A property company owned by private equity investor Guy Hands (pictured) has kicked off a court battle with the government over controversial plans to buy back an estate valued at as much as £8bn.
Annington Property is trying to block plans by the Ministry of Defence to buy back some of the 60,000-home estate at a court-appointed price. Annington is backed by Hands’ Terra Firma Capital Partners. The week-long judicial review started at the High Court in London on Monday.
Annington bought the MoD married quarters estate in Bristol and Cranwell in Lincolnshire for £1.7bn in 1996 and rented it back to the MoD. Increased property prices in the past 25 years mean the estate is now valued at around £8bn and generates significant sums in rent.
Now, the MoD is seeking to use its rights as a freeholder to buy back some properties as a “test case” before deciding whether to buy back more.
Annington is attempting to block this. In court papers, lawyers for the company said it had been preparing to sell the estate before market conditions deteriorated in 2022, but the MoD’s buy-back proposals effectively stopped this and the opportunity to sell has now been lost.
“The sale cannot proceed in circumstances where the business can no longer be valued with any certainty, nor can it be assumed to offer a stable, long-term cash flow to potential investors,” the papers said.
Annington says the uncertainty has reduced the estate’s book value by £415m, according to a CBRE valuation dated 31 March 2022.
One of Annington’s arguments is that the freehold is effectively owned by the Crown, which means it isn’t governed by the same freehold and leasehold laws as a private company. Annington argues the MoD can’t buy back properties from the estate without Annington’s permission.
The MoD opposes this and argues that Annington is a sophisticated property investor that has long been aware of the possibility of a buy-back.
(1) Annington Property Ltd; (2) Annington Ltd (3) Annington Holdings (Guernsey) Ltd v the Secretary of State for Defence; (1) UK Government Investments Ltd and (2) Defence Infrastructure Holdings Ltd
