The debate is on a crucial question. “No, we were first, I’m sure of it,” says Ashley Nicholson to partner Tim Pain. “No, no. I’m definitely sure they were first,” says Pain. The debate lasts several minutes. At times there are tense silences, exchanges, and frowns as both try to work out the dates in their heads.
And the burning question? Who came first: Nicholson’s and Pain’s Verve Properties or The Verve, the 1990’s indie band whose biggest hit was 1997’s Bitter Sweet Symphony. As it turns out, Pain is right. Richard Ashcroft’s band did indeed precede the light shed developers, whose biggest hit is the 12-acre regeneration project, Paintworks in Bristol, by a good 10 years. Verve Properties was set up in 1999.
Debating the company’s name is clearly friendly banter, and it shows that, after working together for more than 12 years, both partners are still very much in tandem with what they want for their company – to prove that money can be made from discarded secondary stock.
“When we started out, the property industry was more obsessed with location and covenant and tended to ignore the inherent value of the bricks and mortar,” says Pain. “We have always been more concerned with capital value per square foot, potential and meeting unsatisfied needs, so we like to think we have the skills and enthusiasm to turn property around that others might dismiss as rubbish, or as someone once described one acquisition of ours as ‘vertical hard core’.”
Or, as the company’s website says, Verve works on “brownfield and regeneration… while having a passion for developing unusual buildings with an industrial heritage, and to know that the key to successful places is in the quality of design, effective management and the mix of inhabitants.”
Enterprise Zone
Today, Verve, headquartered just off London’s Oxford Street, W1, has a £50m investment and development fund rolling over the next eight years. It owns 13 developments, with Paintworks, home to Dutch company Endemol – of Big Brother fame, which sublets the space from the BBC – the jewel in the crown. And this month, it was announced that the scheme has been included in Bristol’s Temple Quarter Enterprise Zone.
As part of its development programme, the company has gone on a mini spending spree over the past eight months, buying three industrial/mixed-use schemes across the South East for nearly £6m, with yields of more than 11%.
The deals were for the 40-acre, mixed-use Graylands Estate in Horsham, Sussex; 60,000 sq ft at Wyvern Way industrial estate, Ashford, Kent; and Taber Place industrial estate, Witham, Essex.
And the company is looking for more. “We are close on a few things but can’t say as yet, I’m afraid,” says Nicholson.
Verve’s growth and success first bore fruit when both men decided they wanted to get out of the rat race, having had enough of working for large companies. Both already had a huge amount of experience in property development, Nicholson with Sapcote, and Pain with Allied London.
Nicholson says: “I realised pretty early on I didn’t fit into a big company mindset, so realised I had to find a market that others weren’t in. I identified there was an unsatisfied market for small freeholds at the same time as there was an oversupply of outdated, large factory complexes that no one wanted, so I therefore advised several clients to buy these unloved dinosaurs because they were cheap, and break them up.
“In many ways, it was classic retailing – ie, buying wholesale in bulk and selling to end users at retail prices. I guess ever since I’ve just tried to turn unwanted crap into something that people want.”
As well as making money, the company’s aim was also to stop buildings from being demolished.
Nicholson says the company deliberately chooses buildings that are quirky, and in fringe locations, that others would demolish. This means they can buy them cheap. It also means that institutions and housebuilders are less interested in them.
Occupiers attracted to the regenerated buildings are usually light industrial users and creative companies, such as those at Paintworks.
Just like Paintworks, all of Verve’s developments are in southern England. The only two exceptions are a 129,000 sq ft shed at Alconbury, Cambridgeshire, and a 7,000 sq ft shed at Daventry, Northamptonshire, both of which were subsequently sold on.
Despite their success, Pain rules out going further afield to the industrial heartland of the Midlands, or beyond. “Because we are active landlords we try to pick projects within a travel distance of two hours from London, as we are very hands-on and need to be close physically and conceptually.”
Pain admits that the lack of development in the market is good for their business. “There is a handful of people out there who sense when there is a good portfolio – certainly with secondhand stock. But some asset and fund management companies operate with other people’s money, meaning they are under pressure to place that money. We don’t have that kind of pressure. We do what we want to.”
Investment and development
So, where is the money coming from to fund the investment and development programme? Being an independent company, Pain and Nicholson do not have to be open about their finances, but they do offer some explanation. What they will happily say is that they have a generous “external shareholder”, but will only reveal that they are Liechtenstein-based. They also mention a bank which lends to them, but will not give a name.
They are, however, willing to admit they get financial backing from Royal Bank of Scotland. Pain says RBS has stuck with them “because we haven’t breached the covenant and we were still within our loan-to-value ratio. We saw RBS before Christmas and it still wants us as a client, and will be writing the debt”.
Both partners stress that it was Verve’s record in delivering on every project – such as the 17,000 sq ft Crane Mews, Twickenham – that has helped secure development money.
With such a secure, profitable small business, it would be no surprise if larger companies were interested in buying Verve. But, even if they were, Pain is adamant, that “we’re not for sale”.
He adds: “The whole point of setting up Verve Properties was to do what we wanted to do. We have a very good band of agents that we use, and we have reached a stage in life where we are not beholden to other people. Yes, we have an external shareholder who we see four times a year, but we are in the driving seat.”
They have also lasted a lot longer than The Verve, which broke up in 1999, only to reform briefly in 2007. And clearly, as long as there is quirky secondhand stock out there, this is a partnership that is not going to be playing any bittersweet symphonies.
Case study: Paintworks, Bristol
A company knows it is in for a challenge when it buys a site that the new owner describes as “an unusual beast”. This was the description Ashley Nicholson, co-founder and director of Verve Properties, gave of the Paintworks, Bristol – a 12-acre tract of industrial land a quarter of a mile from central Bristol, which he and Tim Pain, the other company founder, bought in 2002.
The partners learned this month that the scheme has been included in Bristol’s Temple Quarter Enterprise Zone.
The former Victorian paint factory had a mixture of unusual buildings. But Nicholson and Pain were not put off. It is set to be developed in three phases. Phases one and two are complete, while the ambitious third phase is new-build, comprising 150,000 sq ft of offices, 35,000 sq ft of live/work space, retail, leisure and 200 residential units.
In 2006, Nicholson admitted to Estates Gazette that Verve took a chance with Paintworks, saying: “The occupiers we tend to attract like the flexibility – they don’t fit the product that the property industry tends to churn out. We don’t pretend to aim for the majority market. We tend to design carefully and accept that what we do won’t suit everyone.”
He also admitted that planners were surprised the company approached the site from an employment angle and treated the residential as just a bolt-on.
“Everyone told us Bristol council was conservative, and it would be difficult to do something innovative and different, but we have found it very supportive,” Nicholson said at the time.
Pitching the rents was another challenge. “In terms of costs, we learn by our mistakes. We always think we’ve got it nailed, but we haven’t,” he told EG.
But phase one was successful, and followed by an equally successful phase two, which comprised 75,000 sq ft of 1920s-1950s factories and an Art Deco former administration building.
Now all eyes are on what will happen with phase three.
In 2006, Nicholson said: “We are in discussion with the planners about phase three, but they might laugh us out of court about that.”
Today, he hopes that will not be the case as the company awaits Bristol council’s decision. The time scale is unclear, but what Nicholson will say is: “We wont know if phase three is as successful as the first two phases until it’s completed in a few years time.”
But, at the moment, with Paintworks included in the EZ, the signs are positive.
Ashley Nicholson CV
1979 Graduated from Sheffield Polytechnic
1979 Hillier Parker,
1983 Chesshire Gibson (London)
1987 Sapcote, development director
1999 Director of Verve
Married with two girls, 20 and 17, and one dog. Supports Manchester City FC “for my sins”
Tim Pain CV
1984 Graduated from Polytechnic of Central London
1985 Chesshire Gibson
1987 Graduate trainee at Industrial Ownership
1989 Estates director at IO
1995 Allied London Industrial Property
1999 Managing director Verve
Lives in London’s West End. Has three children 22, 19, 17. Supports Liverpool FC
They openly describe themselves as “feeding off the scrap” of industrial properties. But, Tim Pain and Ashley Nicholson have turned developing secondhand sites into a lucrative business. Noella Pio Kivlehan talks to the men behind Verve Properties
