Lunch with David Lockhart of New River

Bruce Dear, partner and head of real estate investment at international law firm Eversheds, meets his old friend and client David Lockhart, Chief Executive of New River, for lunch at Wiltons.

David tells me, "I started out practising law in the family firm. In Scotland, solicitors are also estate agents, so I began developing residential and buying retail property, whilst practising law. I enjoyed the commercial edge of buying, selling and creating value; I also preferred acting as principal, taking my own business decisions, rather than taking a client's instructions. In 1981, I founded Caltrust, a company dedicated to prime retail and office development opportunities. There's nothing like the excitement of starting a business."

He received backing from the Middle East and Scottish institutions and built up the business during that brash, yuppie decade. In the late '80s, just before the crash, David sold Caltrust to Sheraton securities. Market wise, David has the timing of a great surfer. He feels the top of the cycle, like a peaking wave, and always sells just before it falls away. His experience of previous corrections means that he is well placed to recognise the opportunities generated by this one.

In 1991, David founded Halladale. They were active asset management, development and value enhancing specialists, operating in the retail and office sectors. He assembled a talented team including Mark Harkin, a tough and combative Glaswegian finance director, Ken Lindsay, a supremely well connected property man and his own son, Allan, a Strutt and Parker retail specialist and swash-buckling deal finder. By April 2007, they had grown Halladale to a £1.5bn company.

David takes up the story: "One of Australia's largest quoted REITs approached us about a joint venture." Their interest strengthened and ultimately they decided they wanted to buy Halladale. "We were an AIM listed company and there was no doubt in my mind that it was in the interests of our shareholders and all other stakeholders to accept their very attractive offer. I also felt a frothy "topiness" in the market. I knew that this was a good moment to sell; though no one could have imagined the financial Armageddon that followed. I stayed for 15 months to oversee the integration of the two businesses and then Allan and I began talking about a new platform, a new river to fish."

In 2009 they founded New River, a vehicle which has now become a highly active, specialist REIT, focused on the retail sector. They have a clear and decisive vision for their business: to become the leading value creating platform in the retail sector.

"We target retail opportunities that give us attractive initial acquisition yields and high cash on equity returns. The assets must have sustainable rental levels and have asset management and development opportunities, so that we can enhance value. We look for centres with an under provision of, and need for, food and large space value retailing. We also target non-discretionary retail: health, beauty, clothes and discount, as well as food."

New River has a strong story. In a little under two years, they have raised over £100 million of new capital, acquired approximately £250m of assets, set up a joint venture with MSREF, secured two shopping centre management contracts from a major institution, converted to a REIT and paid a maiden dividend.

While New River confirms David as a shrewd market reader his other great skill is as team builder. At New River, among others, he has a talented and well connected young finance director in Mark Davies, a tenacious deal finder in Nick Sewell, and Allan Lockhart alongside him, as an extremely able, driven and entrepreneurial deal maker. David feels New River's future course is assured and in capable hands. It's obvious that bringing this team through and sharing his experience with them has given David more satisfaction than almost anything else."

Photo by zoqy.net via Flickr.