Three of Britain’s leading commercial property advisers have been caught in the controversy surrounding Blue Arrow’s £25m loan to a company controlled by Peter de Savary for a development at Canvey Island, Essex.
Jones Lang Wootton, Debenham Tewson & Chinnocks and Drivers Jonas all provided valuations, ranging from £13.25m for the land in its current use to £75 to £85m with planning permission, which have led Blue Arrow to put aside £25m in case it cannot get its money back.
According to Peter de Savary, Blue Arrow’s board decision to write off the loan is “ignorant and stupid”. He has estimated the site’s value to be approaching £200m.
Blue Arrow became involved when former chairman Tony Berry authorised a loan of £25m to de Savary-controlled Chainrock NV.
Blue Arrow’s board, under its new director, Mitchell Fromstein, decided to review the loan and asked JLW to value 800 acres of the Canvey Island site in February. The valuation, based on open market value and such planning permission as existed at that time (400 acres are zoned for industrial/oil use, and there is permission for one oil refinery), priced the site between £75 and £85m.
Later, in February, Chainrock submitted a planning application for Northwick — 4,000 houses on 400 acres, 150 acres of business space, 30 acres of shopping and a nature reserve.
In March, Blue Arrow decided to get a second opinion on the value and planning issues from Drivers Jonas. Assuming that consent would be given for a scheme similar to Northwick Village, DJ thought that the site (now 1,200 acres) could be worth £55 to £60m. The existing use value, excluding hope value or speculative demand, was put at £13.25m.
Worried by this low figure, Blue Arrow asked DTC to provide a further valuation on the Northwick proposals — this was £75m.
