Patrick Begg is on a mission. And it’s a monster. Begg is the National Trust’s rural enterprise director and making sense of the Trust’s mighty property portfolio is his task. Mighty is indeed the word. The estate ranges from 600,000 acres of farm and woodland, to 150 teashops, 50 pubs, various warehouses and offices, several dozen entire villages and 5,000 homes. Only the Crown, the Duchy of Cornwall and the government have more, and more varied, rural land portfolios.
No surprise then that Begg’s mission – to grab the sprawling, under-invested and sometimes poorly maintained portfolio by the collar – is going to take some time. Decades, probably.
The multi-million-pound programme is still being costed – and some key parts of the portfolio are years away from receiving systematic attention. But it is sure to be one of the most ambitious asset management programmes in the UK. The vast residential estate is the first to receive attention; farmland and agricultural tenancies will come next with a programme being prepared around 2015 – and then will come the commercial portfolio.
The residential portfolio presents the greatest challenge because it’s so varied. The strategy involves a rolling eight-10 year programme of investment likely to cost around £50m at today’s prices – but could be more.
“Residential is at the top of the priority pile,” says Begg, of a portfolio now worth £26m a year in rental income.
“Residential property has become critical for local financial performance, and it provides the Trust with a very significant portion of its business income, which means getting the level of investment right.“
“We want a residential estate we can really be proud of, and that means tackling a backlog of investment. We need to improve our game.”
First, they would like to see a 5% return on investment. That is not a fortune by normal commercial standards, but given the nature of the properties involved – old, listed, in sensitive or isolated locations – it’s bordering on ambitious. “Five per cent felt like quite a hurdle,” says Begg.
The second objective is more nebulous – but every bit as significant. “We’re not driven by the same commercial imperatives as other landlords – the Trust’s other objectives are in play.
Begg explains: “We recognise that the residential portfolio has an essential place in landscape conservation. Villages and cottages are as much part of the landscape as fields, woodlands and country houses.”
Projects vary in size from £1.25m up to £10m, and will tackle the 25 major clusters – mostly entire villages – that make up 65% of the residential portfolio.
There is a long way to go with the residential portfolio, but thoughts are already beginning to turn to the commercial and agricultural portfolios.
“The next target is to lift our ambitions for what we want from our land,“ says Begg. “You have to remember, the National Trust is in the business of land management for ever, literally – that is the statutory basis of the Trust – and so we have always to be thinking and asking about what we can do to optimise the value of our land both now, and into the future. We’re literally in this for the long term.”
Begg adds: “We’re looking into this now, and working to understand what the problems are with the agricultural estate. We haven’t yet worked out the figures, and because we’re dealing with the residential portfolio now we won’t move forward on agricultural land until 2014-15.”
In the meantime, there is some scope for juggling the 1,500 agricultural leases – but that is limited. Less than a dozen are relet each year – making change achingly gradual. But there is much greater scope with new purchases and with the more rugged or forested sites.
Last year the Trust acquired a parcel of land at Great Landgale in the Lake District and it has become a model for the latest management approach. The site includes the Stickle barn pub, popular with hikers. Instead of letting the pub, the Trust has taken it in hand and is managing it successfully. Simultaneously, it has also investing £3.8m in the Stickle Ghyll hydro-electric scheme. The 100KW project will provide about half the energy the site needs.
The commercial portfolio is last in the queue. The estate includes pubs, warehouses, industrial and office uses, and a string of village shops and sub-post offices. The total rent roll is around £10m.
“We’ll begin in three to five years’ time. The fact is the Trust has a history of biting off too much. And while residential is a priority, I think we’ll concentrate on that, it doesn’t stop local initiatives from going ahead in the meantime.”
The local approach could be the key to revitalising the commercial portfolio. Three years ago, the Trust adopted a new management strategy for its great houses. Called Going Local (see panel), one of its aims was to give local managers more chance to shape their business at places such as Killerton, south Devon.
The Trust’s portfolio is never going to be easy to control – and will never be cheap to manage. Old properties in charming places need a lot of money. But – bravely – the Trust has embarked on a long journey towards a revamped portfolio.
Going Local
The Trust’s Going Local 2020 management strategy was launched in 2010. Three years on, its effects are beginning to be felt. Orchards are being planted and regenerated, community allotment schemes created, and in places such as Killerton, burlesque dancers have been causing a stir.
The 6,400-acre Killerton Estate, near Exeter, is one of the Trust’s largest. The burlesque dancers appeared last month as part of an event linked to the Trust’s costume collection, which includes plenty of shapely corsets and sparkly feather-adorned frocks.
The Trust has been anxious to stress that the burlesque act will be unimpeachable and tasteful.
It comes as Killerton begins to consider how to implement the next stage of Going Local.
Chris Melia, head of destination consulting at Colliers International, has been helping local managers set their agenda.
“Killerton has tenanted farms, shops, a post office, as well as the big house, and the aim has been to define questions to help the Trust make the best use of its assets. For instance, this could mean shifting things around so that offices move out of the big house to less sensitive space, freeing up rooms for visitors,” says Melia.
One aim is to encourage visitors to see the entire estate is an entity – not simply to see a big house and lots of fields. Melia adds: “It’s about making the house, the village and the estate legible to visitors. About making this a clearer narrative – and it’s something local managers are already keenly aware of doing.”
