Feel for Lambert Smith Hampton staff.
By the time you read this, one of two things will have happened: either LSH will have been acquired by reclusive Dane John Bengt Moeller; or the 950 staff will still be in the unwanted hands of estate agency group Countrywide, which has been trying to sell it since 2016.
The £38m deal with Monaco-based Moeller had been ratified by LSH shareholders just after Christmas and was expected to be completed within days.
However, a month ticked by and Countrywide issued this statement on 7 February: “Completion of the transaction has been delayed due to John Bengt Moeller being indisposed during January and due to logistical difficulties relating to the transfer of the requisite completion monies. We have been reassured by Mr Moeller that completion is imminent.”
If the deal has been completed by the time you read this, Mr Moeller will need to show his colours. Staff will need to see, hear and feel his reassurances. The delay has spooked both employees and clients.
LSH has a troubled ownership history. Countrywide was not the first uncomprehending owner to buy the firm. Engineering consultant Atkins paid £50m in 1999 – then sold LSH back to the management for £30m in 2007. How the firm survived the recession and convinced Countrywide to pay £34m in 2013 is a tribute to management and staff.
The last published trading figures are not bad. Underlying profit of £6.7m was earned on £87m of revenues in 2018. Costs included a whopping £3.1m earned by the highest-paid director – presumably a long-term bonus. Nearly £60m of revenues flowed in via consultancy, always a good measure of how staff are valued by clients.
If the Dane has admitted he cannot come up with the cash by the time you read this, well, Countrywide will need to examine its due diligence procedures. If silence reigns beyond today, well, fingers crossed. Hard to know what to say to staff who have endured a less-than-caring parent for years – except perhaps a line I picked up from watching Top Boy, a UK version of the drugs-and-gangs classic The Wire: “We feel you.”
The elephant and the kangaroo
Next Tuesday (25 February) Hammerson will declare its 2019 results. Past figures have not been as bad as imagined from a company holding £9.5bn of largely retail assets. Rents are up from £305m in 2014 to £347m in 2018. Occupancy? Bumbling along around 97%.Trading profits? Up from £174m to £240m. Total returns have nose-dived from 13% to zero. Negligible rental growth and falling capital values have seen to that.
But sales have prevented the loan-to-value ratio rising morethan 7% to 40%. The share price has crashed from more than 600p five years ago to 230p on Wednesday, wrecked by carnage among retailers.
At a Hammerson press drinks event in January, the main feeling among our hosts was relief at not working for intu. Although one topic caused embarrassment when raised: “What are you and that French outfit that took over Westfield going to do about Croydon?” Last week came half an answer. Unibail-Rodamco-Westfield placed its 50% of the £1.5bn project on the back-burner and set fire to the current plans.
A skim through the development pipeline of the world’s biggest retail property company makes depressing reading; it’s pretty much all tinkering with existing centres. When Westfield was still under the control of the Australian Lowy family, its line on Croydon was: “The partnership is now working towards an earliest commencement of full construction on site in 2019.”
That was in November 2017, after a revised permission featuring more homes was granted. One month later, the elephant that was that Unibail-Rodamco paid $25bn to swallow the Westfield kangaroo.
Croydon has now been spat out. Hammerson will be wise to not fudge on Tuesday, when asked what it proposes to do with its half stake.
Meanwhile, let’s give what was Westfield a belated cheer. When the Aussies came to England more than 20 years ago, no one gave them much of a chance. I remember writing rude things. But without the energy and expertise of Westfield European boss Michael Gutman and his energetic deputy John Burton, two of Britain’s most successful retail centres would never have risen in east and west London. Can’t see another arising, ever again.
Peter Bill is a journalist and author of Planet Property