The first stages of a costly regeneration of Croydon’s Whitgift Centre have been kick-started. But as David Thame reports, a host of technical and financial issues must be resolved before a new retail vision can become a reality
What do the Irish Banking Resolution Corporation, and a man who says he’ll flash his rear outside the have in common? Give up? The answer is Westfield and Hammerson’s plan for a 2m sq ft retail redevelopment centred on Croydon’s Centre. And this isn’t a joke – it is deadly serious.
Earlier this summer, Croydon council began what could be a lengthy and expensive compulsory purchase process ahead of the town’s long-awaited retail regeneration. Up to 200 freehold and leasehold interests are involved.
Nobody knows how much it will cost – observers say a figure with seven or eight zeros after it is plausible. But it’s not the cost, or even the time, that will be giving Westfield and Hammerson bosses headaches. It’s the technicalities.
Marco Cash – also shown on Companies House paperwork by his birth name of Mark Anthony Gorevan-Cash and Mark Anthony Gorevan – is the retailer whose picturesque threat to expose himself outside Allders has added colour to the looming compulsory purchase of the 530,000 sq ft former department store. That’s because Cash’s company is planning to open the new Croydon Outlet Village inside it.
In July, Allders’ landlord Minerva unveiled the deal with Cash’s recently created Croydon Village Outlet Ltd. The terms remain secret but last week’s opening was expected to see the entire building occupied.
Says Cash: “Every square foot is occupied, 60 per cent with concession and 40 per cent operated by ourselves – there are 180 concessions. Demand was very strong. If the shop was twice as big I could have let the space over again.”
Cash says he has invested millions of pounds refitting and stocking the store to create a shopping destination. Minerva sources say they are not providing a capital contribution, and Cash denies any help from his landlord, insisting the resources are from private sources.
“I’d like to think we’ll still be here in ten years time,” says Cash.
A Minerva spokesman said: “As a responsible landlord, Minerva has acted in the best interests of Croydon and its residents by seeking a letting that ensures this building does not lie dormant, and helps to serve the town by providing jobs and a retail offering while the town centre redevelopment proposals are still going through the process.”
Despite the clear statement of purpose not everyone is convinced they understand Minerva’s plans. Westfield’s development director John Burton, says: “We’re not entirely sure what Minerva’s current intentions are or whether their current efforts will succeed. If you were a tenant what would you be asking Minerva?”
Minerva and Westfield/Hammerson are understood to have been in talks, but as yet there has been no happy outcome.
A Minerva source says: “The CPO will mean a protracted process. The design and planning process is far from complete and will come under exactly legal scrutiny from several parties.”
Westfield’s Burton confirms that his redevelopment will require the Allders site, but is under no illusions about how easy it will be to get his hands on it.
“Allders is a mix of freeholds and leaseholds – two freeholds but a myriad of leasehold interests because it connects to other parts of the Whitgift area,” he says. “We’ve been in touch with Minerva for some time. There is no agreement, we are still talking, and we will exhaust all the possibilities.”
In comparison with the Allders problem, Westfield/Hammerson’s problem with the Irish Banking Resolution Corporation is more straightforward.
Private clients of the Dublin-based corporation bought a 50% stake in the Whitgift Centre in 2005. The IBRC is one of the Irish government’s so-called “bad banks” and its interest both complicates and simplifies the task ahead for Westfield and Hammerson.
IBRC ownership makes life simple in that the bank’s sole aim is to make the best financial return possible. There are no side issues to negotiate.
The downside is that as of earlier this year the IBRC is in special liquidation. In August, KPMG Dublin began what are discreetly called “market soundings” on the sale of IBRC loans. Some may, or may not, get rolled into NAMA – another Irish bad bank, whose attitude and approach may be different.
Behind this sits the suspicion that the IBRC loan may be heavily under water. It is said to have a nominal value of about £171m, assuming last September’s sale by Royal London Asset Management of 25% for £65m represents a reliable guide, the asset behind the loan is worth £130m. In itself this isn’t a surprise either, but combined with the liquidation it adds another dash of trickiness.
IBRC sources in Dublin would not be drawn on what happens next. Meanwhile, it is providing Westfield with food for thought. Westfield’s John Burton says: “IBRC’s position is not that simple, and there’s debt and equity to deal with. We are in contact with IBRC about their interest in the sublease at Whitgift, and hope we can accomplish something before we reach the CPO process, but the Irish situation is incredibly complex.”
Alistair Parker, retail development partner at Cushman & Wakefield, has some soothing words for Burton and his team – but he too doesn’t underestimate the potential for headaches.
“It’s not going to be that complicated – nothing like the scale of the issues faced by Grosvenor at . But it is still a massive challenge, which is why the project has been waiting since 1997 and has missed two booms when it could have moved forwards,” he says.
He warns Westfield/Hammerson that there is “potential complexity” and “scope for litigation” in both the IBRC and Minerva acquisitions, but adds: “The CPO should cut through all of that. IBRC will be looking for value for the Irish taxpayers, so that perhaps makes them the easiest to deal with. Minerva is more complicated,” he adds.
With John Lewis already said to be lining up to sign with the Westfield/Hammerson joint venture, John Burton can congratulate himself on plenty of achievements since the two developers teamed up last Christmas.
But he knows there is a long way to go. He explains: “We’ve been reviewing the existing Westfield planning application – there may be some minor tweaks – and we’re working with the council with the hope of getting the application to the council’s planning committee in middle to late October.
“We hope the council will resolve to use its compulsory purchase powers within two weeks of granting planning consent, and while there is no timetable for CPOs we’d hope for an inquiry in March 2014 and confirmation in autumn 2014.”
“Hammerson and Westfield won’t be falling out of bed. It wasn’t a reluctant marriage, we both know it makes sense. But we need to resolve the IBRC and Minerva issues if we’re to be on site by late 2014 as we’d hope to be.”
Mr Cash carries Allders
The 530,000 sq ft Croydon Allders store is a step up in scale from Marco Cash’s most recent retail operation which was a 10,000 sq ft homewares concession in the Metro Clearance Outlet, Gateshead.
The 148,000 sq ft outlet opened in the former M&S Home Store and Ivla unit in 2010 and was operated by NUT Outlet Ltd. The company – of which Mr Cash was neither a shareholder nor a director – entered a voluntary arrangement with creditors in May.
Jo Morrison, who was owner and director, is also a minority shareholder in Croydon Village Outlet Ltd, which is 50% owned by Cash and was registered in July.
Cash is also a director with Morrison of Metro Outlet Croydon, which was incorporated in April and owned by Morrison.
Previously Cash, 46, has been involved in garment manufacture and wholesale, helped found a Belgian fashion chain in the 1980s, and from 1996 to 2009 ran Andalusia Stone, a Spanish marble and granite importers
