Philip Green's stepson in property debut

Retail entrepreneur Sir Philip Green’s stepson has teamed up with Anthony Lyons and Simon Conway to buy the O2 Centre in north London in the first purchase for a new property joint venture.

Entrepreneur Brett Palos, the son of Lady Tina Green by her first marriage to South African businessman Robert Palos, has joined Matterhorn Capital’s Lyons and Conway to pay Capital & Regional and Hermes’ X-Leisure Fund £92.5m for the leisure and retail scheme on Finchley Road.

Lyons and Conway, who are longstanding friends of Palos, have set up a new venture with him to buy prime retail and leisure assets in the UK and Europe to take advantage of market conditions.

The 50:50 joint venture plans to invest £600m-£750m in the next 12 to 18 months.

Palos made his money over the last six years in corporate acquisitions, by buying companies, turning them around and selling them on at a profit. He bought ISA Retail, a stationery and electronic goods supplier, out of administration in 2003 and sold it 18 months ago for a profit. He has also invested in residential developments and, last August, sold a property on Avenue Road in London’s St John’s Wood at £3,800/sq ft.

Palos said: ‘Over recent years the corporate deals became too expensive as there was too much competition from venture capitalists.

So I saved up capital and, having known Anthony and Simon for many years, we have decided to team up and look at assets that have sensible income streams and options of long-term development.

‘We will also look at buying assets by buying debt and we will look at corporate property assets, as well as the plain vanilla transactions such as the O2,’ he added.

‘The key to how much we have to spend is reliant on the debt market,’ said Conway.

‘If it came back to 75% gearing the property world would get back to seeing deals happen. At the moment where the debt market is, means deals are very few.’

Debt for the O2 purchase came from Abbey and Deutsche Post at a loan-to-value ratio of 60%.

As tipped by Property Week, the X-Leisure Fund sold the 300,000 sq ft O2 at a price reflecting a yield of 7.83%.

Jones Lang LaSalle acted for X-Leisure; David Baroukh Associates advised Matterhorn.