Things wouldn’t have had to work out very differently, I tell Mike Hussey, for this interview to have been with the new chief executive of Land Securities. “Couldn’t he make it?” he asks, his face a picture of mischief.
If Hussey saw that one coming, the same could be said for the position in which he finds himself today. The public exhibition of his plans for converting London’s Centre Point into homes opened last Saturday, he’s been on the frontline of the battle for Lords, he’s in the running for Battersea Power Station and his name gets mentioned wherever the capital’s more imaginative schemes are discussed.
Almacantar, the business he set up in 2010, is at heart of the current property zeitgeist. And running this kind of operation was always at the centre of Hussey’s ambitions.
But let’s deal with Land Securities first. Hussey spent seven years with the company, as board director responsible for the London portfolio. When Francis Salway conceived his plan to split the business in three back in 2007, he took his board by surprise.
But then so did Hussey. Offered the job to run the London operation as a standalone business, instead he decided to leave the company. Last month his successor as LandSec’s Mr London, Rob Noel, succeeded the retiring Salway as chief executive of the whole business. How does Hussey feel about what might have been?
“Fine,” he insists. “I’m delighted for Rob. He was an excellent choice for the London role and there was a sensible period of time for him to get his feet under the desk, understand what Land Securities is all about, and step into the chief executive’s role. I’m delighted to see it all go through smoothly because it’s a great business.”
Salway’s decision to split LandSec, a decision that was never implemented, of course, forced Hussey to think about what he really wanted to do. “The only issue for me was deciding whether I really wanted to be chief executive of a plc with a London focus, or did I still want to go off and start something from scratch and grow the business?”
Pro-London
It didn’t take him long to decide. “I’ve always had aspirations to do something. I’m a London guy, I like London, I’ve always thought that London has special qualities and I wanted to grow a business that was focused on that market.”
Such independent thinking was underway even before he joined LandSec. Certainly it was there during his five-year spell with Canary Wharf Group, where he was head of leasing and marketing between 1997 to 2002. Former colleagues will tell you that running his own show was an ambition when he was Knight Frank’s youngest salaried partner before that. Indeed, he says the first seeds of Almacantar were sown in about 2001.
Almacantar launched in 2009, though its gestation had a longer history. Hussey and Neil Jones, Grosvenor’s head of Europe, had already been planning. They dismissed the idea of a fund, wanting to build an internally managed property company focused on London and Paris. Having seen Canary Wharf’s flotation at close quarters in 1999, Hussey believed he knew what investors wanted. In short he and Jones wanted to play to their strengths.
“The thing that frustrates investors the most is seeing people who’ve spent 30 years in the market doing one thing and then they try and do something else with their fund. So it was straightforward. What can we do well? What do investors want? How can we match those two to create the structure?”
Between October 2009 and April 2010 they set about raising £150m. “We saw about 20-odd other businesses trying to do the same thing, more in funds than propcos such as ourselves, but nonetheless we thought it would be pretty straightforward and it turned out to be incredibly difficult.”
It was their track record that saw them through. “In the end, we created the perfect investment structure, aligned to long-term investors wanting to add value to assets.” Italy’s Agnelli family emerged as the core investor and others rallied round too.
There were further hurdles. It soon became clear that Paris was a difficult sell and Jones stood down. “Other than that, it’s pretty much followed the track, which is to add value to assets. Identify assets you want to buy, make sure they’re large assets, because the only thing I’ve ever done in my career is large assets, and then look to investors prepared to take a long-term view. The gap in the market for us was people who wanted to multiply their capital rather than get a dividend return.”
Acquisitions so far include Marble Arch Tower, W1 for £80m and CAA House in London, WC2 for £110m. “We’re trying to fit into quite a small space,” says Hussey, which is assets over £100m in terms of their entry cost, so you get into less competition in terms of the purchase.
“But we don’t want to be purely on the secure income route. We want to be buying assets that others may not have the skills or the appetite to bring forward. We’ve written eight to 12 assets into our business plan.”
Centre Point and Chelsea FC
His most eye-catching purchase so far has been Centre Point for £120m, though his work for Chelsea FC on building a stadium on the Battersea Power Station site could yet eclipse that.
Last week Estates Gazette showed the first images of how the iconic tower would look if Almacantar is able to persuade Camden council to allow a conversion (21 April, p60). The plans could be transformational for an area with a troubled history. Indeed, as long ago as the 17th century it was condemned as “deepe foul and dangerous”.
Yet Hussey is excited. “It’s an amazing piece of architecture, but it’s in the most horrendous environment. What we are putting forward to Camden at the end of May is really a way of dealing with a listed building, reviving it, improving the environment around it, introducing retail, and trying to improve the condition of the asset so that it will have a 150-year life, not a 15-year life.
“And the way to do that and the way to fund it is to convert an unviable office building into a residential block.”
Hussey is selling a vision of the area as the first view of London for millions of visitors emerging from the new Crossrail station below. “Imagine if they have to pop out now. They’ll have thought they landed in Russia. We want to make it the window for London. We don’t want to lose the dynamic of the 60s icon, and we think there are some wonderful things to retain as well. So it’s providing a balance. For the first time, the opportunity exists to bring all those things together.”
For Hussey’s sake, and perhaps London’s, let’s hope the scheme is not too off the wall for Camden councillors.
