HQ is looking to expand its position in Europe and is expected to follow its competitor Regus to the public markets
HQ Global Workplaces may now officially be a Dallas-based company, but it has separate histories either side of the Atlantic. The UK and European arm, now totalling 35 centres, was built up by Peter Kershaw and Peter Allport who bought the franchise for less than £200,000 in 1996. The pair sold the business in 1998 to US Reit CarrAmerica Realty Corporation.
Vantas, the serviced arm of US e-commerce investor Frontline Capital Group, built up a portfolio of more than 400 serviced offices across the states; a takeover of HQ by Vantas’ parent, which completed in June, created the world’s largest serviced office company.
The new company, which retained the HQ name, now owns or operates 500 centres in 17 countries and anticipates an annual revenue on a pro forma basis of $550m. Frontline owns a 57% stake.
The deal bought in a number of investors to the company. CarrAmerica reduced its stake to 19%, retaining an $120m investment in the company, while Dutch pension fund ABP, Fortress Investment on behalf of General Motors, US fund manager AEW and Equity Office Properties (EOP) were bought in.
EOP’s investment into HQ ended the jv the US office Reit had with Regus. HQ now has a similar deal with EOP, which gives the company access to opportunities in its portfolio.
HQ intends to continue its expansion in the UK and Continental Europe but this will now be done without the founders Kershaw and Allport. The pair left in September amid rumours of a disagreement with the US parent over European expansion plans. Ron Adams was appointed interim MD; Julian King was promoted to MD of business development in Europe.
On the Continent, the company has 11 centres in Germany, France and Austria. It will open centres in Madrid, Amsterdam and a third in Vienna. It is also negotiating on further sites in Spain and Germany as well as looking to enter Italy.
The target is to reach 20 centres on the Continent in 2001 with the Netherlands, Scandinavia and UK seen as growth areas. Worldwide, the company is targeting Asia with a focus on Japan and Latin America.
In the UK, the company has three new centres under construction. Much of the UK’s growth has come through a partnership with Merrill Lynch Investment Managers. The two parties set up a limited partnership which has invested £135m into new centres; 80% of this was from Merrill Lynch and 20% from HQ.
HQ has also linked up with airport’s group BAA to roll out serviced conference and business centres in UK and international airports. The first centre at Gatwick Aiport will comprise 743m2 at Norfolk House in the south terminal. It will provide meeting rooms and a touchdown area. BAA owns seven UK airports and has stakes in nine international airports.
The next step for HQ will be whether it follows Regus to the public markets. Regus withdrew from flotation plans in 1999, but in a second attempt in October, the company raised £235m.
HQ says it is exploring options to raise money for expansion. King acknowledges that Regus’s successful float was good for the sector. “It demonstrates that the property industry is ready to accept companies who offer a much higher degree of service provision, and that it is a complementary offering for building users,” he says.
HQ Global Workplaces
5 Park Place
London SW1A 1LP
Tel 44 20 7898 9090
Fax 44 20 7898 9091
www.hqglobal.com
