When Ask Real Estate won the backing of construction giant Carillion less than two years ago, it was the start of a new era for the Manchester-based developer.
With the firepower to compete for major regeneration projects, it quickly won a competitive process to develop a 750,000 sq ft mixed-use scheme at Manchester Central, the former Bauer Millet showroom (right) and a £200m arena development in Gateshead Quays.
“They got us back into the market, back into the business of creating partnerships with the public sector,” says Ask Real Estate managing director John Hughes, who joined the group in 2003 and helped navigate it through the last economic cycle.
This week marked a new twist in Ask’s evolution, after troubled Carillion offloaded its two-thirds share in the developer to the Midlands-based Richardson family for £13.8m. The deal also includes Carillion’s 50% stake in the Ask Carillion Developments vehicle, and £1m of the cash consideration is contingent on the sale of 100 Embankment, a 166,000 sq ft office block it is developing in Salford with Carillion and Tristan Capital Partners.
Return to roots
For Hughes, the deal symbolises the developer’s return to its roots. “Culturally, we are very similar to them [the Richardsons]. It’s created an opportunity to not go back but to return to our culture which started with the founding partners [in 2000]”.
Ask was forced to reconsider its position over the summer, after Carillion found itself suddenly in corporate chaos following a fall in its share price which wiped nearly three-quarters off the company’s value in three days. “There was a strategic review and we decided we probably would be constrained in terms of new opportunities and it would be the right thing to do, to see whether we could bring in new partners or investors.” The deal was sealed after only a couple of meetings and conversations with the Richardson family. “It just felt very, very natural,” says Hughes.
For Hughes, the new investment partners means Ask can focus on delivering its existing business commitments for the next three-to-five years, but also opens up opportunities for new ventures.
Beyond Manchester
While major mixed-use developments will still be its focus, Ask will now also consider asset management opportunities and projects near transport nodes in smaller town centres in Greater Manchester, such as Sale, Bolton and Salford.
“With Carillion there was always an expectation that major construction projects would be driven from these equity investments through Ask,” Hughes says.
“We still have a very strong working relationship which we will maintain and they have been a good partner on projects for the business for the past decade or so.”
While under Carillion, Ask began to explore opportunities beyond Manchester, it now plans to return to the region, where it has dominated the office market, securing 37% of all grade-A office lettings in Manchester city centre in 2016. This included a prelet of the whole of 101 Embankment to Swinton Insurance.
“We have a proven track record of targeting and delivering occupiers across the city centre,” Hughes says. “Our strength in this sector looks set to continue in 2017 with the announcement of a number of substantial grade-A lettings at Number 8 First Street towards the end of this year.”
Ask – a history
2000 Founded as Ask Developments by Ken Knott, Simply Red vocalist Mick Hucknall, Andy Dodd and Simon Bate. Over its first eight years the developer built up a portfolio of 20 projects comprising 8m sq ft, borrowing heavily from the Co-Operative Bank.
2006 The developer made an untimely partnership with the Morgan Stanley Real Estate Fund, which took a 25% holding in the business in 2006. When the financial crisis of 2008 hit, the company was dangerously exposed, given its highly leveraged status.
2012 Ask formed a new company, Ask Real Estate, in a bid to “start afresh and deliver”. Ask Developments was gradually wound down, repaying all its debt.
2013 John Hughes took over as managing director from Knott and turned the company’s finances around, with Ask Real Estate reporting a £1.1m profit in the year ending 31 March 2015.
2016 Carillion became a majority shareholder with the company’s founding members agreeing to sell their shares.
2017 Carillion sells its interest to the Richardsons in a £13.8m deal, which also includes Carillion’s 50% stake in the Ask Carillion Developments vehicle.
Who are the Richardsons?
The deal represents a new foothold for the Richardson family in Greater Manchester. The Midlands-based family developed the Printworks leisure complex in the city in 2000. It was subsequently sold to Landsec and was acquired by Resolution Property last year for £98m.
Active in the commercial property market for more than 50 years, the Richardsons have developed more than 7m sq ft of property. They were the original developers behind the Merry Hill Shopping Centre in Brierley Hill.
Current projects include Nickel, a 261,000 sq ft warehouse at junction 28 of the M1; Lincoln Gateway; a 110,000 sq ft office development in Durham; a £28m, 51-bed student accommodation scheme; and the Midland Metropolitan Hospital, where Richardsons are providing funding for a £297m finance facility in Smethwick.
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