Aged just five, developer Deeley Freed is already adept at playing the office, residential and industrial markets – and with over £50m of regeneration to its credit in central Bristol, it has left its mark on the city. Neil Jones reports
Achieving a city’s record rent always makes the competition sit up and take notice. If your business is barely five years old, then competitors start to think they may be missing a trick or two.
But there is little mystery about the way that West Country-based developer Deeley Freed has made its mark on the Bristol market.
Since 1996, Deeley Freed has set about building a group with a strong balance sheet underpinned by high-yielding rental income streams and low overheads. It is an old-fashioned – or, to put it more kindly, tried and tested – method of achieving success.
Little surprise, then, that the three directors – Peter Deeley, David Freed and Andrew Maltby – are no newcomers to this business.
Freed has spent the past 10 years building up a range of property companies and for a decade before that was a commercial and financial lawyer majoring in commercial property development and corporate flotation work.
Varied property interests
His other property interests include the family investment company Sydney Freed Holdings, Merchant City Properties, an investment and development company in the Merchant City area of Glasgow, and Howsmoor Developments, a leading shareholder in the innovation and technology park QWest at Emerson’s Green, Bristol.
Deeley is chairman – and son of the founder – of the Midlands-based Deeley Group, which he joined in 1958. Established in 1936, it has businesses in development and investment, housebuilding, construction, plant and tool hire and decorating.
Maltby is the relative newcomer, having joined Deeley Freed as a director and shareholder in 1999. Before this, he headed the development division at Hartnell Taylor Cook for 10 years as a partner of the firm, after six years as vice-chairman of Alder King, specialising in office agency.
Deeley Freed’s greatest success to date was achieved last year with its Georges Square scheme in Bristol, which completes fully at the end of this year.
The Georges Square site was bought in a joint venture with Atkins Properties from Scottish Courage, which had stopped brewing on the site 10 years earlier. A notoriously difficult site, largely because of its historic importance – Situated in a conservation area that forms part of the former Courage Brewery site – the purchase was seen by some as a brave move. The sceptics were soon proved wrong.
Deeley Freed negotiated a planning consent to provide 68,000 sq ft (6,320m2) of offices plus 47,000 sq ft (4,370m2) of residential apartments and 5,000 sq ft (460m2) of restaurant space. It spent a great deal of time and hard cash satisfying the demands of the historians.
Record office rent
Within a short time, the residential apartments were forward sold to Crosby Homes, the South West operating subsidiary of Berkeley Group, and the entire office building was prelet to law firm Clarke Willmott & Clarke at a rent of £22.50 per sq ft, a record for the city.
David Sedgwick, managing partner of Clarke Willmott & Clarke, says: “The views from the upper floors over Castle Park and the centre of Bristol are amazing and we really couldn’t ask for a better location for our new headquarters.”
The new building, which will be ready for occupation shortly, is more than twice the size of Clarke Willmott & Clarke’s old offices and the rapidly expanding regional firm of solicitors – which has seen its staff numbers practically double in the past year – is looking forward to moving in.
Freed, born in a well-heeled Cardiff suburb, is the driving force of Deeley Freed.
But he has great back-up in Maltby, who is said by those in the Bristol market to be able to spot a property deal better than anyone in the city. “It would be tough to find a more astute pair than Freed and Maltby operating in this region. Not much passes them by,” says one agent close to the firm.
Deeley Freed’s directors say that they set out to “acquire, manage and improve a high-yielding portfolio of commercial properties”. They improve these assets through refurbishment, reletting and restructuring leases to boost secure returns. The intention is either to retain assets in the portfolio or to sell them on in the medium term.
A second operation is the creation of a portfolio of largely freehold serviced residential apartment blocks prelet to the group’s associated company The Serviced Apartment Co. The aim is to provide a high-yielding portfolio of quality residential property in key centres throughout the UK.
It has approximately 100 units and plans to increase this to 300 in the near future.
Deeley Freed’s investments are mainly based in the South West and the Midlands. Much of its activity is concentrated in Bristol; in the past four years, the company has created urban regeneration projects worth over £50m in central Bristol, principally in the Victoria Street area. It has retained over half of these investments in the company portfolio, Freed points out.
The company’s development work in Bristol has transformed Victoria Street. In one of three schemes in the street, it developed new offices for solicitors Wansboroughs in buildings that had been vacant for 50 years after being bombed during the second world war. The completed investment was sold to Lothian Pension Fund.
A second development, of a 35,000 sq ft (3,250m2) office building at 90 Victoria Street, was prelet to Bristol Canterbury Welfare Association and sold to Associated British Foods Pension Fund. Deeley Freed developed this brownfield site in partnership with the City of Bristol.
It then completed a redevelopment scheme at the adjacent Saco House, 80 Victoria Street, and retained the freehold. Saco House provides 21 residential apartments in a largely new-build structure constructed behind retained listed fa!ades.
Deeley Freed’s latest purchase has been the freehold of Netherton House in Marsh Street, opposite the former Bristol & West building in Bristol city centre, for which it paid £3.85m at a yield of 8%.
The developer’s plan is to retain and refurbish the 36,000 sq ft (3,340m2), 1960s building and give the outside a facelift, to provide modern, attractive offices with good parking.
Demand for central office space
Freed says: “There is a strong market for smart, central offices among solid, successful Bristol companies which cannot afford to pay the current rents for top-quality prime space.
“We believe there are strong growth prospects in the secondhand office market, and are actively looking for more investment opportunities like these.”
Deeley Freed has also turned its attention to the secondary industrial market, having acquired 110,000 sq ft (10,210m2) at Ashmead Trading Estate in Keynsham near Bristol from a private vendor.
With Atkins Properties, it has also acquired eight units at Grovebury Road Industrial Estate in Leighton Buzzard for £3.4m from Land Securities, at a net initial yield of 8.75%. The units are let to Boss Group and Bernard Freight Management.
Andrew Maltby says: “We are keen to invest in well-located secondary industrial space, as we believe there is a great potential for rental growth in the market.
“Freight companies are particularly keen to keep their space costs at a reasonable level, as other operating costs – including fuel – are rising and profits are being squeezed. We are also able to offer flexible lease terms from three years upwards.”
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Latest figures |
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To year-end April 2001 |
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Deeley Freed Estates |
(£000s) |
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Sales |
3,490 |
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Pretax profit |
514 |
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Fixed assets |
1,301 |
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Current assets |
6,248 |
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Total assets |
24,421 |
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Current liabilities |
10,272 |
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Long-term debt |
10,333 |
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Total liabilities |
24,421 |
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Working capital |
(4,024) |
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Net worth |
3,347 |
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Auditor: Deloitte & Touche. Bank: HSBC Source: Dun & Bradstreet |
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The Deeley Freed portfolio |
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Development is concentrated in the West and Midlands |
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Serviced apartment buildings |
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Saco House, 78-84 Hagley Road, Edgbaston |
Birmingham |
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Saco House, 80 Victoria Street |
Bristol |
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Saco House, 74-76 Cathedral Road |
Cardiff |
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Saco House, 53 Cochrane Street |
Glasgow |
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Saco House, The Ropewalk |
Nottingham |
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Saco House, 2-10 Castle Street |
Reading |
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Commercial properties: Bristol |
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Georges Square, Bristol Bridge |
120,000 sq ft mixed-use development, with 67,000 sq ft office prelet to law firm Clarke Willmott & Clarke, with remainder residential/A3 forward sold |
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Netherton House, Marsh Street |
36,000 sq ft income-producing office refurbishment opportunity |
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County Gates, Ashton, Bristol |
11,000 sq ft income-producing office refurbishment opportunity |
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Charlton Road, Keynsham, Avon |
30,000 sq ft town-centre food store opportunity |
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2-10 High Srett, Keynsham, Avon |
Fully let retail/office/residential investment |
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Ashmead Road, Keynsham, Avon |
100,000 ft industrial development/refurbishment |
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West and Midlands |
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6-7 High Street, Chippenham |
Prime retail investment |
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11-12 High Street, Chippenham |
Prime retail investment |
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Crossways Shopping Centre, Paignton, Devon |
100,000 sq ft retail investment |
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Grovebury Road, Leighton Buzzard, Beds |
200,00 sq ft industrial investment |
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Source: Dun & Bradstreet |
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