It’s Hammerson, of course, that has been the principal subject of bid rumours in recent weeks. But don’t think for a moment that it is the only developer being eyed covetously.
Ever since chief executive David Atkins announced his intention to sell off his £500m office portfolio in February, speculation about the REIT’s future has been rife. The battle of Croydon has only intensified it. With Westfield’s rival efforts to redevelop the Whitgift Centre so high-profile, the suggestion that the Australians might buy the Brits to make the problem go away has been a seductive one.
There have been approaches from rivals, for sure. But whether there is a serious – and seriously attractive – bid for the whole Hammerson business on the table remains to be seen.
Hammerson may remain independent, but consolidation among developers is a certainty. Investment bank Citi is touting industrial developer Gazeley for around £400m. And don’t believe for a second that the likes of SEGRO have ruled themselves out. Like others, it has money to spend on the right assets at the right price.
Meanwhile, the announcement of Adrian Wyatt’s departure from Quintain served as a reminder for rivals of the opportunities (and distractions) that that business offers (p30). And as new chief executive Max James works up the future funding plans he has been tasked with delivering, he may well find his phone ringing with inquisitive potential suitors seeking a moment of his time.
It was no surprise that one wise old head I caught up with this week predicted serious consolidation among the REITs. Expect bold calls from the most forward-looking, he said.
And he’s right, though from where such boldness will come from is a much harder call.
Great Portland Estates reported the strongest numbers of this reporting season on Wednesday (p38) and has a considerable war chest after its recent US fundraising. And all eyes are on Land Securities’ Rob Noel – just how big and bold is he prepared to be? British Land, meanwhile, has proved itself an active trader of small assets (p38) – might it apply the same philosophy to larger trophies?
There is another big factor at play. The principal constraint on corporate boldness is, and will remain, the uncertain economic outlook. A lack of political boldness in addressing that is only making an already tortuous situation worse.
In an ideal world, political solutions would spur corporate activity. But this isn’t an ideal world. Politicians are dithering on all fronts – domestic and European, economic and political. Corporates will have to find their own solutions to spurring growth. And consolidation and the economies of scale that brings will play a large part in that.
It’s London’s fault. That was the conclusion of journalist and commentator Matthew Parris. It’s developers’ fault, implied Andrew Carter of the Centre for Cities. And the question at this week’s BCO conference? Why are we struggling to spur growth in the UK’s regions?
In fairness, Carter was more nuanced than that. With developers gravitating to larger conurbations, smaller cities are having to turn away economic growth opportunities. “York and Cambridge are turning away businesses who want to come to their city because they don’t have the office stock available today,” he said.
There was no nuance to Parris’s argument. London is too successful, he said emphatically, with Manchester, Birmingham, Belfast and elsewhere unable to compete.
It was a fabulously entertaining address and at its heart there was a fundamental question about the future of the UK economy. London is a world city, said one delegate, Manchester is a European one. But the global marketplace is going to be an increasingly important determinant of success. Is national rebalancing compatible with that? It’s a conundrum that wasn’t solved at the BCO. Where will it be?
