by Duncan Lamb
When MEPC pay the final consideration to the Co-operative Insurance Society for the latter’s 68% shareholding in Oldham Estate, they could be handing over as much as £620m in cash and shares. So what will they be getting for their money when and if they gain full control?
MEPC chairman Christopher Benson speaks brightly of the deal being the equivalent of getting a “10-year management order book in one go”, but as to what the portfolio actually is, information is thin.
Details of Oldham’s current development plans are even more sketchy, with chairman and managing director Harry Hyams’ statement in the 1986 report and accounts typifying the company’s reticence: “As the financial statements demonstrate, the group has a strong assets base from which it expects to continue to increase its property portfolio as and when suitable opportunities arise.”
What’s certain is that MEPC will be eager to see what the lease patterns are at Royex House, London Wall, EC2.
Built by Oldham in the 1960s, the 100,000-sq ft office slab is almost directly opposite the planned redevelopment of MEPC’s Lee House. At the recent City planning meeting considering MEPC’s proposals one of the main objectors was Guardian Royal Exchange, who hold Royex on a long lease from Oldham and have been talking about redeveloping the building when its main tenants, Coward Chance, move out this year.
Elsewhere in London – aside from the famous Centre Point – Oldham developed the 180,000-sq ft Drapers Gardens in Throgmorton Avenue and Finsbury Court. This 170,000-sq ft office building was built in partnership with Stock Conversion subsidiary Stockham Investments. Since the takeover of Stock Conversion by P&O, the latter have been disposing of some of the assets, but whether they would part with Finsbury Court remains to be seen.
London Bridge House, a 150,000-sq ft office block wedged next to London Bridge Station and completed around 1970, has perhaps always been a poor relation to Oldham’s other London ventures.
However, when considering the changing fortunes of that side of the river and that it lies just behind St Martins’ London Bridge City, there is possibly more development potential than is immediately obvious.
Oldham already have office projects under way at International House, Chiltern Street, W1, where the 81,000-sq ft building is undergoing refurbishment, and in Fleet Street where a 40,000-sq ft refurbishment is being carried out with a new 6,000-sq ft scheme behind it. It will be interesting to see if MEPC continue with the projects as envisaged.
In 1982, Oldham applied for planning permission to redevelop a 0.75-acre site in Victoria at the junction of Belgrave Road and Gillingham Street. They were unsuccessful in an application for around 80,000 sq ft of offices, but this may be one of the properties that MEPC will now exploit.
Outside London, two Oldham schemes – one new and recently completed, the other in need of redevelopment – stand out as presenting particular challenges to MEPC.
Dukes Court in Woking, Surrey, a 215,000-sq ft office headquarters complex, was completed in 1985, but still remains empty. Letting agents Jones Lang Wootton have been instructed to look for a single tenant for the building and are not quoting a rent. The Ministry of Defence was widely thought to have taken a preletting of the space, but this did not materialise.
This building may prove part of the acid-test for the “hands-on management” that MEPC say they will bring to the Oldham portfolio.
On the shopping side, the 190,000-sq ft St Peter Precinct in Oldham is faced with demolition if the council-backed scheme of George Dew and Cramond Properties to develop a 6.3-acre site in the town’s centre goes ahead.
Mr Hyams’ company developed the existing shopping centre on a long leasehold agreement from the council, but recently the authority has said that if Oldham resist the new development it will use compulsory purchase to further the scheme. MEPC have the option to throw in their lot with Cramond/Dew or do as Oldham had hoped – propose a scheme of their own.
Before they start considering these possibilities, however, MEPC have to take control of Oldham and, perhaps essentially, persuade Mry Hyams to sell his shareholding in the company.
They have already made it plain that there will not be a management position for Mr Hyams, but the difficulties of having him as a major shareholder might be considerable.
For the moment, though, MEPC are saying very little.
See “Finance” on p 987.
