March 2011 Archives

Soho Estates anxiously tells the Sunday Times that the appointment of Steve Norris as chairman and the selling of 20% of the company to the estranged son of deceased porn baron, Paul Raymond, does not mean the other 80% will be sold to near neighbour, Shaftsbury. Raymond's son-in-law and boss of Soho Estates, John James, insisted "we are not for sale. It's a tried and tested model -- it will go on forever." Maybe: but watch out for two things. One, joint ventures with Shaftsbury when the pair piece together respective development sites: two, a move into posh residential outside Soho, hinted at by James.

CBRE brags to the daily Times it has beaten JLL and KF to sell the Adelphi building near the Strand, and this is all the idea of Dubai World who simply can't be bothered to refinance £212m of debt now covenants have been breached. Really?The FT carries a profile of the previously invisible Danny Truell, chief investment officer of the Wellcome Trust: the man who naively thinks the government is going to hand over the freehold of the Olympic Park to the Trust for £1b without a transparent bidding process. "Long term, it's worth a bloody sight more than that" said a source last week. Let's see if Mr Truell's publicity bid helps.

But short term the story of most immediate property interest is not in the papers, but in Building Design. It's a share-moving tale of how British Land faces the threat of Broadgate being listed. Let preface the tale by saying this is highly unlikely to happen. But the mere hint that the long term plan to add 1.2m sq ft of space by tearing down some of the existing stock and replacing it with vastly larger buildings might not happen as smoothly as supposed, will be enough to give BL analysts the jitters. Broadgate developer, Sir Stuart Lipton, has already called the new UBS "engine block" the worst building he has seen in 20 years.

A former president of the RIBA, Sir Richard MacCormac, says replacing what's there with the UBS block will be like "chopping up a Nash Terrace." Not really. But you can see where this is leading: to trouble and strife. The "pump-up" plans laid by Stephen Hester when in charge at BL had the potential to add £1b of value. The 700 000 sq ft UBS block is just the first example. The architectural establishment may not have much power. But a fuss they can cause may have the effect of cautioning BL into downscaling future redevelopments. If that is the case, selling 50% of Broadgate to Blackstone for not very much will have been a good idea.

Nick Shattock is leaving Quintain, it was announced this morning. The deputy chief executive of the listed developer is seen as the serious alter ego to the more flamboyant chief executive, Adrian Wyatt: a bit like the pairing of Mike Slade at Helical Bar and his serious deputy, Gerald Kaye. It is unclear why Shattock is going. But a second announcement makes it clear why Duncan Owen's Invista Real Estate business is not having a nice time and is losing mandates from the £5.2b it has under management: a loss of £10m on £35m turnover.

On Wednesday I toured Westfield's new town centre at Stratford for today's Standard column. To call the 1.9m sq ft development a shopping mall does not do justice to a place likely to be opened by David Cameron in September. Well over 80% of the 300 shops are now let. The temporary signs outside the units awaiting the fit-out show some many posh shops coming, maybe even Harvey Nichols. Chief executive Joseph Wan also toured the site on Wednesday. Only Harrods appears to be missing. Apple won't be.

One impression: Land Securities, British Land, nor Hammerson - or even a combination of the trio - seem no longer have the inclination or ability, to build a retail development on this scale and finish the base build so far ahead of time. The workers were occupied with those last minute tasks you normally see being done 24 hrs before opening. Perhaps the most extraordinary achievement is a new ticket hall for TfL the size of four tennis courts has been handed over already; the tube line status board was already glowing.

A second story in the Standard today reveals the seemingly trivial purchase for £15m of a seven-storey office block in Leadenhall by Canadian asset management giant, Brookfield. Seemingly trivial - because 65-68 Leadenhall is a key building block in the assembly of a plot for one of the last spots in the City that could take a mega-bank. Ex-JLL agents Mark Morris and Morris Golker spent years doing that on behalf of Jacob Schimmel, who owns two plots. But £127m of loans were called in. The sites are for sale. No guesses as to who might buy.

Libel lawyers advise that juxtaposition is solid ground for suing. On Saturday The Times had a two page spread on the Tchenguiz brothers' travails. This rather fine article was illustrated with photographs of Robbie and Vincent and their comely partners. Included were shots of retailer, Sir Philip Green, restaurateur, Richard Caring and financier, Robin Saunders. Well, OK, they run in a pack. But m'learned friends may object to a story on the same page beginning with the inflammatory words "some of the world's most secretive offshore banks are to allow the Serious Fraud Office to examine their customers' private statements as investigators widen their inquiry into the collapse of an Icelandic bank." 

Er...let's move quickly on - past a Telegraph story suggesting Robbie's ex-brother-in-law, Vivian Imerman has been "dragged into the affair" - towards two tales of interest in the same paper. The first reveals that Carphone Warehouse boss, David Ross, has appointed Jones Lang to review his "strategic options" for selling property worth £230m, freighted with debts of £247m. As in all such cases, the polite fiction that the owner rather than bank holds the option is maintained. The second story concerns Southern Cross, the beleaguered nursing home operator trying to reduce rental liabilities of £250m. I made the suggestion in Saturday's EG that landlords benefitting from the un-cancellable leases should be exposed.

The Telegraph reveals Southern Cross has hired just the man to do this. Barrister Tim Bolot has been appointed to lead negotiations with landlords. His appointment will be announced at the AGM tomorrow. Will he name names? Probably not, or not yet anyway: but it is now perfectly clear that Britain's largest care home operator will sink - unless those benefitting from the floatation of Sothern Cross by Blackstone in 2006 accede to 20% cuts in return for a stake in the company. The US private equity house benefitted from the sale. It would be interesting to know if it still benefits from the rents. Either way, the landlords have two options. To agree to cuts - or see their names turn up on an administrator's list of creditors.

Tomorrow's EG column forecasts the Robbie and Vincent Tchenguiz side of the SFO arrest story "will be expertly made." Today the FT carries an interview with Vincent saying he has begun the restructuring of £2b of debts freighting his various enterprises. A "beauty pageant" of bankers is apparently jostling for the favour of relieving lenders like Lloyds & RBS of loans granted in the good times. It is hard not to smile at the picture painted of Vincent sitting on his casting couch deciding which bank to favour with his debt. Those that lent him the money in the first place will be having far uglier thoughts.

Let us return to earth and two bank-related stories. The first was rumbling round MIPIM: Broadgate developer, Sir Stuart Lipton, hates the British Land replacement for one of the original blocks. That replacement is of course the 700 000 sq ft "Engine Block" design by Ken Shuttleworth for UBS. "It is the worst large building we have seen in the City for 20 years" Sir Stuart tells Building Design. Anyone confronted with a Cgi of the huge silver shed may agree. But it is tough to be rude to Ken, who is such a nice man. But the bottom line is that because BL is gaining such a huge increase in lettable space, Sir Stuart will be ignored.

The second bank story is the: will they - won't they tale of Goldman Sachs. On February 19th EG said the US investment bank was close to buying Plumtree Court, a grimy marble block in Holborn soon to be vacated by PwC: a block that stands next door to huge empty BT block that Goldman has owned for a decade. The not unreasonable assumption made by EG was that the two blocks will be levelled and Goldman will build a 1 million foot 12-storey ground scraper on Farringdon Street to add to the 1m feet they rent in nearby Fleet Street. But Goldman successfully downplayed the story and nothing has appeared elsewhere.

Until today: I've written an article for today's Standard column that concludes the story is true, but the timing any such development has yet been decided. Goldman was very anxious to stress that it is far too early to draw conclusions from their interest in Plumtree Court and even more anxious to stress that it is part of some vast "expansion plan". But it does now look as if they have had an offer of around £100m accepted for Plumtree. It is also the case that just about every single agent on the streets of Holborn is convinced that the biggest bank development for decades is going to happen sooner and not later in mid-town.

The several yards of newspaper coverage printed between Friday and Monday on the arrest of Vincent and Robert Tchenguiz, add little to the explosion of speculation that occurred after they were arrested on Wednesday. I'd have to include my own coverage of the MIPIM boat party in the Standard on Friday in this category, as the only exclusive snippet I managed to obtain, was that Vincent was given a clean bill of health by Kroll six or seven years ago. Even that came earlier from an invitee, who like many, stayed away.

The lack of guests (and Vincent) meant the party itself felt a little flat, the attendees a little self conscious of being in the media eye. There was relentless thump-thump music. Loius Roederer champagne flowed. A few stone-faced men in high-collared open-necked shirts talked in whispers. A gaggle of not terribly glamorous women wandered around giggling. The main man at the party was former Northern Ireland politician, David Burnside, who used to run the PR department at BA. He was there to field media questions.

Burnside gave a calm and impressive performance. He will have been responsible for what positive coverage has so far come the way of the brothers. Asked which lawyers were representing the brothers, Burnside wryly replied "all of them." As followers of the various Tchenguiz sagas will know, they are suing Kaupthing, the Icelandic bank is suing them.Robbie is suing his brother in law, Vivian Imerman, he is suing Robbie. Now dozens of London's finest litigation lawyers will be added to the huge legal payroll.

The only hard news coming from the SFO is that the investigation is centred on a short period before the Icelandic bank went bust in October 2008. That presumably means querying the final outflow of funds. The main question being: "who ordered who to send what money to whom, when - and why?" Plus perhaps: "did the funds go to the lawful recipient and did any sender personally benefit? If the SFO can stick to these questions, the investigation may only take months. How about a result before MIPIM 2012? A silly question no doubt.

Today the International Quarter at Stratford is born. The brand has been coined by Lend Lease and their 50:50 JV partner, London & Continental Railways, for 22-acres of land nestling between the Olympic Park and the Westfield shopping centre, on which 4m sq ft of offices, 267 000 sq ft of retail and 350 homes are planned. An outline of these plans appeared nine months ago. But the JV clearly judge it is time to start marketing the £1.3b "international quarter," as work can begin in 2013, once the Olympic hospitality tents are struck.

Last May Dan Labbad of Lend Lease and (now retired) Stephen Jordan of London & Continental Railways went through their nascent plans with me for a column in the Standard. "We want this to become a premier office space, a spot for the European HQ of international companies," said Jordan, "this could be bigger and better than Croydon." The remarks were made to rebut the suggestion that Stratford is just the spot for acres of back office space for government departments renting at somewhere between £15 and £25 sq ft.

The new "international quarter "tag, tells you that the JV is sticking to its original vision of offices rented in the £25 to £40 sq ft range. To be fair, the view that Stratford will become "a new metropolitan centre" for London is correct. This is largely thanks to the huge shopping centre being built by Lend Lease's Aussie rivals, Westfield - who began marketing a million square feet of office space of their own last week. It is also thanks to the fact that all London's major transport hubs are within 35 minutes of the new station at Stratford.

Paris is, of course, just two hours away down HS1, hence the international ambitions. But just up the line lies Kings Cross, where, after 20 years, just one international tenant, BNP Paribas, has been secured. But there is no harm in trying.  L&CR own the 22-acres, which must be on the books at a minimum amount. But would a JV holding such cheap land be able to resist brand dilution if government makes good on plans to move civil servants out of Central London and offered £15 sq ft for 2 million feet in the International Quarter?