COMMENT My time as chief executive at BNP Paribas Real Estate ended in the summer of 2017; my French peers and I had different ideas as to the future and how to drive the UK business to be a market leader after our takeover of Strutt & Parker.
I subsequently had a two-year spell at Evans Randall as chairman and partner on the client and private equity side. We were held back by the availability and liquidity of equity; with a competitive market the equity was, too many times, too slow to commit to allow us the time to hold a negotiated purchasing position. Some great deals were sniffed out, but slowness of commitment undid us.
Although there have been many other successes, I cannot help feeling a tinge of jealousy when I read about Orion’s success on the site of the old BT site opposite St Paul’s, while Surinder Arora is continuing successful hotel ownership and development around London’s airports.
At Evans Randall, we sought more capital, and I was asked by my remote partners to initiate a recapitalisation. I managed to create substantial interest from the likes of CDL of Singapore, Generali of Italy and Allianz Real Estate. There was a lot of interest in what we had to offer – a testament to the strength of the London market and their track record – but a difference of opinion between partners as to where we were going ultimately unravelled opportunity.
Along came Poly
At that time, Allianz had €70bn (£58.9bn) in real estate equity and debt investments, but little in the UK on a direct basis and nothing in London offices. In 2019, it talked to us about helping. The result was my appointment as senior adviser to help it build a London office portfolio.
At this time I was also a senior adviser to the Chinese government’s publicly controlled, Beijing-listed Poly Global, a substantial property development company. It had grown exponentially in China off the back partly of office development around new Chinese hub railway stations. It also had huge overseas ambitions and embarked upon a 600-home scheme at Mill Hill.
We nearly got it into a 300,000 sq ft West End development but it fell apart after the daughter of the Huawei founder was imprisoned in Canada and a subsequent furore over Chinese capital in UK nuclear power stations, coupled with a breakdown in Sino/Anglo relations post-David Cameron, meant Poly Global disappeared from the UK quickly.
I was also chairman of the international real estate side of Duff & Phelps, a very acquisitive and successful US financial and risk advisory business. One of its takeovers was of the cyber/security/investigation firm Kroll, whose name it later adopted. It was (and is) one of the largest valuers globally; its valuation business was even bigger outside the real estate sector. My brief was to help it expand its professional real estate offer. An agreed takeover of a well-known £100m property consultancy business beckoned but Covid-19 delayed and eventually killed it.
Deeper waters
Meanwhile, at Allianz I worked closely with Kari Pitkin and we built up a portfolio of offices along the Elizabeth Line with an end value of just shy of £1.5bn, including three Portman Estate buildings with British Land, Farringdon’s Stonecutter House with Ivanhoe Cambridge, and 1 Liverpool Street plus 100 Moorgate with Aviva.
Allianz was also lending substantially in the UK and I was delighted when I was asked to give advice on this side. Substantial financings were approved – in excess of £2bn. Not just offices but residential, alternatives and even a bit of life sciences.
This also enabled me to work with some old agency contacts. Commercial brokerage agency was already in trouble in 2022 but it was headed into deeper waters with rising interest rates, illiquidity, supply issues Trussonomics and more. The level of transactions virtually ground to a halt and even the larger agencies which had taken large strides to increase their recurring income outside agency were suffering with much reduced revenue.
I, for one, have miscalled sighting the bottom of the market at least twice in the past 18 months. Transactional income will come back, but not tomorrow. Here we are now with a new stable government and lower interest rates? What could go wrong? Watch this space.
John Slade is chairman at Sladesco
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