Career shift: Julian Wells hardly returned to a quiet life in the country when he left Hammerson for Targetfollow
Julian Wells has big shoes to fill. As the recently appointed development director of Norwich-based Targetfollow, he is tasked with turning a company with virtually no track record in building into a fully fledged developer.
Owned by organic farmer Ardeshir Naghshineh, Targetfollow is better known for clever acquisitions and smart asset management than for building regional offices. In a portfolio worth £1bn, it holds trophy assets such as Centrepoint in London and Baskerville House in Birmingham. Wells’ task is to triple that holding through a £2.2bn development programme.
Clearly, he will not be easing himself in.
So, is he up to the task? His peers in the industry applaud the progress he has made, saying that he has”single-mindedly” pushed mammoth development projects through the planning process.
Four planning consents have been secured, two have been submitted and a further two are waiting in the wings (see below). And Targetfollow has emerged relatively unscathed from the vagaries of the debt market, securing a £454m refinancing at the peak of the credit crunch (see below).
It is poised to start work on a vast array of projects, including the £50m Duke’s Wharf in Norwich, Baskerville Wharf in Birmingham and the £100m Grand Central leisure scheme in Stockport.
Now, however, the Norwich property industry says it is time for the developer to actually deliver projects that have so far existed only on paper.
Wells is unfazed. Born and bred in Norfolk, he forged his regeneration skills under the watchful glare of property heavyweights such as Jon Emery during 14 years at Hammerson.
Key difference
In 2006, Wells made the leap back to his home ground. One day, he says, he was sitting in Hammerson’s Park Lane offices, the next he was sitting in Targetfollow’s headquarters above the KFC at the bottom of Norwich’s main student clubbing drag.
“The key difference is that Hammerson is a FTSE 100 company with layers of boards. Here we have effectively one shareholder with the banks behind us,” he says.
“Hammerson was a great place to grow up in. There, you have the big processes in place that you follow for a development. Here, I’ve had to build that up.”
He adds: “I feel a bit like a manager starting up a football club.”
Since starting, Wells has built up a soon to be six-strong development team and has 15 projects on the go. Yet he says: “If anything, Ardeshir undersold the potential to me. We are talking about a development potential of 3.5m sq ft over the next five to 10 years.”
For Targetfollow, its biggest test may well prove to come from one of its smaller projects. Compared with plans to redevelop the 21-acre Harford Place on the former Bally shoe site to the south of Norwich, its city-centre Duke’s Wharf project is a minnow. Yet all eyes are focused on how it can deliver on the latter.
Agents are familiar with the images of Duke’s Wharf, the group’s office-led, mixed-use scheme in Norwich city centre, but they have waited nearly 10 years for any part of it to become a reality. Plans include 140,000 sq ft of offices, 25 flats, and 25,000 sq ft of leisure.
But the facts that Targetfollow has owned the site since 1999 and considered a purely residential scheme have prompted suggestions that there was a lack of confidence in the local office market.
Question asked
Take into account the economic climate and the fact that Jarrold’s Whitefriars scheme, with a first phase of 250,000 sq ft of offices, will beat Targetfollow to the market by nearly two years, and the question most often asked by local agents is: “Will they actually build it?”
Absolutely, says Wells. “We will crack on with it, irrespective of if we can get funding – which I am absolutely confident we can,” he says. “We are incredibly conscious it is our home city, and this will be our legacy. We are incredibly passionate about Norwich, we love this city, and Duke’s Wharf will be a real statement.”
Gearing will depend on the level of prelets, although Wells hints that it will be less than the company can achieve for Stockport or Harford Place in Norwich.
A detailed planning application was submitted last October, and the hope is that this will go in front of the planning committee this month, with a view to building the scheme in one go. The first occupiers, which include Targetfollow itself, will be in situ in two years.
Designed by local architects Feilden + Mawson and modelled on Brindleyplace, the scheme will, Targetfollow hopes, help it push headline rents up by a whopping 25% in the city, to £20 per sq ft (see p153).
“It is a reasonable rent,” says Wells. “There is a market for the type of kit we are going to build, and there are a lot of occupiers that want to up their game but are having to wait, and Whitefriars is doing brilliantly.”
Raising eyebrows
Targetfollow is taking 25,000 sq ft of offices as its new European headquarters. Yet the fact that it also took the first lease on its redevelopment of Baskerville House in Birmingham – raising a few eyebrows in the Midlands capital – has not gone unnoticed by Norwich agents.
Since then, Baskerville House has been slow to let. Wells nods, but says simply: “It looks stunning, and itwill let.”
Many will be hoping his optimism is well placed. Baskerville House sits within 5 acres of land that could house as much as 1m sq ft ofmixed-use development. Called Baskerville Wharf, it will be one of Targetfollow’s boldest ventures yet.
Targetfollow is still at an early stage, evolving plans with Birmingham council. No compulsory purchase order will be necessary since, between them, the council and Targetfollow own all the land. But the company will have to wait for the completion of the city-centre masterplan, which will steer the shape of Birmingham over the next 20 years.
Wells promises a new style of development for Birmingham. “It will not be another Brindleyplace or Snow Hill,” he says. “There will be tall buildings and a major mix of uses including hotels, residential, offices, restaurants and cafés, but we won’t have the big shiny towers. Snow Hill already has that covered.”
So, while many make the move from the big city back home to seek a quieter, higher-quality life, that is clearly not Wells’ ambition. “Targetfollow was a one-way ticket to go places. It has such big ambitious plans. Being in Norwich was a double bonanza.”
Targetfollow’s key projects
Duke’s Wharf, Norwich
? £50m office-led mixed-use scheme
? 140,000 sq ft of offices, 25 riverside flats and 25, 000 sq ft of leisure
? Planning submitted in October, completion set for 2010
Harford Place, Norwich
? One mile south of the city centre at the former Bally Shoe site.
? 21 acres with proposed district centre and retail park
? On site by the end of this year
Princes Street, Ipswich
? 14,000 sq ft, £4m office scheme.l Work started in January with completion targeted for the end of this year
? One prelet to a “plc tenant” is already in place
Pantiles, Tunbridge Wells
? £11m deal signed for Pantiles shopping centre, neighbouring Targetfollow’s Corn Exchange centre
? Plans are afoot to link the two centres together
Baskerville Wharf, Birmingham
? 5 acres of mixed-use development in the city centre
? Could include as much as 1m sq ft of mixed-use development
? Plans at early stage with a view to signing an agreement with Birmingham council
Grand Central, Stockport
? £100m leisure development.
? Planning application submitted last August
? Completion scheduled for 2010
Developer survives as funding tightens
Targetfollow may be a Norwich-based company, but a Europe-wide portfolio leaves it exposed to the wider market.
As a debt-backed company, it is also open to the whims of the money markets. What is being done to address that?
Development director Julian Wells is philosophical. “No one knows what is around the corner,” he says.
He adds that now is a “good time to be a developer. So long as you manage the cash flow carefully, it is a great time to work up a scheme and, to be honest, I would rather be developing now than in a racing market, when you are competing with everyone else to get planning applications in.”
Having just gone through a mammoth £464m refinancing for a portfolio of 10 properties with Bank of Scotland Corporate, the company was exposed to the money markets at the peak of the credit crunch.
However, Wells says survival was relatively easy. “None of the assets were dry, and that gave the bank a big comfort,” he says.
But he adds: “The funding on development is getting tighter. If you are a developer with no expertise, there are some tough questions being asked.”
Wells refuses to talk about the firm’s gearing, other than to say Targetfollow has a “fantastic NAV and a huge amount of real cash”.
As a result, he says, Targetfollow will keep buying. “We are acquisitive all the time and, if it is a chunky, decent sized lot, an income-producing asset with an opportunity to improve or a development angle, we will look at it. If it is vanilla, then it probably isn’t Targetfollow.”
Julian Wells cv
Born: 1970, Norwich
Educated: The Norwich School and Newcastle upon Tyne Polytechnic
1992: Joined Hammerson as a graduate trainee in the property asset management team
1994: Moved to Hammerson’s development and investment team
2005: Promoted to a director at Hammerson
2006: Joined Targetfollow as development director.
Lifestyle: Married with three daughters. Likes football, tennis, reading, shooting and skiing
