Starting again Nadia Elghamry speaks to property players in Yorkshire about the opportunities and challenges facing brand new companies
Declared bankrupt
Guy Brudenell
In December last year, Guy Brudenell suffered the worst fate a businessman could imagine. The Yorkshire property entrepreneur was declared bankrupt following a messy divorce, wiping out his property empire that had taken 30 years to build up.
Since then, Brudenell has spent the past year trying to get an annulment from the courts and paying back his creditors.
“Yorkshire is a small place and it’s tough to bounce back. There were mornings I didn’t want to get out of bed. I just wanted to keep the curtains closed. I’ve had 180 sleepless nights.”
Since then, Brudenell has brought in funds of £15m, of which £6m is expected to secure him the annulment. The rest will form his fighting fund to rebuild his property portfolio.
“This time next year, I’d like to have everything I’ve lost back,” he adds. “I’ll be getting rid of the dead wood and taking the partially completed projects that offer the highest returns in the shortest period.”
That includes £25m worth of student accommodation schemes in Middlesbrough and York as well as the refurbishment of the Black Swan Hotel in Helmsley, which was left part complete.
Brudenell is also looking to the future. “It is a perfect time to be piling into the market. There are some amazing deals so I’d like to do some mopping up.”
He plans to look at lot sizes of £10m-£15m, using cash for 30-40% of the purchase price and gearing up the rest. This is with a view of building a portfolio in the next 18 months with a net value of £50m targeting residential, secondary commercial and hotels.
“To say its been a bad year is an understatement. It’s been cathartic. Now I plan to get busy.”
Asset manager
Ripley Capital
It was late 2009 when BAM, developer of the 120,000 sq ft Latitude Red in Leeds, announced it was in consultation with senior regional staff to close its Leeds and Birmingham operations.
One of those staff was Nikolaj Dockree, who was then development manager in Leeds. Last November, he found himself with a modest payout and no job. By Christmas, he was working out of his dining room and had, along with Mark Leonard who left CB Richard Ellis in 2007, set up asset management firm Ripley Capital.
The company is hoping to get involved with everything from managing far-flung northern assets for London-based fund managers and institutions, placing capital for wealthy individuals, to buying and profit sharing on commercial buildings.
“A number of London-based fund managers have said they lack someone on the ground. They go up to look at an asset and it’s a full day to get there, never mind doing something with the asset while you are there,” says Leonard.
But they are not the only ones eyeing this juicy sector of the market. “A lot of the propcos have been forced, rather than chosen, to go into asset management to cover overheads,” says Dockree. “Those guys want to buy the big tickets.They want to be able to develop. We are looking to sit alongside the owners.”
By this time next year, Dockree says he would like turnover to be a six-figure number, and he would “like that to begin with a two”.
He adds that, if the jobs the firm has in the pipeline come off, they should exceed this and be able to expand the business. He says that they have secured some jobs and are making progress.
The pair are also keeping an eye out for distressed assets and have held some interesting conversations with high street and specialist banks.
“We are also talking to the major firms of accountants as they’re the ones that are being appointed by the banks,” says Dockree. “We can then go in very early and look to add value before these assets are sometimes even known to the market.”
Fees have been different on every job, says Dockree. In some cases, it is a retained monthly rate and in others a profit share. For example, the pair are looking to set up a partnership to buy two buildings in Yorkshire for a total of just over £6m. They are also talking to the banks about West Riding House in Leeds.
“It’s nice to have a mix of steady fee income and incentivised income,” says Leonard.
“We’ve got to pay the mortgage after all,” quips Dockree.
Resigned
WSB
Just over a year ago, Robin Beagley was faced with a decision. Should he give up the steady wage at Lambert Smith Hampton and forge out on his own or, with his wife now working part-time and a second child on the way, should he hunker down and wait for the recession to pass?
Beagley chose the former and, at the end of March last year, was put on three months’ gardening leave. Together with David Watson (also formerly of LSH) and Duncan Senior (from CB Richard Ellis) the trio formed agency WSB.
“Some people thought we were mad to resign, but we were confident we’d make it work. Perversely, in this climate, there’s a battle weariness among those left in some other firms, while we are a fresh-faced business.”
Looking forward, although reticent to disclose figures, he says turnover will be “six figures, not seven figures”.
The high point was signing one of the largest deals in Leeds this year, securing Yorkshire Water in 56,000 sq ft at Livingstone House at Clarence Dock. This helped the firm transact 104,000 sq ft of office space over the past 12 months.
The firm now has 370,000 sq ft of stock on the books in Leeds city centre and around 70,000 sq ft outside, and boasts a team of five, which will soon swell to six.
That is far from saying it has been an easy market. The Leeds agency scene has many mouths to feed and local players, although reticent to go on record, say that you need to only look at annual take-up figures to see that fees cannot support the number of agents.
“We say that all the time,” says Beagley. “How the hell do some of those guys make money? But, that said, take-up in the city centre doesn’t necessarily reflect where a lot of deals are getting done outside Leeds.”
The business is self-financed, says Beagley, and the overheads are low. “It’s a tough market and we were fully aware of that when we set up,” he says. “We did a lot of financial planning and decided that we could do this, even if fees did not come through the door for a period of time.”
