forum Partners and developer-investor Mark

Glatman’s Abstract Securities last month.

The £30m development will comprise 200,000 sq ft of industrial space, 100,000 sq ft of offi ces and a hotel, all on a 3 acre site. The largest building is expected to be 50,000 sq ft and the scheme will be built over a seven-year period.

Inverness Airport

Business Park is a joint venture between public airport company Highlands and Islands Airports, landowner Moray Estates and development agency Highlands and Islands Enterprise.

Roxhill is seeking prelets. Colliers International and Ryden are the letting agents.

Tenants ahoyCowan & Rutter was this week instructed to fi nd an offi ce tenant for the Enterprise (pictured), which off ers views of the Thames from one’s desk. The boat is moored at Cadogan Pier and off ers 3,000 sq ft of open-plan and cellular offi ce space, available to buy for more than £1m, or to rent at £100,000 a year. It is believed to be owned by investment company Boultbee, which also has its headquarters at the pier. The vessel has a pied-a-terre and a boardroom that overlooks Albert Bridge.

Roxhill lands at Inverness airport

NEWS

propertyweek.com

Global

08|04|11 15

Bahrain’s reputation damaged as firms exit 9 Knight Frank, DTZ and Cluttons among those rethinking presence in kingdom

By Nick JohNstoNe

Companies with offices in Bahrain are considering relocating or scaling back their operations in the unsettled Gulf state. The recent unrest appears to have permanently damaged Bahrain’s status as a deregulated, west-friendly springboard into Saudi Arabia.

Knight Frank is reducing staff numbers in the country, after it was forced to temporarily relocate all workers last month. Its workforce in Bahrain has been cut from nine to four since the turmoil that began in February erupted into violence.

DTZ and Cluttons were also forced to shut their offices between 21 and 25 March. Cluttons is understood to be cutting staff from 30 to 20 in the medium term.

Jeremy Waters, partner in charge of the Middle East at Knight Frank, said: “Historically, Bahrain has been the

business-friendly region. It was an important commercial centre in the Gulf.

“We will be moving people into the United Arab Emirates as a result of the unrest, specifically to Abu Dhabi, where we have a joint venture with the National Bank of Abu Dhabi.”

Cushman & Wakefield won a mandate to manage the Bahrain World Trade Centre last year, and set up its 25-man Bahraini operation on 1 February, just days before the trouble started.

Mike Atkins, Middle East partner at Cushman, said: “The timing is tough. We have a plan to expand and Bahrain is a launchpad into Saudi Arabia. Now, we will expand, but more cautiously.”

Other property consultants in the country said its occupier-friendly image had been permanently damaged. Bahrain had a reputation for being stable and deregulated, and provided a platform for gaining access to Saudi Arabia via the King Fahd Causeway.

Fifty-five per cent of Bahrain’s population is from overseas and it last year ranked third in the world in HSBC’s Expat Explorer survey.

But with the causeway closed by the Saudi Arabian government, the Formula 1 Grand Prix postponed and soldiers on the streets, Bahrain residents said it had been irrevocably affected.

Hotel occupancy levels have dropped from 80% to 10%, retail is suffering because Saudi shoppers can no longer enter via the causeway and a package of stabilising measures worth £10bn from the Gulf states is unlikely to be enough to salvage Bahrain’s image.

One expat consultant said: “People who were considering coming to Bahrain may do so no longer. Companies may not grow as much, and people may scale down their operations.”

A drop in office take-up is likely and, as oversupply is already an issue, rental rates will also drop, experts predict.

Savills’ Albert victorious in ChinaSavills has appointed Albert Lau as managing director of its China business. Lau has led the Shanghai operation as managing director since July 2002 and takes responsibility for Savills operations across 12 offices in mainland China.

Asia leads residential price boomMonaco remains the world’s most expensive residential location, followed by London, Knight Frank and Citi Private Bank’s annual Wealth Report showed this week. Almost 40% of 85 prime city and second home locations rose in value during 2010 — 17 by 10% or more, the report said. Shanghai topped the price growth league table with a 21% increase. Six of the 10 biggest risers were in Asia, reflecting the region’s continuing economic boom.

squarestone Brasil’s Golden momentSquarestone Brasil, the AIM-listed Brazilian development company, has secured funding to develop the Golden Square shopping mall in Sao Paulo.

US-based private equity firm Walton Street Capital and Brazilian investment bank BTG Pactual will provide the funds to Squarestone Brasil’s wholly owned subsidiary, SB Brast Participacoes.

Through the agreement, SB Brast will receive R$192.5m (£72.60m) to complete the project.

Construction of the 330,000 sq ft scheme is expected to begin in the next three weeks and Golden Square is scheduled to open by the third quarter of 2012.

Squarestone Brasil will pay R$95.2m to acquire the remaining 50% of Golden Square that it does not already own and to settle the outstanding amount it owes for its original 50% purchase. 

Qatari Diar makes its Us debut in Washington DcQatari Diar, the property investment arm of the Qatar Investment Authority, has made its US debut with a $700m purchase.

Qatari Diar is the cornerstone investor in a fund that is financing a 10 acre scheme in Washington DC. Barwa Bank investment banking subsidiary First Investor has raised the equity to fund the mixed-use scheme (right).

Construction of the Hines and Archstone-led development commenced on 23 March. It is expected to be completed by the fourth quarter of 2013.

The first phase of the project is a pedestrian-friendly neighbourhood of more than 185,000 sq ft of retail, at the base of six buildings that will provide 674 homes and 520,000 sq ft of offices.

The project also provides 1,555 parking spaces and nearly an acre of open public spaces.

A second phase of the project proposes a 350-room high-end hotel, along with an additional 110,000 sq ft of retail.

CB Richard Ellis and Tanween are advising First Investor.

IN BRIEF

NEWS

propertyweek.com

Finance

08|04|11 17

CBRE’s White earns $11m 9 CEO is highest-paid director at listed property company and JLL bosses follow close behind

BY JAMES WHITMORE

Brett White, CEO of CB Richard Ellis, received $11.5m (£7.1m) in remuneration last year after the fi rm achieved a sixfold increase in profi t.

White was the highest-paid director at a listed property services company in 2010, receiving a salary of $809,135, stock awards of $7.5m and a cash bonus of $3.2m. This was 60% higher than in 2009, when he received $7.2m.

His remuneration was boosted by a $7.5m “CEO retention award” that was given to him last March. The 552,282 shares vest fi ve years from the time of the grant on 4 March 2015.

CBRE’s remuneration committee said the award accomplished two goals: “First, to adjust Mr White’s compensation as appropriate for his position in a manner that aligns Mr White’s interests with that of our stockholders; and second, to provide a signifi cant incentive for Mr White to remain employed with the company at least through 2015.”

The details of the directors’ compensation were revealed last Friday in CBRE’s statement to shareholders in advance of its annual general meeting on 11 May (table, right).

White was the only CBRE director to receive a stock award. The other fi ve directors received less remuneration in 2010 than in 2009, when they all received stock awards. President Bob Sulentic received $2.7m, chief fi nancial offi cer Gil Borok $1m, president of

global services Calvin Frese $2.3m, Americas president Michael Lafi tte $1.85m and Europe, Middle East and Africa president Mike Strong $1.8m.

All six directors had their salaries restored to pre-recession levels and annual performance target awards restored to 95% of normal levels. In 2010 CBRE increased its net profi t from $33.3m in 2009 to $200.3m and its EBITDA (earnings before interest, taxes, depreciation and amortisation) by 74% to $647.5m.

Jones Lang LaSalle’s six directors,

who comprise its global executive committee, were also well rewarded for a much-improved fi nancial performance last year.

A similar statement to shareholders in advance of its annual general meeting on 26 May, posted last Friday, shows that the directors generally received at least double the amount of remuneration in 2010 than in 2009.

JLL’s remuneration committee said the fi rm “recorded the highest level of revenue [$2.9bn] in its history during 2010 and used its strong cashfl ow to

reduce its total net debt and strengthen its investment-grade balance sheet”. Its net profi t was $154m, compared with a net loss of $4m in 2009.

CEO Colin Dyer was the top earner, receiving $6.5m in salary, stock awards and bonuses. Chief operating and fi nancial offi cer Lauralee Martin received $4.1m, Asia-Pacifi c CEO Alastair Hughes $3.75m, LaSalle Investment Management CEO Jeff Jacobson $2.3m, Americas CEO Peter Roberts $3.9m and EMEA CEO Christian Ulbrich $3.2m.

Crest Nicholson debt restructuring to lead to Varde takeover US hedge fund Varde is expected to push through a scheme of arrangement to complete its debt restructuring at housebuilder Crest Nicholson in the next six weeks.

The plan is expected to lead to a full takeover of the

company by July through a debt-for-equity swap, and pave the way for a possible return to the stock market.

Varde, which is being advised by former Hammerson chief executive John Richards, has been buying Crest’s £500m debt since last autumn

and is now working formally with the management on the restructuring after taking control of 80% of the company last month.

Crest was owned by a consortium of 24 banks after a £630m debt-for-equity swap in March 2009, which itself

restructured the £1.2bn takeover of the housebuilder by Sir Tom Hunter and HBOS at the peak of the housing market in 2007.

Varde secured a foothold in Crest last September when it bought the 30% interest of HBOS owner Lloyds Banking

Group. Varde’s takeover is expected to bring debt down to £150m at Crest, which is on target to build nearly 2,000 homes this year.

The company is reported to be trading well, is spite of its complicated ownership structure.

CBRE and JLL executive director compensation in 2010 ($)Director Salary Stock awards Cash bonus Other payments TotalCB RICHARD ELLISBrett White, CEO 809,135 7.5m 3.23m - 11.54mBob Sulentic, president 671,991 - 1.9m 124,396 2.7mGil Borok, CFO 434,615 - 570,000 440 1.0mCalvin Frese, president global services

577,404 - 1.71m 440 2.29m

Michael Lafi tte, president Americas

520,288 - 1.33m 440 1.85m

Mike Strong, president EMEA 472,115 - 1.35m* - 1.82mJONES LANG LASALLEColin Dyer, CEO 750,000 2.32m 3.38m 26,397 6.47mLauralee Martin, COO and CFO 425,000 1.21m 2.45m 25,344 4.11mAlastair Hughes, CEO Asia-Pacifi c

350,000 1.03m 2.11m 253,616 3.75m

Jeff Jacobson, CEO LaSalle Investment Management

350,000 250,000 791,500 902,787 2.29m

Peter Roberts, CEO Americas 350,000 1.13m 2.36m 21,902 3.87mChristian Ulbrich, CEO EMEA 350,000 882,500 1.91m 79,501 3.22m* Mike Strong’s bonus included £320,000 from the UK business profi t share pool.

SOURCES: CB RICHARD ELLIS/JONES LANG LASALLE

NEWS

propertyweek.com

Finance

18 08|04|11

ING UK Real Estate Income Trust to be reborn as Picton 9 Present fund manager Michael Morris to become chief executive of internally managed company

by jamEs whITmoRE

ING UK Real Estate Income Trust ushered in a new era this week with a change of name and management structure.

The company, the third largest of the Guernsey-domiciled property investment companies, is to internalise its investment management function, as Property Week revealed five months ago (12.11.10) and change its name to Picton Property Income next month. The name comes from a General Picton pub, which the company once owned. Picton fought with Wellington at the Battle of Waterloo.

ING Real Estate Investment Management, which has managed the company since it was listed in 2005, will relinquish its role at the end of this year.

Michael Morris (pictured), the present fund manager, will lead the internalisation process and become chief executive of Picton later this month. He will be joined by ING REIM colleague Andrew Dewhirst, who will become finance director.

Morris said his team would comprise around a dozen people, who will move to a new headquarters at 28 Austin Friars in the City of London, which the company owns.

Chairman Nick Thompson said the internalisation would provide “an aligned management team structure focused solely on the company’s interests, a significant cost saving over the short-to-medium term, anticipated to be in the region of £400,000 a year, and the potential to attract a wider group of investors”.

He said the decision to internalise had been taken after ING announced last year its intention to sell ING REIM. CBRE Investors bought ING REIM for $1.2bn in February.

Thompson said the company was considering converting to a REIT in the wake of the government’s plan to scrap the REIT conversion charge, which would have cost Picton around £8m.

The company’s results for 2010, published this week, showed an 8.6% increase in net asset value to 63p a share. At the end of the year it completed the NAV-accretive acquisition of Rugby Estates Investment Trust for a mix of shares and cash. This increased the size of its portfolio to £424m, comprising 70 assets throughout the UK.

Morris said the portfolio focus would

continue to be on maximising income. The dividend of 4p a share paid for 2010 was fully covered and reflects a 7.5% yield.

He is also working on refinancing the £171.6m securitised debt facility, which comprises the bulk of the company’s £222m of debt. The facility, which has a loan-to-value ratio of just 45.5%, matures in January 2013.

Legal & General Property has secured a further £100m of equity for its UK Property Income Fund.

The equity has come from institutional investors in France, Finland, Switzerland and Japan, and increases the fund’s net asset value to more than £250m and gross asset value to above £400m.

“Raising equity for real estate funds remains challenging,” said Bill Hughes, head of L&G Property. “We are aware of many funds that have failed to achieve a close, and others that haven’t grown since modest first closes.

“We plan to bring several active conversations to a head in the next few months, prior to a final close in September.”

The fund seeks to generate returns of 15% geared and 10% ungeared, focusing on acquiring larger properties, which offer opportunities to add value. The fund aims to

provide two-thirds of the target return through quarterly income distribution.

The fund has an innovative debt structure, which enables both geared and ungeared investments, providing investors with the flexibility to select their optimal level of leverage. Debt has been provided by Eurohypo.

New commitments have been evenly split between those with debt and those without. L&G said this endorsed the fund’s structure as being attractive to a wider group of investors than a fund running a single debt strategy.

The fund has already spent £213m on assets such as Fremlin Walk Shopping Centre in Maidstone, Guildford Business Park and a distribution centre at Andover, prelet to Co-op.

Cushman & Wakefield Corporate Finance acted as placement agent.

L&G’s £100m fund fillipBahraini investment firm Arcapita Bank has sold its majority stake in 72 European self-storage facilities for €412m.

Arcapita has sold the 80% stake to Brussels- based storage company Shurgard Europe, which owns the remaining 20% of the portfolio.

Arcapita and Shurgard formed their first joint

venture to develop self-storage in 2003, and since then have built a portfolio of 72 self-storage facilities, totalling almost 4m sq ft across seven European countries.

“The investments have benefited from their geographic diversity and their limited exposure to the slower performers among the European economies,”

said Atif Abdulmalik, Arcapita’s chief executive.

“The economic downturn presented a number of challenges, but the real estate group has worked closely with our joint venture partner at the portfolio level to protect the interests of our investors.”

Arcapita mainly invests on behalf of wealthy Arabian Gulf clients.

bahraini moves its stake out of storage

NEWS

propertyweek.com

Finance

08|04|11 19

Great Portland is top of the REITs 9 Bell-Mallen’s economic profi t yield rewrites valuation of REITs

BY JAMES WHITMORE

Great Portland Estates was the best-performing listed property company in the last six years, groundbreaking new research reveals.

The central London REIT, headed by Toby Courtauld, performed better than Land Securities in second place, followed by Helical Bar, Hammerson, British Land and, fi nally, Segro, in a detailed examination of the six companies using a new measurement of economic profi t yield (graph, below).

The research, revealed today by Property Week, has been carried out by the Bell-Mallen Partnership, an independent consulting practice formed in 2009 by Roger Bell, former director of strategy at Segro, and Steve Mallen, former global head of research at Knight Frank and director of property research and strategy at Henderson Global Investors.

Last September, their fi rst piece of research revealed that the fi ve largest UK REITs collectively destroyed £24.1bn of shareholder value in the

noughties — a massive fi gure that was far greater than their then combined stock market worth of £17bn.

Between 2000 and 2009, Land Securities, British Land, Hammerson, Segro and Liberty International generated cumulative losses of £6.1bn, £6.4bn, £3.8bn, £3bn and £4.8bn respectively, in terms of economic profi t — a key measure in developing business strategies in other sectors.

Economic profi t is defi ned as NOPAT (net operating profi t after tax), less a charge for all the capital in a business. It is a technique based on the idea, originally proposed by economist Adam Smith, that a company can only acknowledge a “profi t” once all costs have been accounted for.

Now Bell-Mallen has developed the concept of economic profi t a stage further to calculate an economic profi t yield, which is defi ned as the economic profi t per unit of asset (box, left). This allows large companies to be compared with small enterprises.

“This analysis is highly revealing,” said Mallen. “On a like-for-like basis, we

are able to compare the value-creation characteristics of all listed companies and their component portfolios.

“Importantly, we are able to distinguish between the pure eff ects of market cycle and the real impact of management strategy at both a tactical and strategic level.

“Some strategies are inevitably better than others with inter-company comparisons being especially revealing — and challenging for senior management teams.”

Over the 2005-to-2010 period Great Portland had the highest average economic profi t yield at 1.9%, followed by Land Securities (-1.8%), Helical Bar (-2.8%), Hammerson (-4.4%), British Land (-4.7%) and Segro (-6.2%).

In 2010 the rapid improvement in the central London investment market led to a spectacular economic profi t yield of 9.8% for Great Portland — the group average was only 3.3%.

Great Portland also posted the highest total shareholder return in 2010 and Segro languished as a signifi cant underperformer.

You can’t hide from the economic profi t yieldEconomic profi t has much to commend it as a performance metric because it is defi ned as net operating profi t after tax, less a charge for all the capital used by the business.

However, it does not address the actual effi ciency of value creation and destruction within a business, which is clearly a key determinant of corporate success and also share price.

In addition, there is an “apples with apples” problem associated with comparing large portfolios or companies with smaller ones.

To overcome this issue, we have developed the concept of economic profi t yield. This may be defi ned as economic profi t divided by total assets.

It enables us to measure the economic performance of a portfolio or company per unit of asset value, thereby enabling interportfolio comparison and the viable assessment of large companies against smaller ones.

Economic profi t yield also off ers better clarity over how much performance is being driven by exogenous market factors, such as a shift in valuation yields, and how much is attributable to discernable management action.

Economic profi t yield enables us to understand just how eff ective management teams are over and above what the market would have produced anyway.

Steve Mallen (left) is former global head of research at Knight Frank, and Roger Bell is former director of strategy at Segro. They have formed the Bell-Mallen Partnership (www.bellmallen.com)

-40

-35

-30

-25

-20

-15

-10

-5

0

5

10

15

20

25

201020092008200720062005

HAMMERSON

LAND SECURITIES

BRITISH LAND

GREAT PORTLAND

SEGRO HELICAL BAR

AVERAGE

REITs’ economic profi t yield (%)

SOURCE: BELL-MALLEN PARTNERSHIP

NEWS

propertyweek.com20 08|04|11

Recovery

City sources claim quoted agency needs to refi nance. Mike Phillips reports

DTZ’s share price almost halved to 28p last month — exactly the same level it fi nished on 17 December 2008.

That was the day before the company announced plans to raise up to £57m in a rescue capital raising. DTZ needed to restructure its debt with the Royal Bank of Scotland, most of which was taken on to buy Donaldsons at the peak of the market.

In the prospectus for that capital raising, DTZ admitted it was on the brink of collapse and that if it did not raise the money, RBS could put it into administration.

The company is not in the same situation today — its loan covenants are not in breach and it told Property Week last week that it was “comfortable” with its fi nancial structure after a refi nancing in December last year. But City sources insist it is likely DTZ will need to raise new equity to reduce its debt to a more manageable level.

It is worth asking how, after more than two years in which chief executive Paul Idzik has stripped tens of millions of costs out of the business, DTZ fi nds itself — in the eyes of stock market investors — in the same place it was during the week before Christmas 2008.

Debt reckoningThe answer lies in its debt. DTZ had gross debt of just less than £110m at the end of October last year, split across four diff erent facilities, each carrying diff erent interest rates. With £27m of cash, net debt was around £81m.

The company’s EBITDA (earnings before interest, tax, depreciation and amortisation) in the half-year to 31 October was £200,000. Analysts at Collins Stewart predict the company’s EBITDA in the year to 30 April 2011 will be £7m, giving the company a net debt-to-EBITDA ratio of more than 11:1. This metric of debt to EBITDA is seen as a key barometer of whether a services fi rm is overleveraged. A ratio of between 3:1 and 4:1 is regarded as the acceptable average.

In the rights issue prospectus, DTZ outlined revised covenant terms on its loans from RBS, which were restructured using cash raised in the rights issue. By 31 July of this year, the ratio of net debt to 12-month

EBITDA was supposed to be 2.5:1. These debt facilities were restructured again in December, however DTZ declined to disclose the new relaxed covenants.

In a statement to Property Week, DTZ said: “Having refi nanced bank facilities in December last year, on improved terms with greater fl exibility, DTZ is comfortable with its current fi nancing arrangements and will not comment on speculation regarding what the group may or may not do to address the longer-term issue of reducing its net debt.”

Profi t struggleDTZ has found it harder than most listed competitors to return to profi tability as the market recovers. This is in spite of having a strong UK business, and an incredibly strong Asian business — it is the largest commercial agent in the growing powerhouse of China.

Part of the problem lies in the loss-making continental European business, but it also comes down to the amount of cash needed to service interest on the debt, which is costing the company £5m-£7m a year. The RBS facilities are generally in line with commercial terms for services businesses (table, left). However, two £15m mezzanine loans — one of which is fully drawn down — provided by SGP, the French company that owns 55% of DTZ, come at punative interest rates.

Both facilities have a cash interest rate of 4% above the European interbank off ered rate (EURIBOR), and also a payment in kind (PIK) note with a coupon 7% above EURIBOR. This gives a total interest rate well above 11%, with the 7% PIK note rolled up and added on to the principle of the loan.

DTZ could, of course, raise fresh capital to pay back some or all of its debt. This would need the support of SPG, and would likely lead to the other shareholders in the company’s already small free fl oat being further diluted.

A long-term refi nancing would be required if DTZ were to try to pay back its debt using profi ts and cashfl ow. It has to refi nance some of its debt in 2013 and there is little likelihood of profi ts increasing suffi ciently to pay down signifi cant amounts of debt before then.

It could sell businesses, but those with signifi cant value are those it wants to keep.

The company’s results for the year to 30 April, expected in June or July, could be its most important yet. 9

DTZ makes hard work of climbing debt mountain

Key terms of DTZ’s debt facilities

 

Facilities as at 31 October

2010

Amended facilities as at

14 December 2010 INTEREST MARGINTo 31 July 2011 1.75% 1.75%1 August 2011 to 31 July 2012 2.50% 2.00%1 August 2012 to 31 July 2013 3.00% 2.50%1 August 2013 to 31 July 2014 3.50% 3.00%1 August 2014 onwards 3.50% 3.50%

DEBT FACILITIES (£000)Zero coupon tranche 20,000 25,000Term loan: £ tranche 54,744 49,744Term loan: HK$ tranche 12,034 12,034Revolving credit facility 15,000 15,000

REPAYMENT SCHEDULE (£000)    Within one year — —One to two years 12,500 12,500Two to three years 15,000 15,000Three to four years 59,505 59,505Four to fi ve years — —After fi ve years — —

SOURCE: DTZ

DTZ’s fi gures at a glance (£m)2009 2010 2011 2012 2013

Total turnover 364.1 356.0 350.1 375.9 414.1Staff costs -269.4 -240.9 -241.6 -254.8 -273.4Finance expenses -7.7 -5.2 -4.9 -6.1 -6.6Profi t before tax and non-recurring items

-35.1 3.6 -2.1 5.2 16.8

Operating profi ts -33.0 6.5 -0.7 8.3 20.4EBITDA -24.6 14.2 7.0 15.8 27.9

SOURCE: COLLINS STEWART RESEARCH

Broadly speaking: City whispers around DTZ’s Old Broad Street headquarters suggest it needs to raise fresh equity

NEWS

propertyweek.com

Banks|Asset management|Turnaround

08|04|11 21

Since the beginning of the year, property lending conditions — apart from some increases in pricing — appear to have stabilised.

Because lenders now have diff ering ideas about which property assets they want to lend on, this can lead investors to think that the fi nance market is closed.

However, if the same property is taken to the right lender, it will probably be able to provide acceptable terms. Lenders are being quite consistent with their terms, as long as the property asset falls within their lending criteria.

Investors who are considering unlocking equity from an existing property, need funds for a new purchase or have an existing property term loan coming to an end in 2011, should particularly consider the following points:9 Finance is expected to cost less in the early part of 2011 than in the last quarter9 It is important to go to the correct lender for your specifi c property — there is no longer one lender who fi nances all properties. There are fi ve main lenders that are reducing their UK property exposure in 2011 and they are expected to pursue this strategy for the next two to three years. So when looking for fi nance, it makes sense to discount these lenders at the outset9 Interest-only facilities are still available for good-quality assets9 Do not let a property’s lease become too short before refi nancing.

The key fi nancial metrics we are seeing out there are: Loan terms In the year to date, most lenders have off ered loans with a maximum term of fi ve years. This is mainly because of the Basel III banking regulations, which require banks to hold more capital on their balance sheets for longer-term loans. Unless there is a change to these regulations, which seems unlikely, this trend is here to stay.Lending margins Margins increased throughout 2010 and

that trend has continued in to 2011. Standard margins now range from 2.25%-3.25%.Loan-to-value ratios It is unusual for commercial property investment to be able to attract fi nance with more than a 70% loan-to-value (LTV) ratio. To achieve this, lenders will inevitably require the asset to be let on a lease term of more than 15 years.

Break clauses Regardless of the term of the lease, all lenders now assume as a matter of course that, if there is a break clause in a lease, that is when the lease will end. There is no element of optimism in their analysis of these situations.

Base and LIBOR rates There is a consensus among lenders that base rates and LIBOR (London inter-bank off ered rate) will increase this year. Taking an average of the commonly projected increases, the base rate is expected to be at 1% by the end of the year and LIBOR is also expected to follow a similar pattern.Swap rates With base rates projected to reach 3% by the end of 2012, it is anticipated that swap rates will rise throughout 2011.

Here are some examples of recent fi nancings secured in the market:Short-lease properties These were three properties with lease lengths of between three and fi ve years comprising a bank and two retail investments. The loan was £1.5m at a 58% LTV with a margin of 2.45% over a fi ve-year swap rate and a fi ve-year term loan.Financing to enable a new purchase An unencumbered

Co-op supermarket was used as security for a fi ve-year interest-only facility to buy another investment property. The loan was for £1.2m with an initial fi ve-year interest-only period and a 10-year capital and interest repayment term. The margin was 2.5% over a fi ve-year swap rate.Bank and supermarket portfolio A portfolio consisting of two banks and two supermarkets with a combined value of £4m and

with unbroken leases between 10 and 15 years. The loan was for £2.2m with a 55% LTV and the interest margin was 2.25% over LIBOR with a 20-year amortisation profi le.Mixed commercial and residential portfolio A portfolio of fi ve commercial and residential mixed investments with local covenant commercial tenants. The portfolio was valued at £1.5m. The loan was for £1m with an interest margin of 3% and a 20-year capital and interest loan.Hotel/fast-food outlet development Finance to build a hotel and fast-food outlet using two existing investment properties (a Tesco and a Wickes store) as security. There was a £4m loan with an interest margin of 2.75% over the Bank of England base rate.Enterprise Inn pub purchase Finance for an Enterprise Inn pub, the loan was 55% LTV at a margin of 3.3% over base rate with a seven-year term and a 15-year amortisation profi le.

Stuart Buchanan is head of fi nance at auctioneer Acuitus

RECOVERY POSITION Stuart Buchanan

Six refi nancings that prove there is life in lending

Branch lines: banks are open for business on specifi c assets

propertyweek.com

ANALYSISRadical rethink needed by retail property chiefs

What’s new @

LEADER Giles Barrie, editor-in-chief

Tuesday night’s Property Awards were buzzing. There were 1,320 people in the Grosvenor House Great Room, some superb winners and a brilliant performance from Michael McIntyre, Britain’s biggest comedy star.

But for the guests that operate nationally there was an underlying cause for concern: retail.

Anecdotal evidence suggested all retailers, from John Lewis to House of Fraser, Marks & Spencer to Next and Sainsbury’s to Tesco, had a very tough February and March indeed.

Marks & Spencer’s fi rst-quarter trading statement on Wednesday lifted the gloom a little, but with like-for-like UK sales up just 0.1% and food gains off set by falls in general merchandise, it was hardly a roaring success.

In 2010, landlords need to make retaining tenants their number one goal.

We argued here that landlords should not back JJB Sports’ company voluntary arrangement (Property Week, 15.02.11). We still stand by that because we believe that its business model is

fundamentally unsound.But now that even the best brands in retail are

struggling, landlords need to do all they can to ensure these retailers do not close their stores. Reletting a unit is far more expensive than conceding ground to

a retailer in the short term, and the decay caused by allowing vacancies to spread throughout a high

street or shopping centre is too awful for any landlord to bear.

In the longer term, though, there needs to be a more considered debate. After an upheaval the size of the credit crunch of 2008 and recession of 2009,

conditions never return to the same as before.In property, there are new faces: from David Atkins

at the helm of Hammerson to Charles Maudsley in charge of retail at British Land to other new bosses at institutions such as Hermes, LaSalle and Standard Life.

Although many diehard property directors at big retailers are still battling for their rights, there are also new chief execs at John Lewis and Marks & Spencer and at supermarket giants Tesco and Morrisons.

Turnover a new leafOn all sides, this allows for the sacrifi ces that should be made, because our retail leasing system is utterly clapped out. Retailers should give up the security of tenure enshrined in the Landlord and Tenant Act 1954. It is wrong for failing retailers to be allowed to cling on. If there is a danger they will be booted out, they will work harder to drive footfall.

In return, landlords should consider scrapping rent reviews and look towards a continental model that is turnover based or index linked.

Of course there needs to be a base rent to fund development, but reviews are a costly system that looks badly out of date.

There is also a strong argument, in an era when energy is such a huge contributory cost, for service charges to be capped or index linked.

We do not condone fundamental reform of the British retail leasing system on a retrospective basis.

But one of our REITs could do a great service to retail property by using the leasing programme for its next shopping centre development as a test bed for the radical model outlined above.

08|04|11 27

An update on the status KuoThe events in Libya and Japan have dominated the news during the last month, and the economic impacts of both will no doubt reverberate around the world. Find out how in the latest podcast with fi nancial expert Dr David Kuo of investment blog the Motley Fool. It is available free from propertyweek.com/podcast and iTunes.

A toast in aid of ShelterTime is running out to enter Property Week’s David Doyle’s marathon pub quiz this Tuesday. Henderson Global Investors’ head of property James Darkins is taking the role of quiz master. There is also an auction and a raffl e for two Club Wembley tickets to England vs Switzerland. The pub quiz is being held at the Stamford Arms near Waterloo in aid of Shelter. Tickets are £5, or £25 for a team of six. Email David at david.doyle@propertyweek.com

ANALYSIS

propertyweek.com28 08|04|11

Opinion

There can be little doubt that Broadgate remains, in architectural and planning terms, the most signifi cant and successful commercial development in London of

the post-war period. The provision of generous public space and artwork,

alongside commercial buildings, brought an entirely new template to London. It was infl uential in its speed of construction, as well as in its design and use of lavish materials. It exudes confi dence and panache and continues to challenge categorisation: part post-modern and part high-tech. We are still digesting these legacies, and of course it also integrates a fantastic restoration of Liverpool Street station. Above all it works, delightfully. Walk through at practically any time of day and you will see people enjoying the sense of light and space, sitting and relaxing, as well as generating an almost un-British energy and dynamism.

It is not just the individual buildings, but Broadgate as a whole that is signifi cant. To that end, the Twentieth Century Society has requested that the City of London designate the whole development as a conservation area and asked the secretary of state to list numbers 1 and 4 Broadgate, both of which were designed by Arup Associates and completed in 1991.

Broadgate appealThat date is important, as none of the development is yet 30

years old, so no part of it can be listed unless it is judged to be both of outstanding quality — grade I or II*

standard — and under threat. Numbers 1 and 4 Broadgate are the only two

buildings proposed for demolition, and hence the only individual ones to meet the criteria. Other

parties have now put the whole development in for grade-II* listing, arguing that it should be considered

as a single construction of which a signifi cant part is at risk — this seems a reasonable argument in the circumstances.

Although the Twentieth Century Society considers the Arup phases of the development to

be the most coherent and successful parts of Broadgate architecturally, and particularly admires the way that they are clustered primarily around the award-winning Broadgate Arena, there are other key individual buildings. Perhaps most notable amongst these are Exchange House and Bishopsgate. Both were designed by SOM and have been extensively written about and praised.

While the boldly expressed truss of Exchange House exploits the extensive air rights over the train tracks , and the chunkily oversized detailing of Bishopsgate are easy to dismiss as brash, both buildings reward a fresh visit. Returning with a critical eye

to Broadgate, I was impressed — the buildings are more subtle and responsive to the site and brief than is initially apparent.

We have had many cases where a building’s original architect has approached us and asked us to put its work forward for listing, but as far as we are aware Broadgate is fi rst time that the developer is calling for preservation. But Sir Stuart

Lipton is, however, right to regard Broadgate as a substantial achievement, and one that deserves to survive and bring pleasure to future generations.

We know that the City, mindful of its desire to continue to provide potential sites within its tiny boundaries for development and expansion, was never likely to be bold enough to say “yes” to a Broadgate conservation area. It is technically possible for English Heritage to designate one regardless, or for the secretary of state to list either all or part of the development.

We have had trouble getting recognition for many buildings perceived as troublesome monuments to the welfare state, but they belong to a diff erent world to this bit of enlightened capitalist bombast.

Of course, many of the former have suff ered from skimpy original budgets and lack of maintenance and upkeep, while Broadgate was generously funded from the fi rst and is unaltered — give or take the odd extra sandwich bar — and meticulously cared for. Where’s the controversy?

Catherine Croft is director of the Twentieth Century Society

CITY VIEW Catherine Croft

Brilliant Broadgate deserves listed status, not a death sentence

Out with the old: the celebrated 1 Broadgate (left) would be demolished to make way for British Land’s 700,000 sq ft HQ for UBS

ANALYSIS

propertyweek.com 08|04|11 29

Opinion

LAbour LeAder David Taylor

Come back, Hezza and Prezza — all is forgiven

Five most read @

Week ending 03.04.11

1 GL Hearn “takes steps” after surveyor’s four-letter email exchange 2 Settlement in controversial rights of light case 3 Officers Club administration prompts Blue Inc buy  4 Wheeler and Brixton end employment row5 Oddbins applies to go into administration ahead of CVA vote

As an avid reader of my good friend Steve Norris’s columns during Labour’s years in power, I look forward to returning the compliment. Steven, what a mess!

As a longstanding Labour man, you might expect me to say that. However, as I survey the wreckage of our planning system and regeneration delivery vehicles, my plea in mitigation of a balanced view is that I must be one of the few people who have reported directly to both Hezza and Prezza on these issues.

One of the interesting ironies over the last few decades is that the two men were poles apart politically but had many similarities. Both had vision, a set of clear strategic objectives and the drive to implement them — all qualities sadly absent from the present political scenario.

Heseltine set out to pioneer new ways to channel private sector investment into our inner city areas. He also pioneered the concept of local authorities working directly with the private sector to achieve common objectives via City Challenge, one of the best post-war regeneration initiatives.

Prescott’s vision was of powerful English regions, each with their own development agency. His objective was the delivery of economic development at a regional level. He also pioneered numerous private finance initiatives, and was one of the few ministers to challenge the stifling orthodoxy of the Treasury — and win. It was Prescott who single-handedly delivered the funding for the Channel Tunnel Rail Link.

Good concepts, bad policiesIncoming governments only have the briefest of periods to set out their vision and key policy objectives. The arrival of the coalition heralded the new agenda of the “big society” and localism. Neither of these concepts is necessarily a bad thing.

The problem is that the dislocated policies being set out to deliver them create a series of fundamental tensions

that I would argue are almost universally negative for the development and construction sector. If we consider localism in terms of the revisions Eric Pickles is steamrolling over our planning system, it seems almost impossible to envisage the construction of a new airport, power station, motorway or railway, and bidding for the Olympics — just forget it.

Under the guise of returning power to a local level,

nimbyism is bound to be the prevailing influence for many years to come. One example is the ongoing consultation on High Speed 2. To date, the consultation has identified only three local authority supporters: the Greater London Authority, Birmingham City Council and Manchester City Council. Almost every local authority has objected to the proposed route.

And so we awaited George Osborne’s Budget to see what the bright new breed of Cameron/Clegg politicians would bring forward in terms of innovative new policies. What did we get? Enterprise zones. The best that can be said about enterprise zones is that, along with the billions spent on Jubilee Line and the Docklands Light Railway, enterprise zone status may have played a small part in Canary Wharf’s huge success.

However, a report by independent authority Work Foundation pointed out that nationally 86% of companies in enterprise zones came from within the same county. So much for the growth agenda. The same report noted that, of the first group of enterprise zones approved, only 13,000 of the 63,000 jobs created could be categorised as new.

To complicate matters further, the chancellor’s commitment of just £100m to cover the first 10 of these new zones seems very modest compared with its earlier iteration.

As local economic partnerships struggle to get o£ the ground, it should be noted that imaginative and ambitious local programmes — or localism — will need to be funded by a fraction of the financial resources that were previously available.

I acknowledge that cuts were inevitable, given the banking bailout and the plight of our public finances. The point is the rate at which these cuts need to be made. And if there are less resources, how can we best target that expenditure to promote economic growth and sustain employment?

What we need is a Prezza or a Hezza. What we got was Pickles, an old-style, right-wing Tory, who is showing so far that cold ideology will have deadly consequences for our sector, our economy and our disadvantaged communities.

As the cuts bite, social unrest will be on the horizon. In these difficult times we need a visionary, not a bruiser.

David Taylor is a developer, a board member of the Olympic Delivery Authority, a former adviser to John Prescott and supported Ed Miliband’s leadership campaign

This week’s poll: what do you think about the GL Hearn “hot ex” email saga? 9 Silly boys — for getting caught 9 Disgracefully sexist behaviour 9 Don’t know what all the fuss is about

phot

ogra

ph:b

rian

for

bes

Last week’s poll: what do you think of the High Speed 2 Rail plan?Brilliant new way to link north and south 34.4%

oR £17bn waste of money that could be spent elsewhere 65.6%

Vote now at propertyweek.com

ANALYSIS

propertyweek.com

ND THE GLORY

08|04|11 31

Development

As the sun set last Monday evening, Gerald Ronson stood with his wife, Dame Gail Ronson, on the deserted 41st fl oor of the

newly completed Heron Tower on Bishopsgate in the City of London, sharing a glass of champagne.

From here, London looks like a scale model. Buildings that are imposing from ground level, such as Minerva’s St Botolph’s or Citypoint, are dwarfed.

“Gail got quite emotional, because she hadn’t seen it fi nished before,” Ronson says. “Me, I just see things that still aren’t quite right.”

His legendary attention to detail coming to the fore, Ronson says there is a 10,560-point list that needs to be actioned before the building offi cially opens in September.

“I defy anyone to come around in three months’ time and fi nd a single one that still isn’t done.”

Property Week was on Monday granted an exclusive preview tour around the 440,000 sq ft, 46-storey tower. The fi rst occupier, US law fi rm McDermott Will & Emery, moved in last week.

After more than 13 years in conception and a delivery period that spanned events that stopped many a fearful tower developer — 9/11 and the global credit crunch (timeline, overleaf) — the opening of the Heron Tower is a landmark event for Ronson, Heron International and London itself.

The tower began its life when Heron bought a portfolio from Degi, which included Kempson House and Bishops House, where the tower now stands, and Stone House next door, which will be demolished next year to make way for the Heron Plaza and a 42-storey Four Seasons hotel and serviced apartment tower.

Development of the Kohn Pederson Fox-designed tower commenced in October 2007. Only one other offi ce building of similar scale, Hines’ Cannon Place, is due for completion this year, so Heron has the leasing market to itself.

“On the basis that it’s fully let in three to four years’ time, the building will have been almost 20 years in conception,” Ronson says. “To be a developer, you have to have vision. Yes, there have been some diffi cult periods for the market during that time. But when you’re in the game, and the ball is rolling, you can’t stop halfway through.

“If you believe in the product, and you believe in London, you go on. This is a business for men.”

It is clear that Ronson believes in the product. Despite that action list, the specifi cation of the building is phenomenal (box, overleaf). The lobby’s 12 metre long, 70,000 litre aquarium, soon to be fi lled with 1,200 fi sh, is a spectacular sight on entrance. An innovative computerised »

ANALYSIS

propertyweek.com

Development

32 08|04|11

“double-decker” lift system means workers will never have to wait longer than 25 seconds for a lift. As Ronson lovingly shows off the marble in the bathrooms, he says: “That’s what you get in a real building. But you have to pay real rents.”

“There’s no other building in London that is fi nished to this quality, and probably not the world,” Ronson says, a view echoed by Max Sinclair, head of the London offi ce at Eurohypo, one of the banks that provided a £370m loan to fund the £500m development costs alongside Heron and Saudi Arabian and Omani equity partners.

“When we funded the project in 2007, the world was a diff erent place, but everyone involved has maintained their commitment to delivering an incredibly high-quality building,” says Sinclair.

Fusion foodOn the 38th to 40th fl oors, US restaurant group Sushisamba will operate two restaurants, which includes its off shoot Sugarcane concept, and a bar, which will have outside terraces for the summer and be shut for just three hours a day.

Jogging upstairs from the 40th to 41st fl oors, Ronson proudly displays what must be the money shot on the tour for occupiers — stunning views of London in almost every direction. A triumvirate of sporting landmarks is visible: Wembley to the north-west, the Emirates stadium to the north and the new Olympic stadium to the east.

The fact that the building’s core is built at the south-east corner allows the fl oorplate to be almost entirely open.

“The chief executive can stand anywhere and see the whole of the fl oor, and you can see the view in every direction from anywhere on the fl oor,” says Heron’s managing director of property Peter Ferrari. “Everything looks tiny from up here,” Ronson adds.

The tower is designed to provide “villages” of 36,000 sq ft or 72,000 sq ft whereby occupiers can take three or six fl oors connected by a central atrium. This allows them to have what Ferrari describes as “a building within a building”. McDermott Will & Emery occupies two fl oors in such a village, and has already decided to take an option to expand into a third.

“You can have your own sign on the door, and for our type of tenant it gives you an identity and profi le that they wouldn’t otherwise have,” says Ferrari.

Looking down from the upper fl oor of one of these villages, if an occupier needed to just take one or two fl oors, would other tenants not be able to see down into their offi ces?

August 1998 Heron completes £430m portfolio purchase from Degi, including buildings that form site

May 2000 Plans unveiled for Heron Tower, then 37 storeys high

November 2001 Heron defeats English Heritage opposition to tower

Floor show: the tower provides “villages” of 36,000 sq ft or 72,000 sq ft (above) and the lobby boasts a huge fi sh tank (below) as well as a concierge

«

HERON TOWER: CONCEPTION TO COM

ANALYSIS

propertyweek.com

July 2002 John Prescott gives plans fi nal approval

June 2003 Plan to build Heron Plaza revealed

September 2005 Heron seeks permission for larger tower

November 2006 Equity funding from Omani and Saudia Arabian investors secured

March 2007Eurohypo and Landesbank Hessen-Thüringen agree to provide £370m debt package

October 2007Construction begins

July 2009 Heron agrees deal with Four Seasons for Heron Plaza

July 2010 First tenant McDermott Will & Emery

March 2011 Tower completed and McDermott Will & Emery moves in

Development

08|04|11 33

“The glass has a special fi lm on it,” Ferrari says. “If you are looking directly out, you can see through the glass perfectly, but if you are looking down from an angle, it is opaque.”

As well as the high quality of the bricks and mortar, Heron has worked overtime on the level of service it can provide to occupiers. The building’s 12,000 sq ft fl oorplates were always intended to be multi-let on opening, rather than let to one large occupier or large chunks of space to a few tenants. Heron aims to provide a service for businesses that is equivalent to that of a hotel. The bowler-hatted doorman that greets you is just the beginning.

“Service is everything,” Ronson says. “We’ve got a concierge service, so if you want to order a pizza at 2 am or get your dry cleaning done, you can. There are bilingual staff in the reception. If you’re a businessman you demand that sort of service.

“The world has moved on in terms of leases. You don’t get a 25-year lease with regular fi ve-year uplifts anymore, so you have to off er better service. We won’t do fi ve-minute leases — if you want that, you can go to Landmark [the serviced offi ce occupier that has taken 36,000 sq ft at the building]. But we have to be fl exible and provide the best service.

“If you look at the Seagram building in New York, that’s multi-let and it has been an iconic building for more than 50 years. It’s always been almost fully let and the rents have always been more than 15% higher than the average for the area. That’s what we think we can do here. Multi-let buildings allow people to expand as their businesses grow.”

On opening, Heron Tower will be 20% let. Its off ering seems to appeal to prospective tenants. As mentioned, McDermott is expanding, and Ronson says there is more than one viewing a day for the foreseeable future at the tower.

Rental highThe timing and quality of the building have helped achieved strong rental levels. Ronson is coy, but says Landmark’s rent on the 17th to 19th fl oors “began with a six” and £55/sq ft has been achieved on other fl oors. Heron is not quoting rents for the upper fl oors, for which a Russian bank is understood to be close to making an off er.

“The location is important, of course,” Ronson says. “This is the best location in the City. The City has moved east over the past 20 years, towards Liverpool Street and Broadgate. We’re the fi rst tower to go up in the cluster after the Gherkin. As soon as the idea of a cluster was discussed [by City of London head of planning

Peter Rees], we knew we should put a tower here.” The next phase for Ronson’s vision is the Heron

Plaza, which has been designed by PLP Architecture and won planning consent last year. Heron will begin to plan fi nance for the scheme later this year, and begin development next year.

When fully let, the £500m tower should be worth £600m-£700m, Ronson says.

“Property is a long-term business, and you have to put your own money at risk to make the returns. Some people turned up thinking you could make 15% returns easily, but it’s not fee driven.”

Is this Ronson’s proudest moment? “I’ve built 156 buildings across the world, and this

has to be the best, but it’s a bit of an anticlimax to be honest,” he says, pointing out a single screw missing from a stainless steel plate in the atrium. “I’ll only really feel 100% satisfaction when it’s completely fi nished, and only then when it’s fully let.” 9

Location, location: Heron Tower is part of the prime City “cluster” and will be worth up to £700m when fully let to a multitude of occupiers

HERON TOWER TAKES FLIGHT9 4,000 people will work in the building when it is fully let9 1,000 people will fi ll its restaurants and bars at full capacity9 There are 3,000 sq m of photo-voltaic cells on the southern facade9 It is 230 metres high, just short of 1 Canada Square (246 metres) but taller than 30 St Mary Axe (195 metres)9 There are 70,000 litres of water and 1,200 fi sh in the aquarium

PLETION

propertyweek.com

ANALYSIS

BriefingDetail|Data|Policy|Events

Sir Frank Lampl, life-president of Bovis Lend Lease, who died on 23 March, survived the concentration camps of Auschwitz and

Dachau, and slave labour in the BMW Munich factory, to rise to become a top UK contractor.

Sir Frank, who was 85, did not abandon his native Czechoslovakia for the UK until the age of 42. In 1953, the Communists cancelled his prison sentence, served for being a “bourgeois undesirable” on the condition that he went into construction. Ten years later, he was managing director of Pozemni Stavby Zavod Opava.

But when the Prague Spring withered in 1968 and the Russians invaded, Lampl defected to England, joining his son at Oxford University.

He found work at Bovis in 1971, and four years later initiated its expansion into the Middle East.

He joined the main board of the parent company, P&O, as chairman of Bovis Construction in 1985.

Thus began a period when Sir Frank’s Bovis won tenders for many of the world’s great regeneration projects, among them Canary Wharf, Broadgate, Disneyland Paris, the Atlanta Olympics and the Petronas Towers in Kuala Lumpur.

Sir Stuart Lipton, former chairman of Stanhope and now with Chelsfi eld Partners, enjoyed a 25-year friendship with Lampl.

“If you had a problem, he would always off er a quiet chat. You would visit him at 127 Sloane Street, where you would have a charming interlude. He would talk about what he was doing at the time, and then get back to business very

rapidly. And he would always have a big smile.“Whatever the problem was he said he would

solve it. And he did.”Lipton considers that Lampl hid his early horrors.“You gradually got to know that there was

something behind that accent,” he says. “He had been through incredibly tough times, but he would never mention a word. He was very reserved in terms of his past experience. He was well regarded as a builder, as a person and as an engineer.”

Paul Lewis, director of projects at Stanhope, recalls that Lampl was still much in command after he had sold Bovis to the Australian Lend Lease in 1999, and became life-president.

Lewis and Sir Frank worked together on the successful private fi nance initiative bid to refurbish the Treasury, and to create accommodation within Revenue and Customs.

“He always understood the key points in any problem,” says Lewis. “And his people skills were inspiring. He was a complete gentleman. He had a razor-sharp mind. When you debated projects with him at an early stage, there was a lot of discussion that would begin with the words ‘what if?’"

Survivor: Lampl’s “razor-sharp mind” belied “tough times”

OBITUARY Sir Frank Lampl9 Lipton praises life-president of Bovis Lend Lease who survived concentration camps before defecting to UK

08|04|11 35

George Walker, who died on 22 March, aged 81, won 11 of his 14 professional light heavyweight fi ghts.

In property terms, he was a heavyweight loser.Walker dominated the property world of the

1970s and 1980s, having made millions from buying and selling Brent Cross shopping centre in north-west London, Brighton Marina and the Trocadero, the entertainment complex in Piccadilly Circus.

Heavy borrowing led to criminal charges of theft and false accounting in the 1980s, although Walker was acquitted.

He bought Hendon Greyhound Stadium in 1974, and joined Hammerson in developing Brent Cross, north London’s fi rst covered shopping centre in 1976. He sold his share for a £3.7m profi t in 1979.

This fi rst property success gave his company its name, Brent Walker.

In Brighton in 1985, he pioneered a mixed-use development after buying Brighton Marina with a cinema, an Asda, shops and fl ats. But Brightonians said Asda, which still trades, blocked the sea view,

and an attempt to create a factory outlet had limited appeal. Yet Walker called it “an English Venice”.

The development helped to create £1.4bn of debt, and was sold by liquidators to local company Brunswick Developments in 1996.

However, Walker was one of the few developers to make money out of the Trocadero, which he bought in 1987 from the Electricity Supply Nominees for £90m. The tenant was the waxworks of the Guinness World of Records. Walker sold the

Trocadero to a joint venture between Brent Walker and an Irish dentist, Robin Power, three months later for £105m.

Martin Clews, chairman of the Shopping Park Investors’ Forum, observed Walker’s idiosyncratic style, during the heady days of the acquisition of the Trocadero.

Clews, then a management surveyor at Weatherall Green & Smith, recalls: “George would appear at all hours during the night. On the night we exchanged contracts, it was four o’clock in the morning.

“George and I had been tying up stuff , and I said: ‘I’m glad we’ve done that. I look forward to managing the property.’

“He replied: ‘I’ve got some bad news. We’re keeping [incumbent property manager] Debenham Tewson.’

“I said: ‘George, give me another chance. I’ll see you tomorrow morning. We’re both emotionally drained.’

“I went round on the following morning and he had changed his mind.”

Troc shock: George Walker (centre) sold Trocadero to Power (left) for £105m

OBITUARY George Walker9 Former professional boxer enjoyed highs and lows with Brent Cross, Trocadero and Brighton Marina

ANALYSIS

propertyweek.com36 08|04|11

The data hub @

There are hundreds of reports available FREE TO SUBSCRIBERS — go to propertyweek.com/data to search and download. New this week:

The reason for the lack of new centres opening in 2012 is clearlythe recession. The construction period for new shopping centresis usually two to three years and the recession of late 2008 / 2009effectively prevented the implementation of any new centres.Trinity Leeds, which is being developed by Land Securities,is standing proudly on its own for 2013 with a developmentwhich will in total deliver 1 million sq ft of new and reconfigured

floorspace in the centre of Leeds. This is a major regenerationof an existing retail area to provide the size and configurationof shops that retailers need in today’s market, which includeslarger stores and catering.

We are beginning to see greater activity from owners ofestablished centres looking to expand or extend. This typeof development is less risky and the financial requirementsless onerous. We believe that centre extensions could wellform the first phase of development recovery during thenext few years.

Currently some 50 million sq ft of planned shopping centres iseffectively on hold, awaiting improvements in the economy andretail property market in order to achieve development viability.

shopping centre development pipeline 2011

2

2012 and beyond

The answer is yes. Despite the increase in VAT in Januarycombined with the Government’s austerity measures to reducepublic expenditure, retailers still want space in the primarytowns and cities. Despite the growth of the internet, retailingis a leisure pursuit and consumers want the physical presence

of merchandise and stores to fulfil their shopping needs. Lackof new development, together with relatively high occupancyin the existing primary centres means that retailers will find itdifficult to secure the quality of space they need in existingshopping centres.

Given retailers need to grow their businesses they will beforced to look at alternative options. This may include a switchto space on retail warehouse parks, or for the more establishedretail brands to expand internationally and of course to looktowards online retailing as a growth opportunity. This willbenefit the retailers however, it will not improve the vitalityof our town centres.

Retail demand is particularly acute for the major departmentstore retailers and the national multiples brands that needlarger format stores to optimise their retail operations. Cateringdemand has also remained buoyant, with the public continuingto see eating out as an affordable luxury they are not preparedto relinquish.

The UK is also experiencing demand from the internationalretailers, looking to expand into new markets. Such retailersinclude well known brands from the USA as Apple andHollister, as well as more unusual names like Clas Ohlsonfrom Denmark and Uniqlo from Japan.

All these retailers are looking for more shops which ultimatelywill employ more people that will help the national and localeconomies grow. Restricting the development pipeline willseriously curtail these objectives with investment potentiallybeing deflected to other countries.

Do retailers want more space?

Without new prime retail space coming on stream retailerswill not be able to grow their businesses as new floorspaceis still the primary mechanism for retailers to achieve volumegrowth and profit. The department and anchor stores, which

need larger stores formats to optimise their verystringent expansion criteria, will be virtually curtailed asthe ability to create these large spaces is not availablewithin existing shopping centres.

What are the consequences for retailers?

INTELLIGENCE Cushman & Wakefi eld yields

Prime yields unchanged in March

Prime yields were unchanged in March at 5.68%, which was 199 basis points higher than

10-year government bonds.Cushman & Wakefi eld’s latest

monthly update on the UK property investment market shows that prime yields in all 25 subsectors measured by the fi rm remained the same (table).

“The market has ended the fi rst quarter pretty much steady as she goes,” said Cushman’s head of European research David Hutchings. “Demand is generally good and yields were unchanged in March, at least for prime space, but it remains very much an equity-led market.

“Activity has been somewhat less than hoped in parts of the market, but this is still largely down to a shortage of good-quality supply and a cautious attitude towards secondary — particularly for retail, where distress is again evident from some occupiers.

“We can also blame the late and long Easter break for delaying some stock being put on the market and we expect an increase in activity in May and June.”

Markets have stabilised at yield levels last seen in the fi rst half of 2008. Interestingly, however, some sectors remain a long way from the highs they experienced before the onset of the credit crunch in 2007.

Although London offi ce yields are just 62 basis points higher and shops are 114 basis points higher than their 2007 lows, national offi ces are at a 200 basis point premium, shopping centres 181 basis points higher and industrials 158 basis points higher.

The last two years have seen a radical change in the opportunities for retail-led development. The stark consequences of the UK banking crisis, combinedwith falling capital values and consumer demand has had a profound effect.

Shopping centre development pipeline

Add to this the reluctance of banks to provide loan facilities to

commercial property, and in particular development, and we

have the recipe for stagnation. The recessionary environment

has continued to have a dramatic impact on the UK’s shopping

centre development pipeline. In 2010 the total additional retail

space built was 2.2 million sq ft; the lowest proportion of new

space for some 18 years.

In 2011 the total new space will be 2.7 million sq ft, which

can give the impression of an improvement in supply. This is

an anomaly as it is skewed by the 1.9 million sq ft Westfield

Stratford City opening in September, where construction

commenced before the recession. The only other developments

are Parkway Newbury of nearly 300,000 sq ft and Trinity Walk,

Wakefield of 500,000 sq ft, which was started by Modus but

construction stopped due to the company going into receivership.

Construction recommenced following the purchase by Sovereign

Land / Area in a joint venture with the builder Sheppards and is

now scheduled for completion in April 2011.

Chart 1: Shopping centre new floorspace, 2008 - 2013

0

2,000,000

3,000,000

1,000,000

10,000,000

9,000,000

Sq ft

7,000,000

6,000,000

5,000,000

8,000,000

2008 2009 2010 2011 2012 2013

4,000,000

Parkway and Trinity Walk Westfield Stratford City

shopping centre development pipeline 2011 1

This chart highlights the current and future position. In 2008

we saw some 8 million sq ft of new retail space come onto

the market; in 2012 there is effectively nothing. The future

from 2012 onwards therefore is very bleak.

The most optimistic predictions for 2014 show 1 million sq ft open

and trading, and 3.4 million sq ft in 2015. In reality these figures are

optimistic as they rely on a growing UK economy during the next

two years, which at present would appear to be uncertain.

SHOPPINGCENTRE

DEVELOPMENTPIPELINE

2011shopping centre development pipeline

In 2011 the total new space will be 2.7m sq ft, which can give the impression of an improvement in supply. This is an anomaly as it is skewed by the 1.9m sq ft Westfi eld Stratford City opening in SeptemberLunson Mitchenal Shopping Centre Development Pipeline 2011

Current prime yields2007 low 2009 high Dec 2010 Feb 2011 Mar 2011 Change Future trend

Shop units Prime central London 4.00% 5.25% 4.00% 4.00% 4.00% -Prime retail centres 4.00% 6.00% 5.00% 4.75% 4.75%Large metropolitan cities 4.00% 6.75% 5.25% 5.25% 5.25% -Regional centres 4.25% 6.75% 5.25% 5.25% 5.25% -Strong market towns 4.50% 7.25% 5.75% 5.75% 5.75% -Smaller market towns 5.00% 7.50% 6.50% 6.50% 6.50% -Secondary retail 5.25% 8.50% 7.50% 7.50% 7.50% -

Shopping centres Regional dominant 4.50% 7.00% 5.50% 5.50% 5.50% -Subregional 4.75% 7.50% 6.50% 6.50% 6.50% -Major urban centres 5.00% 8.50% 7.00% 7.00% 7.00% -Small urban centres 5.50% 9.50% 8.00% 8.00% 8.00% -

Retail warehouses Shopping parks 3.75% 7.00% 5.00% 5.00% 5.00% -

Open consent parks 3.75% 8.00% 5.25% 5.25% 5.25% -Bulky-goods parks 4.75% 9.25% 6.00% 6.00% 5.85% -Solus units 4.50% 8.75% 6.25% 6.25% 6.25% -Supermarkets 3.75% 6.00% 4.75% 4.75% 4.50% -

Offi ces Prime London West End 3.50% 6.00% 4.00% 4.00% 4.00% -Prime London City 4.25% 6.50% 5.00% 5.00% 5.00% -Thames Valley 4.75% 7.75% 6.25% 6.25% 6.25% -Regional CBD: major cities 4.50% 7.50% 6.00% 6.00% 6.00% -Regional CBD: secondary cities 4.75% 7.75% 6.75% 6.75% 6.75% -Regional out of town 5.25% 9.00% 8.25% 8.25% 8.25% -

Warehouse and industrial space

Distribution warehouses 5.00% 7.75% 6.25% 6.25% 6.25% -

Industrial estates: south-east 4.50% 8.00% 6.00% 6.00% 6.00% -

Industrial estates: regional 5.00% 9.00% 7.00% 7.25% 7.25% -SOURCE:CUSHMAN&WAKEFIELD

ANALYSIS

propertyweek.com

The morning after @

The International Childcare Trust and Property Week have teamed up for the industry’s second Velodrome Cycle Challenge.

The event will take place on Friday 17 June at south London’s Herne Hill Velodrome and proceeds will go towards children’s rights in Asia and Africa. Races include the two-lap sprint; a points race; pursuit; sprint fi nals and a “scratch” race for the best all-rounder.

Last year’s winners came from Edgerley Simpson Howe. CB Richard Ellis and Prupim, Cyril Leonard, Allsop, DTZ, Cushman & Wakefi eld and Colliers International were among the other fi rms that took part.

The cycling runs from 2 pm to 6 pm and prizes will be handed out at the Crown and Greyhound pub in Dulwich Village from 6.30 pm to 8 pm.

Egan property Asset Management, Albemarle Syndicates and Aquilla Insurance sponsor the event.9 To take part, call Holly Davies at International Childcare Trust on 020 7065 0975

38 08|04|11

EVENTS Velodrome Cycle Challenge

Briefi ng

WHEEL GOOD FACTOR

Heavy medal: CB Richard Ellis (left) picked up prizes at last year’s event, where property industry cyclists whizzed around Herne Hill Velodrome (above)

Undie-performing assets Dragons’ Den star Theo Paphitis launched his new lingerie brand, Boux Avenue, in a fl urry of models, acrobats and cocktails last Wednesday.

The entrepreneur treated various members of the property industry to a party in at Sketch in London’s Mayfair to celebrate the opening of the fi rst six Boux Avenue stores — at Capital Shopping Centres’ Traff ord Centre, Lakeside and St David’s shopping centres, as well as at Meadowhall, Buchanan Galleries and Bluewater.

All aboard the Property Network Leigh Natasha Salter of Movers & Shakers has posted its next event: the Henley Festival of Music and Arts. To fi nd out how you can join the networking club on board the paddle steamer Southern Comfort, and relax with a glass of bubbly while listening to Bryn Terfel, visit the events section in the Property Network.

propertyweek.com

MARKETSDeals55-57 Property’s latest deals, powered by David Adams’ Property Archive

Residential50-51 Offi ces-to-residential conversions, increasing returns for the housing sector

Council selects trio with views on BasingstokeShortlist drawn up of three to redevelop 20 acre site into offi ce-led scheme. Christine Eade reports

Basingstoke and Deane Borough Council has shortlisted Kier Property, John Laing and Muse Developments to redevelop Basing View.

The 20 acre site, between Churchill Way East and the railway lines, accommodates predominantly redundant offi ces, stretching eastward from the town centre to the ring road.

The winning partner will be chosen in September. The council has just begun to demolish two 1970s

buildings on the site. The fi rst to be fl attened is City Wall House, where fi rst Sony and then the AA were tenants, before the motorists’ organisation surrendered its lease to the council and relocated to nearby Fanum House. Loddon House awaits a new demolition contractor after the one appointed ceased trading.

The council has committed more than £10m to the development, including demolition costs.

Simon Hope, strategic manager for the council, envisages an “urban business park”, made possible because Basing View is only a kilometre from the town centre.

“We will look to retain the freehold and grant long leases,” he adds. “This will be an offi ce-led, mixed-use development of 1m sq ft — 60% offi ces.”

Basingstoke was a London overspill town in the 1960s, and consequently, more than 50 years ago, the council bought offi ce sites to create jobs for relocated Londoners. Today, the council owns 40% of the borough’s land and the rents from

the buildings on the land account for 15% of its income. Even though tenants have departed, many are still paying rent. Mars Pension Trustees paid the council £1m to surrender its long leases back to the council when its tenants had left.

Andrew Newman, partner in local fi rm Hollis Hockley, explains: “The big issue in Basingstoke is that there are long leases with ground rent, and the landlord is paying that ground rent based on ‘rent receivable’ not ‘rent received’. Even if the building is vacant, the landlord might be paying 17% of ‘rents receivable.’ This is an unacceptable form of tenure in the present economic climate.”

Newman, who is advising Laing, suggests that when Basing View is developed, those that have been granted long leases from the council to enable

them to grant leases to tenants should pay the council 5%-10% of rents they actually receive.

James Brounger, CB Richard Ellis’s south central region managing director, is advising the council and scrutinised 15 initial expressions of interest. He says development will not begin without an offi ce prelet.

Last month Network Rail bought six of the eight acres on the north side of the railway lines, called the Gresley Road Triangle.

The price remains undisclosed, but the council describes the deal as a £10m commitment. Network Rail will develop a training facility on the land and build a bridge over the railway line to the main site.

Richard O’Brien, route director for Wessex, says: “We considered a number of locations and criteria and felt Basingstoke o£ ered the best solution.” 9

08|04|11 41

Hampshire, Dorset + Wiltshire

Public packet: council has committed more than £10m to redevelopment of Basing View, which will not commence without a prelet

Hampshire, Dorset + Wiltshire42-43 Our Enterprise in Gosport, Highcross in Portsmouth, Terrace Hill in Dorset46 British Land and USS, Wereldhave

US

BASIC SALARY

£107,508TOTAL REMUNERATION

£160,770

EUROPE

BASIC SALARY

£120,974TOTAL REMUNERATION

£168,058

AUSTRALIA ANDNEW ZEALAND

BASIC SALARY

£110,606TOTAL REMUNERATION

£146,440

Occupiers48-49 The fi rst-ever CoreNet Global salary survey

MARKETS

propertyweek.com42 08|04|11

Hampshire, Dorset + Wiltshire

Redevelopment of former military hospital in Gosport can now proceed. Christine Eade reports

The Luftwaff e bombed the Royal Hospital Haslar at Gosport only twice, because its water tower was a navigational aid for attacking Portsmouth.

Next week the owners of the former military hospital, which has treated the injured from every war since it opened in 1753, will reveal how it has avoided another confl ict.

Social enterprise consultant Our Enterprise, which paid £4m to the Ministry of Defence in 2009 for the hospital, is expected to issue a statement to say that it is back on track working with its development partner, Harcourt Developments, after a disagreement that nearly led to litigation.

The plan is to convert the 18th-century hospital into a veterans’ village for those wounded in recent confl icts, and to make the development viable by developing new seaside fl ats for sale.

The disagreement arose because Our Enterprise

questioned whether Harcourt had development funding. Harcourt threatened litigation, believing that it was being excluded from the scheme. Harcourt has already contributed £3m to early work.

Pat Doherty, chairman of Dublin-based Harcourt, reveals: “We were going to take them to court, but now they are talking sense. We are 50:50 partners. We prepared the bid document and we are the developers. But once our masterplan was accepted, they tried to push us out.”

Matthew Bell, a social entrepreneur who founded Our Enterprise, says: “We are positive about Harcourt’s involvement. Pat is an experienced developer and I like him. The litigation was a way of asking: ‘Are we serious or are we just playing?’”

Both sides pay tribute to the conciliatory fi gure of Andrew Parker Bowles, former husband of the Duchess of Cornwall and Harcourt non-executive director. Last year, he was appointed chairman of

Warring partners put Haslar hassle behind them

Until the beginning of this year, Lakeside 1000 on North Harbour near Portsmouth had attracted few tenants.

But in January, the Southern Co-Operative led the way for a number of lettings that will take place later this year.

The letting agent for Highcross’s 250,000 sq ft offi ce building, Russell Mogridge, director of Hughes Ellard, predicts that this one building will account for half the offi ce lettings in the Solent corridor.

Southern Co-Operative, having outgrown its offi ces in Fareham, has taken a new 15-year lease on the top fl oor of 16,500 sq ft at Lakeside 1000. The rent is £15/sq ft with an undisclosed rent-free period.

Mogridge reveals: “There is a 60,000 sq ft deal about to complete and a further three totalling 20,000 sq ft.”

It has been a long haul for Highcross, the fund manager, which bought 100 acres

of the North Shore on junction 12 of the M27 in 2005 from IBM, which remained on the park, downsizing and becoming Highcross’s tenant.

Highcross refurbished Lakeside 1000 in 2008, but only this year has this borne fruit.

The Co-Op letting demonstrates that out-of-town offi ces around the M27 are outstripping the Southampton city centre letting market.

In January, solicitor Lamport Bassitt became the second law fi rm to move into McAleer & Rushe’s Charlotte Place in the city centre. Lamport’s senior partner, Sean Kelly, refuses to confi rm that his fi rm is paying only £12.50/sq ft. In 2009 solicitor Berryman Lace Mawer paid £17.50/sq ft to lease the same building.

Research from CB Richard Ellis’s Southampton offi ce reveals that in the second half of last year, six deals in the city centre accounted for 66,500 sq ft. Nearly half was to a serviced offi ce provider in the Ocean Village Innovation Centre. 9

Lakeside letting leads out-of-town offi ces charge

Clear water: letting to Co-Op at Lakeside 1000 near Portsmouth shows that out-of-town parks are outperforming city centre market

Restorative surgery: the hospital’s pathology lab will become care home (left) and the water tower (above) will be used for offi ces

MARKETS

propertyweek.com 08|04|11 43

Hampshire, Dorset + Wiltshire

Forthcoming Farnborough fl icksVue, the cinema operator, is negotiating to become the anchor tenant in the second phase of St Modwen’s redevelopment of Farnborough town centre. Both are now in discussion with Rushmoor Borough Council on reconfi guring plans to accommodate a multiplex. The council is also talking to Thames Valley Housing Association about operating the residential element above the 62,000 sq ft Sainsbury’s that is part of the fi rst phase of the development.

Waitrose parades in ChippenhamWaitrose opens in the Borough Parade, Chippenham (pictured), next Thursday, having taken a 15-year lease from Jeeves Investments, a joint venture between AEW Europe and Mountgrange. Jeeves plans to spend £250,000 on new signs and a glazed canopy above the listed entrance of Borough Parade.

IN BRIEF

Salisbury has sealed its largest-ever offi ce prelet, after a fi rm of solicitors leased the entire 30,000 sq ft redundant magistrates’ court in Exeter Road, near the city centre.

The Romsey Management Company paid £1m two years ago to the Court Service for the 1950s building.

Romsey has applied to Wiltshire Council for a change of use to offi ces and a decision is expected this summer.

Nik Cox, a director of Hughes Ellard, who acted for Romsey, says: “Only a small part of the building is a court , as it is part of a much larger area. It would work quite well as open-plan offi ce space.”

The building has a varied history, having been an offi cers’ mess, a dance hall and the offi ces of the Inland Revenue.

The court relocated to Wilton Road in the city in 2009. 9

Salisbury solicitors wait for court hearing

The Ordnance Survey relocated to Adanac Park, Southampton, this year. Prospective neighbours still await the decision of local planning authorities and the outcome of a planning appeal.

Lidl will submit a planning application this summer for a 484,380 sq ft depot set in 25 acres by the M271, south of Brownhill Way, Nursling. In December, the German discount supermarket exchanged contracts with the landowner, Barker-Mill Estates, a family trust.

Lidl chose the site after the Say No To Lidl Campaign drove it from 32 acres at Wade Park Farm, Ower, on the M27.

The Brownhill Way site straddles the authorities of Test Valley and Southampton. Barker-Mill’s agent, Andrew Archibald, director of Keygrove Chartered Surveyors, says that the Southampton borough, on which 40% of the land stands, is strongly in favour of Lidl’s scheme.

Circle Health, a private hospital chain, will appeal against Test Valley’s February decision that Adanac did not need a hospital. 9

Lidl hopes Adanac plan is not discounted

Dorset dials up largest shed deal for 15 yearsKondor, the distributor of mobile phone accessories, took possession on Monday of its £5m, 59,740 sq ft warehouse on Terrace Hill’s Christchurch Business Park (pictured).

Terrace Hill’s agent, Matthew Poplett, a partner in King Sturge’s Southampton offi ce, says that this is the largest warehouse deal in Dorset for 15 years.

Terrace Hill is developing speculatively the park of 20 warehouses totalling 52,625 sq ft. Six have already been presold at prices that range from £125/sq ft to £135/sq ft.

Terrace Hill director Nigel Wakefi eld says he has received several enquiries from buyers

because there is no other speculative industrial development in the area.

Goadsby is joint agent on the park. 9

Our Enterprise, thus bringing both sides together.“He has been brilliant,” says Bell. “He has been

passionate about what we are trying to achieve.”An anonymous benefactor gave Our Enterprise

the purchase price, and, because he was a friend of Doherty, recommended Harcourt. Its most notable UK historic restoration is the conversion of Belfast’s shipyards into the Titanic Quarter, a mixture of offi ce and educational space.

The MoD accepted Our Enterprise’s off er with the promise of further payments once the development was completed. Our Enterprise bought 807,300 sq ft of mainly listed buildings set

in 240 acres. Harcourt will demolish the 1970s buildings, and when the new fl ats are developed, Haslar could cover 1m sq ft. The MoD’s overage will be based on this increase in space.

Our Enterprise has appointed Re-format to carry out a conservation management plan, while Doherty has appointed his Titanic architect, Bernard Parker, principal of London-based Heber-Percy Parker.

Parker says: “We had to make it viable, while respecting the existing buildings.”

The hospital, built on three sides of a square, will be a young veterans’ home, and fi nanced by

a charity. The early 20th-century pathology laboratory will become a care home.

The water tower will become offi ces, because, as Parker

points out, no one wanted to live below

the listed water tanks. 9

MARKETS

propertyweek.com46 08|04|11

Hampshire, Dorset + Wiltshire

Failed discount scheme to be replaced by shopping park. Christine Eade reports

Whiteley Village, Hampshire’s failed factory outlet, is to be replaced by a shopping centre of 240,000 sq ft of shops and 50,000 sq ft of restaurants, banks and other ancillary uses.

In February, Winchester City Council granted Whiteley’s joint owners, British Land and Universities Superannuation Scheme, planning consent.

Many of the outlet shops on junction 9 of the M27 are still trading. But because factory outlet leases are generally short, USS and British Land will have little trouble or expense in taking back the shops and demolishing the brick facades and gable roofs.

Ben Grose, British Land’s head of retail asset management, says: “A number of high street multiples have expressed an interest. The feedback from retailers is that there is a lack of supply in the pipeline.”

He refuses to comment on the rumours that BHS wants one of the

proposed 60 stores. House of Fraser may also take space for one of the smaller-format stores that it launched in 2007.

Grose refl ects: “Whiteley Village opened in 1999, and as Gunwharf Quays [in Portsmouth] evolved with its additional leisure, Whiteley Village struggled to keep up the pace.”

USS and Swan Hill opened what they claimed was Hampshire’s Bicester Village or Cheshire Oaks in November 1999, even though only 20 of the 50 units were let. A year later, Whitely was eclipsed by the Berkeley Group’s Gunwharf, now owned by Land Securities, which opened with a cinema and a bowling alley in addition to discount designer clothes.

Whiteley’s only other attraction was a 35,000 sq ft Tesco, which will continue trading and be incorporated into the new scheme.

In 2007 British Land bought a half share of Whiteley, including Tesco. Now both will fund redevelopment from their own resources. What they have not decided on yet is a new name for the centre with a troubled past. 9

Whiteley owners’ fresh outlet

Retailers in Poole’s Dolphin Shopping Centre have begun to notice the changes to their environment being carried out by new landlord Wereldhave.

The Netherlands company bought the 530,000 sq ft centre from Grosvenor in December for £85m leading to a 6% yield.

Wereldhave’s fi rst task will be the installation of double-height shop windows to give the 1984-built former Arndale centre the appearance of a modern shopping centre. It will then reconfi gure the escalator system of the two-level mall, and improve the lighting and fl ooring.

Andrew Turton, managing director of

Wereldhave Property Management, says: “Since our purchase of the Dolphin centre, we have highlighted numerous ways in which we can unlock its potential. We aim to vastly improve and modernise the centre, thereby broadening the appeal to attract retailers and to draw upon the untapped wealthy local population.”

The centre has 100 shops, among them Marks & Spencer, Primark, BHS, New Look and Boots.

Wereldhave has reappointed Lunson Mitchenall as letting agent and appointed architect Leslie Jones to devise tenant mix and asset management strategies. 9

Wereldhave’s Dolphin-friendly revamp

Bournemouth borough councillors have always hated that their Waterfront building was called the Imax, especially as no such fi lm has been shown in the centre for six years.

So last month they turned up to make it a public event when a workman removed the sign in preparation for the lowering of the height of the building.

Council leader, Peter Charon, says that chopping the building down to size will improve residents’ sea views.

Next month is the deadline for those with ideas for the future of the truncated building to communicate their thoughts to the council.

By September, the council as freeholder hopes to have granted a lease to the operator who comes up with the best idea for the Waterfront. The fi t-out having been completed, the council hopes that the public will throng back in the summer of 2012 and the word Imax will never be heard in Bournemouth again. 9

Bournemouth gives Imax turkey the chop

Poole attendants: new owners will replace windows, lighting and fl ooring and reconfi gure escalators

MARKETS

propertyweek.com

OccupiersRetailers|Corporates|Industrial|Leisure

48 08|04|11

European executives are best paid, a Corenet Global survey shows. Aditi Shah reports

The average renumeration worldwide for a head of corporate real estate was £136,504 in 2010, a CoreNet Global Compensation survey reveals.

The survey is the fi rst of its kind to be completed specifi cally for corporate real estate teams and included information from 275 companies across the globe.

Europe compensated its property heads best, and paid them an average of £168,058 after bonuses and long-term incentives such as company shares. In terms of sector, technology paid their real estate executives the highest — an average total of £188,615.

The survey interviewed professionals from companies that lease or own property in industries including fi nancial services, technology, retail and manufacturing. Standard Chartered Bank, PepsiCo, and Hilton Worldwide were among the companies surveyed.

The research was carried out by CoreNet Global and FPL Associates. 9

WAGE REVELATIONS

0 25,000 50,000 75,000 100,000 125,000 150,000 175,000 200,000

Business services/consulting

Education/research

Telecommunications

Consumer products/retail

Financial services

Manufacturing/industrial

Technology 127,241

117,933

111,866

111,496

105,796

100,471

98,253

33,345

34,344

46,370

46,632

49,921

44,513

61,374 188,615

162,446

161,787

158,128

152,226

133,816

132,5970

10

20

30

40

50

2010 compared with 2009 (actual)

2011 compared with 2010 (projected)

Incr

ease

No ch

ange

Decr

ease

Did

not r

ecei

ve/d

o no

t ant

icip

ate

rece

ivin

g

Incr

ease

No ch

ange

Decr

ease

Did

not r

ecei

ve/d

o no

t ant

icip

ate

rece

ivin

g … but technology comes top after bonuses (£) Execs bullish for 2011 bonuses (%) Twenty-nine per cent

of professionals received a decrease in their annual bonus compared with 2009.

This number is expected to drop to 10% in 2010, as improved company performance results in higher payouts.

This has also caused 41% of professionals surveyed to expect a higher bonus, although 41% expect the same as last year.

Those in the manufacturing sector earned the highest basic pay by more than £10,000. This is possibly because they moved across from non-property departments, such as fi nance jobs, which command higher fees (box, right). By contrast, those in the property departments of the fi nancial services sector earned £21,000 less than their peers in manufacturing in 2010.

Ninety per cent of participants were eligible to receive a cash bonus, but the performance of corporate real estate departments had little infl uence on determining bonus amounts. Instead, company performance had the largest impact on determining incentives. The technology sector off ers the best remuneration packages at more than £60,000, almost double the bonuses paid in education and research and business services and consulting.

Salary surveys @

Access an interactive version of this article at propertyweek.com/occupiersalarysurvey. You can use it to compare your salary with others in the corporate real estate sector.

Key: 9 Basic wage 9 Bonus

Manufacturing pays the best basic wage … (£)

0 25,000 50,000 75,000 100,000 125,000 150,000 175,000 200,000

Consumer products/retail

Business services/consulting

Financial services

Education/research

Telecommunications

Technology

Manufacturing/industrial 127,241

117,933

111,866

111,496

105,796

100,471

98,253

PHOT

OGRA

PH: G

AGIL

AS

MARKETS

propertyweek.com

Salary survey

08|04|11 49

US

BASIC SALARY

£107,508TOTAL REMUNERATION

£160,770

EUROPE

BASIC SALARY

£120,974TOTAL REMUNERATION

£168,058

AUSTRALIA ANDNEW ZEALAND

BASIC SALARY

£110,606TOTAL REMUNERATION

£146,440

Corporate real estate roles do not always attract the best people in the market. This is changing as companies realise the importance of property, not only as an asset, but as a cost that needs to be minimised.

There is still a shortage of talent when it comes to corporate real estate roles and this will get worse as we come out of the recession. This is because fewer people have got jobs after coming out of university, which means there has not been an infl ux of people into the industry.

Also, when people decide on a career in property they tend to go for a company that is property focused, rather than taking a job as a real estate professional in a retail company.

Martin Meech, group property director,

Travis Perkins

Corporate real estate represents a substantial and crucial operational asset, and an equally substantial fi nancial cost and liability for many businesses.

The scale and profi le of the corporate real estate executive role will become even clearer with the transparency required by the proposed changes to lease accounting rules. Companies need to value real estate roles in relation to the fi nancial importance of their portfolio.

Many in-house real estate functions are now highly slimmed-down, informed client teams, managing extensive outsourced services. These can be complex business models and the real estate role should be measured on that basis.

Martin Laws, partner in corporate real estate,

Drivers Jonas Deloitte

Corporate real estate in manufacturing companies is often run by executives who have come up through the ranks in other disciplines.

Their salary may refl ect their previous discipline, as well as the scope and scale of the portfolio.

In a large fi rm they may have been chief fi nancial offi cer at a medium-sized subsidiary before moving over to head up real estate and facilities. It is reasonable to expect they might earn more than a “lifer” in real estate, who runs a portfolio of offi ces for an insurance company.

Julian Lyons,member of the RICS Corporate Occupier Group

9 What do you think? Send your thoughts to letters@propertyweek.com

When it comes to base salaries and incentives, European professionals are better paid than their peers in the US and Australia. European corporate real estate professionals earn an annual base salary of £121,214 — 9.3% higher than Australians and Kiwis and 12.5% higher than in the US.

However, American professionals receive the highest bonuses, at £53,425 a year, making their total pay higher than their Australian counterparts. Despite an average incentive of only £47,213 a year, Europeans are the best paid in the business.

European wages top the US and Australia

What this says about the property industry …

MARKETS

propertyweek.com

Investment|Regeneration|ManagementResidential

50 08|04|11

Conversion: a recession trendOffi ce-to-residential conversions have been around for as long as property owners have sought to maximise profi ts from their buildings. But in the modern age, the trend took off in the early-1990s recession. In 1992 the late Geoff Marsh, founder of London Residential Research, spotted the opportunity to convert obsolete commercial buildings into housing following a collapse in London offi ce values.

It took a while before Marsh was taken seriously. As he said at the time, the turning point was Regalian’s acquisition of Peninsula Heights on the Albert Embankment. Regalian transformed a 1960s offi ce block into luxury fl ats, which sold for £1m apiece to buyers such as Lord Archer (left). Soon afterwards Manhattan Loft Corporation made its name and bumper profi ts from converting former industrial buildings in Clerkenwell into loft apartments.

By the late 1990s — and the onset of the last housing boom — thousands of homes had been created in central London and “city living” had spread to Manchester and Leeds.

Conversion could ease vacancy rates and feed demand for residential. Doug Morrison reports

Chancellor George Osborne’s Budget plans to make it easier for landlords to convert commercial properties to residential is one initiative where government seems to be in step with the market.

Just as Osborne announced to the Commons last month that the proposal will go to consultation, Mike Hussey’s Almacantar exchanged contracts to buy London’s Centre Point offi ce tower on Tottenham Court Road for £120m.

Almacantar declared plans for intensive asset management of the 33-storey tower, as well as the possibility of converting some of the fl oors to residential. Centre Point is 15% vacant.

The trend for such conversions dates back many years (box, below) and it is likely to remain an option for developers in central London given the continuing strength of the prime residential market — and the fragility of the commercial property market.

Data prepared for Property Week by CB Richard Ellis show up to 815,000 sq ft of vacant offi ces in Belgravia, Knightsbridge, St James’s and north of Oxford Street (table). Residential conversion could generate total profi ts of £160.76m.

CBRE omits grade A offi ces and Mayfair altogether. The blanket fi gures take no account of localised supply and demand. It may not be appropriate to convert some offi ces. Indeed,

CBRE calculates that the vacant stock in St James’s remains more valuable as offi ces than residential.

But overall, the fi gures demonstrate the potential fi nancial gains from conversion. CBRE’s analysis also lends weight to a study published last November by West End agent H2SO, which revealed that between 2001 and 2009 4m sq ft of offi ces under the Westminster planning authority were converted to other uses, mainly residential. H2SO’s report identifi ed a further 1.8m sq ft of applications with Westminster City Council involving proposed conversions.

At the time H2SO partner Paul Smith observed: “While on the face of it this apparent loss of stock might appear to be bad news for the West End offi ce market, it should actually be welcomed as it repositions a whole raft of [period] buildings back

to their appropriate use, brings new life to them and also funnels demand to the offi ce buildings that work best for contemporary occupiers.”

Whether the Budget announcement adds impetus to the existing demand for conversions remains to be seen. Mark Belsham, director at Hargreaves Newberry Gyngell, has advised on numerous conversions. He believes the impact would be greatest in boroughs such as Lambeth, which have favoured employment uses over residential development.

“In the West End, there’s good demand for offi ces and for residential equally, and so market forces will prevail,” says Belsham. “I do see it as very good for the fringe markets where there isn’t such strong demand for offi ces and there’s an oversupply of redundant buildings.” 9A longer version of this article can be read at propertyweek.com/residential

More converts for offi ces to residentialUp to 815,000 sq ft of convertible offi ces in four areas of central London

Belgravia Knightsbridge North of Oxford Street St James’sOffi ces eligible for conversion 95,500 sq ft 33,000 sqft 453,000 sq ft 234,000 sq ftValue as offi ces £73.15m £25.41m £301.8m £358mValue as residential £166.9m

(£159m private) (£7.8m aff ordable)

£57.9m(£55.3m)(£2.7m)

£409.3m(£379.4m)(£29.8m)

£330.5m(£313.6m)(16.9m)

Less conversion costs* £139.1m £48.3m £341m £275mProfi t on conversion £27.8m £9.66m £68.2m £55.1m* including acquisition and construction costs, professional, marketing, sales and fi nance fees

SOURCE: CB RICHARD ELLIS

ARCH

ER P

HOTO

GRAP

H: G

AUTI

ER D

EBLO

NDE

MARKETS

propertyweek.com

Residential

08|04|11 51

Managers: take a stand on your brandResidential property management needs to become more of a branded service and incorporate some of the successful

marketing ideas commonly used in both the US

rental market and student accommodation sector.

That was the message from

Grainger director Nick Jopling (left), who

was a keynote speaker last week at Property Week’s

residential management conference, Increasing Returns for the Housing Sector. The event was held at the London Midtown offi ce of law fi rm Speechly Bircham.

Jopling described property management as “the beating heart” of Grainger, which is the UK’s largest residential landlord and employs 110 people — half the workforce — in its management business.

But he also hailed Pinnacle Capital — the US group whose eponymous schemes have 96% occupancy and whose operation is sophisticated enough to identify how many properties are available on any given day.

“This is way beyond what we do [in the UK] but they can do it there because it’s a much more homogenised product,” he said.

Jopling said London’s 1,439-unit Olympic Village and accompanying development land off ered the scale and opportunity to introduce US-style branding. Both Grainger and Pinnacle are bidding for the village, which the Olympic Delivery Authority will sell for housing following the 2012 games.

Lessons can also be learned from student accommodation. Jopling cited the example of UK provider Unite.

“They provide an owner-manager solution and they brand it,” he said. “We all know what Unite is and institutional investors invest in it, and on a keener yield than most commercial property except for prime London.” 9

Residential @

To read our full coverage of residential news and comment, as well as information on forthcoming conferences, visit propertyweek.com/residential

Thousands of residential leaseholders in central London risk losing money by failing to exercise their right to manage their apartment blocks, claims surveying fi rm Ringley.

Following an analysis of the ownership of 3,375 fl ats across 15 inner London postcodes, Ringley reveals that just 9.5% of residential blocks are self-managed — where leaseholders can control the amount of service charge and how it is spent.

Leaseholders have been able to take over block management through enfranchisement since 2002. But Ringley’s survey highlights a huge concentration of control still in the hands of a few estates, institutions and overseas owners.

Ringley suggests that London’s leaseholders are either apathetic or unaware of the fi nancial benefi ts of their right to manage, despite paying higher service charges than elsewhere in the UK.

Managing director Mary-Anne Bowring claims: “Wealthy institutional, overseas and famous estate freeholders in prime central London are making big profi ts by charging a premium for management services, undertaking all too frequent upgrading of common parts and by marking up costs such as buildings insurance.

“But it is often the case that the individual fl at owners don’t receive the value they deserve. These leaseholders are in a position where they can initiate a change and save thousands of pounds a year, simply by increasing their involvement in the

management of their building.”Ringley helped residents in Hertford Lock House, 201 Parnell Road, Tower

Hamlets, east London (pictured), to set up a management company. Bowring expects more will follow as service charges come under scrutiny amid tough economic times.

Peverel, the Vincent Tchenguiz-owned housing management group that was placed into administration last month, has come in for increasing criticism from its leaseholders over service charges.

But Peverel’s head of commercial Andrew Fildes

told Property Week’s property management conference last week in London: “Leaseholders have a responsibility to understand their obligations under the lease before purchase.

“People often make property decisions while they are under both emotional and time pressures. As a result, questions such as, ‘what will my service charge obligations be?’, or ‘who is the managing agent?’ never get asked.” 9

London leaseholders lose out in management

Self-help: Bowring assisted with residents’ management company at Hertford Lock House in east London (above)

PROFESSIONAL

propertyweek.com

Councils|Government|AgenciesPublic sector

62 08|04|11

PHOT

OGRA

PH: N

IZAM

UDD

IN

Local authorities must give reasons before rejecting plans. Richard Heap reports

Local authorities must set out reasons why they have rejected certain options when drawing up local plans, says the High Court.

On 25 March, the court published its judgment in the case brought by seven companies and other bodies in the horse racing industry against Forest Heath District Council’s plans for Newmarket.

The council set out plans in its core strategy for an urban extension in the town for 1,200 homes to be built over 20 years on land owned by Lord Derby, Edward Stanley.

Save Historic Newmarket claimed the plan would damage horseracing in the town (box, right). The court found the council had not taken into account European Union directive 2001/42/EC, which was adopted on 12 May 2010, when planning its core strategy. Lord Derby will appeal against the decision in June.

The EU directive aims to “contribute to the integration of environmental considerations into the preparation and adoption of plans and programmes with a view to permitting sustainable development”.

The court held that the council had failed to set out alternatives to its preferred plan in its core strategy and reasons why it would not proceed with those options.

It found that the council’s environmental report that accompanied the core strategy did not give consultees reasons for rejecting alternative plans for the proposed development.

Stuart Andrews, head of planning at law fi rm Eversheds, says this is the fi rst challenge to consider whether a core strategy has been considered in line with the strategic environmental assessment.

“The actual decision and its impact is quite broad,” he says. “It should make local authorities be concerned about whether they have considered alternative strategies eff ectively. This is the fi rst in what could be a series of challenges.”

The council said in a statement that it was “disappointed” with the ruling, as the local development framework that included the disputed core strategy “represents fi ve years of hard work and consultation”. 9

Locals will race to challenge councils after Newmarket caseNewmarket’s racing formSeven horseracing bodies took action against Forest Heath District Council: Save Historic Newmarket, auctioneer Tattersalls, Unex Group Holdings, Jockey Club Estates, Newmarket Trainers’ Foundation, Godolphin Management Company and Darley Stud Management Company.

The fi rst recorded race at Newmarket was on 18 March 1622, and in 1660 horse-racing fan Charles II started to visit the town. In 1665, he brought in an act of parliament for the fi rst-ever race run under written rules, which happened in 1666. Charles II rode his own horse to victory in this race, the Town Plate, in 1671.

In 1750, the Jockey Club formed in Newmarket to oversee and control horseracing in England. Fixed annual races started in Newmarket in the 1760s, and the fi rst classic of the British season — the 2,000 Guineas — was inaugurated in Newmarket in 1809.

It was also the only British racecourse to stage racing during World Wars I and II, and held the fi rst race to be decided by a photo fi nish, in 1949.

Flat out: court found Save Historic Newmarket was not given reasons why council opted for alternative plans, which the protestors claim could have damaged horseracing in town

PROFESSIONAL

propertyweek.com

Public sector

08|04|11 63

The government published terms of reference for its local government resource review into reforming business rates last month, after two months of delay. The review is due to conclude in July, and is seeking proposals for how to reform the system.

Local government thinktank Localis last week weighed into the debate with its report with Ernst & Young, the Rate Escape. Localis has proposed a “buyout model” that would allow local authorities to buy their way out of the existing grant system.

The buyout model works on the principle that any council that believes it can increase the amount of business rates it takes in its area should have an incentive to do so. The council would tell the Treasury that it wants to buy its way out of the rating system, and agree a buyout fee. This fee would go to the Treasury for redistribution to poorer councils, and the council would retain its locally collected rates.

Of 195 council leaders questioned by the parties, 61.8% said that local autonomy over business rates was more important than equalisation, which would redistribute rates (graph 1). And 42.6% of leaders said a council could have an impact on the local economy (graph 2). Three-quarters said more fi nancial incentives would make them innovative. 9

Report proposes business rate buyouts

Public sector @

1 What is more important for local government fi nance: central equalisation or local autonomy?

Local autonomy much more important 35.1%

A large amount 42.6%

3.5%5.4%

A moderate amount 41.6%

A small amount 15.3%

Not at all 0.5%

Local autonomy slightly more important 26.7%

Both equally important 26.7%

Equalisation slightly more important

Equalisation much more important

2 To what extent can a council impact on the local economy?

The government has published its enterprise zone prospectus, which sets out details for the 21 enterprise zones announced in the Budget.

Local enterprise partnerships (LEPs) will run the zones, which have streamlined planning powers and business rates discounts.

Areas for 11 zones were announced in the Budget, and LEPs will be invited to start bidding to host one of the 10 remaining zones by the end of June.

Here are the full timetables for the fi rst and second waves of the zones:

23 March 2011 Government announces 11 local enterprise partnerships to host the zones. They are: Birmingham and Solihull, Leeds, Sheffi eld, Liverpool, Greater Manchester, West of England, Tees Valley, North Eastern, Black Country, Derbyshire and Nottinghamshire, and London

End of April 2011 Other local enterprise partnerships to give short expressions of interest in setting up a local enterprise zone

Mid-April 2011 All partnerships to be invited to government workshop on enterprise zones

May 2011 Government to write to all partnerships who have submitted expressions of interest that set out the criteria against which bids would be assessed

May to end of June 2011 Local enterprise partnerships to develop and submit proposals

July 2011 Government to assess proposals against these criteria, before announcing successful bids

October 2011 to March 2012 Planning authorities to establish local development zones and government will work with successful partnerships to agree the specifi c package required to address local economic challenges 9

24 March 2011 Specifi c sites for four zones announced: London’s Royal Docks, the Boots campus in Nottingham, Peel Group’s Liverpool Waters (pictured) and Manchester airport

March to summer 2011 Government to work with the fi rst 11 local zones to agree details such as specifi c sites and policy packages. Powers to include faster planning processes and business rates incentives in Black Country, Derbyshire and Nottinghamshire, and London

Late March/early April 2011 Government workshop for 11 local enterprise partnerships

May 2011 Once the site specifi cs are agreed, local planning authorities will start establishing local development orders to create simplifi ed planning zones

By April 2012 Local authorities will have the power to discount business rates for specifi c businesses in individual enterprise zones

By April 2013 New funding arrangements to be available to local authorities that allow them to retain business rates and use tax-increment fi nance

THE FIRST WAVE THE SECOND WAVE

Download the enterprise zone prospectus at propertyweek.com/professional

Need to know: enterprise zone timetable

Read Localis’s Rate Escape report at propertyweek.com/professional

PHOT

OGRA

PH: M

OZ27

8

SOURCE: LOCALIS

SOURCE: LOCALIS

PROFESSIONAL

propertyweek.com

Careers|Management|MovesWorkplace

Mark Coxon tells Aditi Shah why he swapped Cushman for Caxtons

After working in London’s West End for nearly 15 years, nine of them as a partner at Cushman & Wakefi eld, I decided to make the move to cover the east of the M25 as an industrial agent at Caxtons.

My patch stretches from Beckton to Tilbury (pictured), taking in the London Gateway, and from Charlton to the M25 and Kent. Since joining the 20-year-old fi rm in 2009, I have already been instructed by pension funds and developers on 50 acres of industrial land.

The transition was not diffi cult. The diff erence is that a big fi rm has a larger network of people to bring in work, whereas in a smaller agency, you eat what you kill. So you have to go out and get instructions.

This is why I work four days in the offi ce and spend one day networking with pension funds, developers and other agents in the West End. I continue to go to as many corporate events as I did back in the day because you have to be seen to make your mark.

My USP is that having worked with large

pension funds and property companies in the past, I have a good idea of what they’re looking for. Looking at the big picture is essential — this is something I learned in the West End from working with international clients that have properties in London.

Having a regional focus gives me more time to get to know the local occupiers and area — this makes people sit up and listen.

And, also, working in a regional offi ce, you don’t tend to have as many distractions as you ould in the West End, which is always buzzing. It lets you put your head down and get work done.

I still live in Clapham, south London, and commute to Kent, and although I spend one day a week in London I occasionally miss popping around the corner for a pint and seeing agents from the other fi rms in the pub. 9

Mark Coxon is a director at Caxtons

My big move: West End to east

08|04|11 65

Mark Bailey, director of service delivery at recruitment fi rm Holtby Turner gives his top fi ve tips for interviewing senior executives.

1Master questions Competency

questioning is a common and valuable technique for confi rming a candidate’s skills.

Think of what your role will require — business development, restructuring a division, commercial acumen, innovative business practices — and ask the person to give specifi c examples of when they have done something similar.

Do not just accept their answer: keep probing to fi nd out exactly how they achieved the result.

2Intelligence test Verifying a person’s experience is relatively

straightforward, but it is also essential to assess their intelligence and personality to make sure they can cope with the demands of the role and will be a good cultural fi t with your organisation.

3Sell yourself The best people are likely to be in a rewarding

job already and they will need to be convinced that you have the right role for them.

Don’t just treat them like an applicant: you need to sell your company and the opportunity to them.

Very few people move just for money — it is the long-term prospects and the infl uence they will have within the business that are likely to be more important.

Find out what motivates them and demonstrate how your opportunity can help them achieve their aims.

4Take it personally The interview is only part of the process. As

soon as you have identifi ed the candidate, start to build a relationship to strengthen their commitment. Get them to meet their peers informally, attend a strategy day or whatever is appropriate.

Keep in regular contact and give them a feeling of personal involvement with your business. This will help them through the tricky stage of the resignation process, where they are likely to be put under a lot of pressure to not leave their employer.

5Time management The decision-making process for recruiting

senior executives can be long-winded, but it is important to keep momentum going. Let the person know the process and timescale, keep the number of interviews manageable (three formal interviews should be ample), provide prompt feedback and move to the next step as quickly as possible. 9

Take fi ve ... tips for interviewing for senior staff

Twitter @

Follow all our writers on Twitter for up-to-the-minute news and comment. You can also join the Property Week groups on Facebook and LinkedIn

@RichHeap Government guidance on the Bribery Act says hospitality won’t be hit, if it’s “reasonable”. Whatever that means

@hatcherdavid Met grad working at esteemed Brum agency last night. Had been working for free while fi nishing his masters. Not bad tactic if aff ordable

@PWNickJohnstone Mark Swallow — big name in Brum’s property circles — quits Knight Frank http://bit.ly/i0CSct

@PWDavidDoyle The dangers of email ... Though more shocking for me is his mate’s cheek in asking if he can cop off with his ex! http://ow.ly/4otkj

You can also get the latest job vacancies by following @pw4jobs

PHOT

OGRA

PH: B

RIAN

FULL

ER36

85

PROFESSIONAL

propertyweek.com

Numbers begin 020 7921 (unless stated otherwise)Editor-in-chief Giles Barrie 8561Executive editor James Whitmore 8565Executive editor (online) Iain O’Neil 8563Assistant editors Hardeep Sandher (features) 020 7955 3925Mike Phillips (news and finance) 8583Richard Heap (professional) 8310 Residential editor Doug Morrison 020 8378 1147 Deputy web editor David Doyle 8564 Deputy news editor Kat Baker 8749 Deputy features editor David Hatcher 8574 Occupiers correspondent Christine Eade 8572 Senior reporters Nick Johnstone 8748Patrick Gower 8597

Digital content producer Justin Broomes 020 7560 4085 Group production director Samantha Warrington 8576Deputy chief sub-editor Felicity Haythorn 8587 Assistant chief sub-editor Andy Plowman 8533Sub-editor Jonny Garrett 8580Group art director Richard Krzyzak 8581Art editor Tina Smith 8671Client Solutions designer Rob Howells 8571Editorial enquiries Charlotte Corcoran 8561Editorial advisory board Paul Brundage; Jeremy Collins; Richard Dakin; Olivier de Poulpiquet; Jonathan Goldstein; Neville Khan; Bryan Laxton; John McCready; Robert Noel; David Sleath; Van Stults; Chris TaylorGroup events director Sam Jennings 020 7560 4200Commercial director Mike Hartley 8345Awards and conferences manager Grant Elrick 8379Public Property Summit James Lee 8224

RESI James McGough 8469Southern regional managers Caroline Londono 8217Jenni Saunders 8492Matt Kingham 8431Northern regional managers Elizabeth Durrant, Graham Lumley 0161 877 1106 Classified and recruitment managerHelen Simms 8474Deals sales executive Nick Ross 8291Corporate accounts manager (subscriptions)Abi Benedict 8486Client solutions 020 7560 4291Virtual solutions 020 7560 4229Group marketing manager Ferial Chtini 4091Divisional production manager Julian Creber 8043Production controller Graham Winter 4130Managing director Chris Kilbee 8350

Property Week, UBM Built Environment, Ludgate House, 245 Blackfriars Road, London SE1 9UY Editorial fax 8394Advertising enquiries 8558Recruitment advertising 8474Email firstname.surname@ubm.com (except: Douglas.Morrison@ntlworld.com)

Property Week is published by UBM Built EnvironmentAnnual subscriptions: £175 (UK), £215 (rest of Europe) and £329 (rest of the world) Subscriptions enquiries 01858 438892Email: propertyweek@subscription.co.ukVolume 77 No 14 ISSN 1354-1471Registered as a newspaper at the Post OfficeTypeset by Clerkenwell Graphics LtdPrinted by St Ives plc © United Business Media 2011

Contacts

People

66 08|04|11

GOING PLACES This week’s movers

Savills has hired Florence Leibovitch-Neu from BNP Paribas Real Estate as a director in its French valuation department in Paris.

Sarah Batehas joined Mayfair Capital Investment Management as director of research from Rockspring Property Investment Managers. James Feilden joins from GVA as assistant asset manager.

Universities Superannuation Schemehas hired Tim Coffin as its evironmental manager. He previously held senior positions at

WSP Environmental and SKM Enviros.

LionHeartis looking for a CEO to succeed Mike Carter, who is retiring in August after 20 years at the helm of the chartered surveyors’ benevolent fund.

Aberdeen Asset Management Asiahas recruited Christiaan van Beek from CB Richard Ellis as a senior property investment specialist, to be based in its Singapore headquarters.

John Cottrel has joined Nathaniel Lichfield & Partners in Cardiff from the Homes and Communities Agency as director. Chris Harrison is promoted to director in Newcastle.

Cordea Savills has appointed Alexandra McGhee, formerly of Protego Real Estate Investors, as head of fund finance, UK, with responsibility for the financial control and reporting on funds administered from London, Stockholm and Luxembourg. It has also appointed Nick Hayward from JP Morgan Asset Management as director of institutional business.

Richard Susskind & Cohas hired two surveyors: Lauren Leach in its retail and leisure department and Daniel Cohen

(left) in the office agency team.

George Aase has joined PointPark Properties from Swiss company Züblin Immobilien as chief financial officer, replacing James Riddell, who retired at the end of 2010.

The Crown Estate has hired two asset managers. Katie Rae joins the regional portfolio team from Invesco Real Estate and Charles Copper from Grosvenor joins the residential team.

Oregahas hired Mandy Holton and Alison Brady (left) as national sales office co-ordinator and representative respectively.

Women in Property has appointed Georgina Tibbs, a town planning consultant at Barton Willmore’s Bristol office, as chairman of its south-west branch.

Skelton Group Investments has promoted Graham Willson to its board.

CVShas made four appointments: Helen Edwards from Gerald Eve and Peter Constable from Lambert Smith Hampton join as a senior surveyors, Michael Hampton-Riddington from BNP Paribas Real Estate as an associate director and Tony Eden from the Valuation Office Agency as a senior consultant.

CB Richard Ellis has promoted two members of its Bristol property and asset management team. Michael Ware (left) becomes senior director with

responsibility for the south-west, Wales and the Midlands, and Peter Craske becomes senior surveyor.

Wilkinson Williamshas strengthened its investment team with the hiring of surveyor Graham Lind from Jones Lang LaSalle.

Investment Property Forum has appointed Pam Craddock from GE Capital Real Estate as its research director.

James Williamshas moved from DTZ’s business space investment team to its shopping centre investment team as director in retail investment.

Knight Frank has expanded its Yorkshire office agency team with the appointment of Elizabeth Ridler as a partner after her two-year

break from property.

Meghraj Propertieshas promoted Justin Wood to director, responsible for investment in the UK and Denmark.

Please send all press releases to the professional editor at Property Week, Ludgate House, 245 Blackfriars Road, London SE1 9UY or email people@propertyweek.com

propertyweek.com

Appointments

08|04|11 67

Chief ExecutveThe Crown Estate is a unique business that manages a vast and varied property portolio, comprising commercial property, agricultural and marine

interests throughout Britain.

The Chief Executve is responsible to the Chairman and Board for providing leadership and directon to the business with the primary objectve of

maintaining and enhancing its capital value and the return obtained from it, with due regard to the requirements of good management. The vacancy has

arisen following the decision by Roger Bright CB to retre as Chief Executve at the end of 2011.

To meet this demanding role you must be a proven business leader of unqualified integrity. You will be able to form policies and energise your team to

implement them confidently. You must have the vision to shape and manage The Crown Estate through the next phase of its development while holding

fast to its core values. Above all you must be able to marry the entrepreneurial spirit of a modern business with its historic legacy and high reputaton.

The Crown Estate is a public body, operatng to high standards of probity alongside expectatons of excellent performance. Applicants will be required to

identfy any areas where a conflict of interest might arise if they are selected as a candidate for the long-list.

If you consider that you possess the special qualites and experience to undertake this unique role and would like further informaton and details of the

applicaton process please visit www.odgers.com/35260 or contact Odgers Berndtson on 0845 130 9005 quotng the reference 35260.

Closing date for responses to the advertsement is 27 April 2011. Preliminary interviews are scheduled from 10 May 2011. Final interviews will be held in

London on 6 July 2011.

The Crown Estate is commited to diversity and welcomes applicatons from all sectons of the community.

COMMERCIALISMINTEGRITYSTEWARDSHIP

If you’ve got the vacancies, we’ve got the audience.

Chesterton Humberts are looking for a

SENIOR VALUATION

SURVEYOR/ASSOCIATEto work in Central London

You will have Residential and Commercial valuation experience witha minimum of 5 years’ post qualification & lead generating

experience and a full UK driving licence

Please email CVs to Frederika.casapieri@chestertonhumberts.comor call 020 7298 5935 for an informal chat

propertyweek.com

APPOINTMENTS

68 08|04|11

Would you like to work for one of the fastest growing and

dynamic building consultancies in the UK?

We have offices in London, Bristol, Manchester, Liverpool,

Edinburgh and Glasgow.

We are looking for two enthusiastic and motivated senior

building surveyors to join our team in London.

For more information, or an informal chat, contact

Trevor Dowd on: 020 7280 8153

Alternatively email your CV and covering letter to:

trevor.dowd@tridentbc.com

Or post it to: Trident Building Consultancy,

10 King William Street, London, EC4N 7TW

Chartered Building Surveyors

Shepherd Group Properties Ltd is part of one of the leading family-owned private businesses in the UK. The Group’soperations, in national and international markets include substantial companies in Construction and Engineering,Manufacturing and Property Development.

A vacancy has arisen for a Property Surveyor. Reporting directly to the Director, this is a key role within the Company withresponsibility for managing an extensive portfolio of properties on behalf of the Shepherd Group. The position involves theidentification, negotiation and acquisition of freehold and leasehold property, the disposal of Group properties and theongoing management of the Company portfolio.

Ideally working towards MRICS qualification or MRICS qualified, the successful candidate will be able to demonstrate strongproject management, negotiation and decision making skills. Working independently but also to a wide range ofstakeholders, you will have excellent Microsoft Office skills, interpersonal and communication skills, have worked on rentreviews and lease renewals, have a working knowledge of contracts, property acquisition and disposal together with aflexible attitude to work and travel within the UK and Northern Europe as required.

To apply send your CV with current salary package to Judith French, HR Dept., Shepherd Building Group Ltd, HuntingtonHouse, Jockey Lane, Huntington, York YO32 9XW or email: careers@shepherd-group.com

Strictly No Agencies pleaseClosing date: 15 April 2011

FOR FURTHER COMPANY INFORMATION VISIT

www.shepherd-group.com

Based York

Property Surveyor£ COMPETITIVE PACKAGE + CAR ALLOWANCE

COMMERCIAL AGENCY SURVEYOR

Hindwoods are leading Chartered SurveyorsEstablished in south London since 1886.

An experienced, ambitious and commercially aware Surveyor isrequired to join our successful commercial Team based in

Greenwich town centre.

You will need to be a hard working fee earner who iscommitted to providing the highest possible level of service and

advice to our clients which include pension funds, local andnational government, PLC companies, charities and a wide

range of private companies.

This important role in our expanding company offers excellentopportunities for career progression and a highly competitive

remuneration package is available.

To discuss this opportunity contact Kevin Bright on07720 407088. Alternatively email your CV to

k.bright@hindwoods.co.uk

hindwoods.co.uk

propertyweek.com 08|04|11 69

APPOINTMENTS

Watts is a leading consultant to the property and construction

industry. With more than 40 years' experience across all

building types and market sectors, the Group delivers

independent, expert advice through a network of offices across

the UK, Ireland and Northern Europe.

We are actively recruiting for a number of positions at various

levels, and across a number of our UK offices. In particular we are

recruiting for Directors in Birmingham and London, and

Chartered Building Surveyors/Project Managers in Glasgow,

London and Manchester.

To apply, or for further details on all of our vacancies please

visit www.watts-int.com. We are always looking for talented

professionals so if that's you, and you're interested in a career

with Watts and have something to offer us, why not get in

touch at human.resources@watts-int.com.

Watts Group PLC is an Equal Opportunities Employer committed to promoting equality in the work place.

International property and construction consultants

We are now looking to increase our team and are seeking to recruit an exceptional

Graduate Trainee and ambitious Junior Retail Surveyor.

● Graduate TraineeFor this post you will have graduated/be due to graduate in 2011 with anRICS Exempting Honours Degree (2:1or first) ideally with some relevant holidaywork experience. In addition to your academic performance, you will need todemonstrate excellent interpersonal and communication skills (written and oral),the ability to deliver and achieve results, and the ability to learn quickly and bea true team player. Most importantly, we want an individual with outstandingpotential, drive and commitment.

In return we will provide excellent training to RICS qualification and a dynamic,fun work environment.

● Junior SurveyorFor this post you will need to have qualified (or be about to qualify) with aminimum 18 months experience dealing with retail property.

In additional to your professional qualifications and experience, you will need tohave a proven track record of success, an excellent eye for detail, proveninterpersonal and communications skills (written and oral) and evidence of goodcommercial judgement/ skills. You will need to be a true team player that thrivesunder pressure and has the drive and ambition to rapidly progress through theorganisation.

We would expect the successful candidate to be on a fast track to AssociateDirectorship and will offer a range of other benefits designed to incentivise andreward high performance.

Applications by Thursday 21st April 2011 in the form of a CV plus covering letter which willbe treated in strictest confidence to be sent to:- Paula Floyd, Keenan & Co, 31 St GeorgeStreet, London W1S 2FJ. Tel: 020 7297 4818. Email: paula@keenanandco.com

Keenan & Co is an established, vibrant,boutique retail property consultancy basedin the heart of Mayfair with an excellent and

growing Blue Chip client base of retailproperty owners and occupiers.

HEAD OF COMMERCIALPROPERTY INVESTMENT

GOSFORTH PARK WAY, NEWCASTLE – (Ref: 10/792)

Circa £60,000 per annum + car allowance

Home Group is a major property business, with over 50,000 homes and

nearly 100 commercial premises. With a turnover over £300m and a

balance sheet in excess of £1bn, we have an ambitious expansion

programme, and are looking to recruit an experienced commercial

property surveyor with proven senior management capability.

The role requires strong leadership skills to head up a new commercial

property team to support a customer focused delivery team responsible

for of residential and commercial property valuation, acquisition and

disposal, a broad portfolio of commercial property management as well

as contributing to commercial property investment strategy.

The ideal candidate will be educated to degree level and will also

possess a RICS Professional qualification with proven work related ability

to deliver the role.

Closing date: Sunday 17th April 2011

To apply please complete our online application form at

www.homegroup.org.uk. We only accept electronically submitted

forms, however, if you are unable to access due to a disability please

contact us on 08451550397 or recruitment@homegroup.org.uk

Home Group Limited (Charitable I & P Society No. 22981R)

We are an independent Chartered Building Surveying

Practice who specialises in Party Wall and Neighbourly

matters and Rights of Light, Daylight and Sunlight matters

Our business is continually growing and as a result

we have positions available for experienced

Rights of Light

and Party Wall Surveyors

This is an exciting opportunity within a niche practice

for Associate level surveyors who will be instrumental

in the company’s growth.

Location: ST ALBANS

Salary:

Excellent salary

with guaranteed bonus scheme

Closing date:

29 April 2011

Applications to be sent to:

louise@behanllp.co.uk

propertyweek.com 08|04|11 71

APPOINTMENTS

It’s time you came knockingNow is a very exciting time to be joining Premier Inn. We’re expanding signifi cantly with an award-winning budget hotels offer that consistently outperforms the competition. One of Whitbread’s most successful brands, we enjoy substantial FTSE-100 backing as we work to add 15,000 more rooms to our domestic portfolio across 300 prime UK locations. This is our time. If you’re at the top of your game, it could be yours too.

Acquisitions Managers - London & East Mids/Anglia to £55kAcquire sites and secure planning permission for a market leader with exceptional growth plans. You need a strong results-driven track record that shows sound commercial judgement in the sector.

Property Procurement Manager to £45kDo the best commercial deals by driving construction costs and time down in a £70m spend across an extensive supplier base. Your impressive retail/leisure experience reveals a relentless pursuit of results.

Maintenance Manager to £45kKeep our properties up to standard by managing our preventative and reactive maintenance supply chains with no overspends. Your substantial multi-site corporate experience demonstrates serious commercial acumen.

Project & Programme Manager to £45kDrive our new build extensions and bolt-ons cost-effectively. To do this you must be an experienced construction project manager who gets things done through robust end-to-end process management.

Don’t miss this chance to do what you do best - with the best in the business. Find out more and apply today at www.whitbreadcareers.co.uk

Head of Property Based Glasgow or Hammersmith, London – travel will be required from either location

Maggie’s is a young, dynamic charity providing information and psychological support to anyone affected by cancer.

We are looking for a highly motivated and experienced person to be responsible for a wide range of property matters including managing the construction programme of a number of new centres. In addition, the Head of Property will take responsibility for the estate management of a number of Maggie’s existing centres as agreed with the Property Director and will assist in advising Maggie’s Executive on other property matters.

The Head of Property will assist the Property Director in establishing systems and processes to ensure that all elements of Maggie’s existing and future property portfolio are managed effectively including acquisitions, disposals and other title matters, compliance, insurance, health & safety, planned maintenance, budgeting, statutory consents and approvals, development management, construction contracts, professional appointments, and delivery commissioning and hand over arrangements.

Maggie’s Head of Property will be an experienced property or construction professional with a well-rounded technical background. The post holder will have an affinity and enthusiasm for exceptional architectural design and the importance it plays within the organisation.

With at least 5 years relevant post qualification experience in the property or construction industry, the post holder will have excellent planning and organisational skills, financial management skills, the ability to communicate with a wide variety of audiences.

A full job description and person specification can be downloaded at www.maggiescentres.org/recruitment

Applications should be by email only in the format of CV with covering letter to: Carys Winship, Staff & Resources Manager, Maggie’s carys.winship@maggiescentres.org

Closing Date for applications is 5pm, 11th April 2011. www.maggiescentres.org

Maggie’s is a registered charity number SC024414

Bring your Career

to Fruition

Fruition Properties is a highly regarded and innovative property developer

that specialises in planning enhancement and development within the London

area and prides itself on its creative thinking, the quality of its product and its

professionalism.

We are recruiting an experienced LAND MANAGER to join our small and

successful team and to actively seek out new projects.You will be responsible for

the acquisition of land and will work with the team to deliver it though the plan-

ning process.

The successful applicant must have:

● Relevant skills in all aspects of land acquisition including identification of

opportunities, planning, production of financial and viability appraisals

● Experience along with knowledge and contacts in North,West and

Central London, with a demonstrable record of securing new development

schemes

● Exceptional levels of professionalism, communication and presentation

skills, as well as energy and ambition

● Self-motivation and confidence with a strong work ethic

● Strong commercial acumen

● RICS qualification

THE POSITION WILL OFFER A COMPETITIVE SALARY WITH BENEFITS.

Be part of a small and friendly team where you can make a significant

contribution to the future expansion of this successful and ambitious company.

Please email your CV to monica@fruitionproperties.co.uk by the

20th April 2011.