Alan Ryall and Nathan Pask were nervous heading into a meeting last year with one of the big UK clearing banks. The pair had known the institution for years and counted it among their strongest client relationships during their time in the restructuring division of Avison Young. But this was their first time meeting the bank’s team since that division was spun out to form Watling Real Estate, a new advisory and agency firm.
“It was our first meeting, a real litmus test,” recalls Ryall, who had been Avison Young’s head of UK restructuring solutions. “After 10 minutes our contact stood up and stopped us. Me and Nathan started panicking a little bit. But he said ‘I’ve got to stop the meeting – no one has said congratulations. This is fantastic’ and shook our hands. From that moment, I never looked back.”
A year and a half on from launch, Ryall says the business “has surpassed all our expectations”, not least due to a rush of restructuring work emerging in a tough period for much of the real estate market. But the team has nonetheless had to handle the challenges and pressures that come with operating as a standalone business after decades of playing their part in larger corporations.
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Alan Ryall and Nathan Pask were nervous heading into a meeting last year with one of the big UK clearing banks. The pair had known the institution for years and counted it among their strongest client relationships during their time in the restructuring division of Avison Young. But this was their first time meeting the bank’s team since that division was spun out to form Watling Real Estate, a new advisory and agency firm.
“It was our first meeting, a real litmus test,” recalls Ryall, who had been Avison Young’s head of UK restructuring solutions. “After 10 minutes our contact stood up and stopped us. Me and Nathan started panicking a little bit. But he said ‘I’ve got to stop the meeting – no one has said congratulations. This is fantastic’ and shook our hands. From that moment, I never looked back.”
A year and a half on from launch, Ryall says the business “has surpassed all our expectations”, not least due to a rush of restructuring work emerging in a tough period for much of the real estate market. But the team has nonetheless had to handle the challenges and pressures that come with operating as a standalone business after decades of playing their part in larger corporations.
Desire and demand
Ryall has known Pask, who was principal for receivership and restructuring at Avison Young, and Andrew Foster, who was restructuring solutions principal, for more than two decades.
“That’s how long the team has stuck together,” says Pask. “Most of us started out at GVA Grimley [bought by Avison Young in 2018]. Over that time, the organisation has changed and we have grown as a team as the market has grown.”
“The skill set that we have got is fairly niche,” Ryall adds. “We are an extremely established team and our experience is unparalleled in the market. We have been doing it for 25-plus years and we have been involved in some of the biggest restructuring cases in the UK over that period, from MG Rover to British Steel to Monarch Airlines.”
Breaking away from the group had been on the cards for some time, the team says. “There was the desire and the demand,” Ryall says. “A number of people in the team had an itch they wanted to scratch. What that scratch looked like, we weren’t 100% sure. We had a few approaches over the years, especially coming through Covid, which wasn’t the right time. And we got to a point where the demand side was coming both from members of the team and from clients as well. It was going to get to the point where we would either potentially lose members of the team or we would look at doing something together.”
The split worked from Avison Young’s side too. In a statement at the time of the deal, UK president Nick Walkley said the move would allow the firm to concentrate on core transactional and professional services offers, describing it as “a client-driven move… very much in line with the trend in an evolving market”. Accountancy firms Deloitte and KPMG had also offloaded their restructuring divisions, Avison Young noted.[caption id="attachment_1264113" align="aligncenter" width="847"] From left: Alan Ryall, Andrew Foster, Nathan Pask[/caption]“The restructuring market and insolvency market is much better known about now, but at times it doesn’t sit very well within a large corporation – there are points of sensitivity, conflict,” Ryall says. “AY has gone through a massive period of change… and that understanding changes over time. With the demand from the team as well, there was a window of opportunity. Having that element of control, being able to grow something was of real interest.”
Broader and bigger
The buyout saw some 20 team members join the new venture. Taking staff and clients along for the ride was daunting, but the team reasoned that its reputation trumped any upheaval.
Ryall says: “It’s a quasi-position, isn’t it – we are an established business under a new name. The thought process was: we have had numerous new names above the door over the past five years and the client base stayed with us. And so having Watling above the door is another name change but the important thing is it’s the same individuals providing the same quality work.”
Every client moved with the buyout, the team notes – in fact, says Pask, the client base has grown “broader and bigger” since the deal.
Today the firm’s client list includes Barclays, HSBC and Santander, EY, KPMG, Deloitte and PwC, Pizza Express and Ferrero. The team is now in talks with a big US real estate adviser about working on its UK-based real estate restructuring projects.
Key to the firm’s pitch is its regional network, with offices in London, Leeds, Manchester, Birmingham and Bristol. The firm is named for Watling Street, a Roman road that stretches from the capital out through the regions. (The fact that Avison Young’s offices are a stone’s throw from Ye Olde Watling pub in the City of London is a happy coincidence, Ryall promises.) “Regional coverage and local market knowledge is critically important in any real estate advice,” says Foster. “We wanted something that reflected that coverage.”
Recent deals have included acting for administrators on the £53m sale of the 286-flat Parkview development in Brentford to LRC Group; selling Carlisle House in Holborn, WC1, from receivership; offloading a portfolio of pubs in Yorkshire and the North East owned by the Milton Three Pub Group before it entered administration; and working with Hargreaves Land on the £558m, 1,500-home Lincolnshire Lakes development.
New normal
Much of the work being done by Watling comes as a result of what Ryall calls a “valuation lag”. “The litmus test for us is some of the reporting coming through alongside some of the positions we have been asked to [act] on, and even recent valuations are out of kilter with where the market is,” he adds. “We have seen some big assets that have come to the market and they may be [stock market] listed so valuations are publicly available. You can track the last two or three years and the valuation curve has been very, very slight.”
That means the team is now “incredibly busy” on the restructuring front, says Foster. “At the moment, our busiest area is taking fixed-charge receivership appointments over insolvent situations,” he adds.
“That has been preceded by two years of negative capital value growth where we have seen a 25% drop-off in commercial property values, which has resulted in an inability of some customers to refinance or pay down the loan on expiry. Some customers default and, in a higher interest rate environment, which was the case previously, lenders are keener to take action. We are at a new normal now where the rate of capital value decline has stabilised, but it’s unlikely to increase any time soon, particularly in secondary markets.”
Foster adds: “Among our lenders client base there’s an acceptance that doing nothing isn’t really an option at the moment.” Good news for a firm eager to continue making its own mark.
Images from Watling Real Estate
