A decade of boom and bust

UK property stands at the end of a momentous decade, in which investment and development boomed. IPD estimates that the total size of the UK commercial property market grew by almost 60% in just seven years, before collapsing by almost 20% in two   JANUARY Irish government nationalises Anglo Irish Bank Occupiers in the City negotiate new leases with three-year rent-free periods Agents feel the pain. Six big firms cut staff salaries by 10% and slash graduate intake. Alongside a rights issue, DTZ cuts jobs and offers only statutory redundancy terms. Jones Lang LaSalle renegotiates banking facilities to avoid breaching debt covenants Westfield and Lend Lease are forced to write down portfolios by A$3bn and A$290m respectively. The UK is the hardest hit. Both companies put UK developments on hold Pears buys Trillium for £750m Dunedin’s Industrious property vehicle collapses Workspace completes £87m rights issue to avoid breaching banking covenants Helical Bar raises £28m of new equity from shareholders   FEBRUARY Semi-nationalised Royal Bank of Scotland says it will reduce lending dramatically in order to rebuild its balance sheet Lloyds Bank says one-third of all the loans it took over when it merged with Scottish bank HBOS are “high risk” Land Securities, Liberty International and, finally, SEGRO all announce rights issues ProLogis announces a $320m writedown in the value of Parkridge, which it bought in February 2007 Tom Hunter’s £35m investment in Crest Nicholson is wiped out after lenders agree a debt-for-equity swap to reduce the group’s debt by £630m CB Richard Ellis makes a $1.1bn writedown against the value of business it has bought, pushing it to a $1bn loss Grahame Whateley’s Castlemore Securities goes into administration after landlords vote down a proposed company voluntary agreement lifeline Shoe retailer Stylo goes bust The Homes & Communities Agency announces a £400m cash stimulus to restart housing schemes Raymond Mould and Patrick Vaughan close in on 50%, £600m Meadowhall stake Chimney proves to be pipe dream Battersea Power Station developer REO scraps its eco-chimney designs after widespread opposition and pressure from London Mayor Boris Johnson. Shortly afterwards REO – controlled by Irish group Treasury Holdings – writes down the value of the power station site by £44m to £406m   MARCH The volume of investment transactions in the City of London in Q1 falls back to £385m – levels last seen in 1993 Cushman & Wakefield makes an £18.7m loss and takes a $50m loan from its parent company Exor to insure against further market deterioration Manish Chande’s and Martin Myers’ Mountgrange Capital goes into administration Modus’ Trinity Walk shopping centre scheme in Wakefield, Yorkshire, is placed in administration after Anglo Irish pulls funding German government nationalises troubled bank Hypo Regional shopping malls plummet in value. Shopping centres in Horsham and Harrogate sell for 40% less than their original asking prices ITV scraps plans to move to MediaCityUK at Salford Quays claiming the developer has scaled back the incentives it was offering RICS freezes staff salaries and makes 18 redundant It’s hammertime REDC, a US auction house specialising in house repossession sales, announces it will bring its glitzy shows to the UK Oh, Bognor St Modwen reports a pretax loss of £73m; puts revamps of Bognor Regis and Hatfield on hold and walks away from work on Dudley Zoo and Castle   APRIL The Irish government announces plans to create a National Asset Management Agency (NAMA) – to buy up ¤90bn of problem property loans from Irish banks UK property transaction yields reach their highest level for a decade – 7.84% – and transactions fall to their lowest level for a decade, according to LSH’s UKIT research Barclays Bank sets up a distressed property team to deal with its problem assets The £520m Industrious commercial property portfolio, run by Dunedin, is forced into administration after it breaches debt covenants Grosvenor posts a £600m loss as property values fall Canary Wharf Group buys back £185m of its £2.6bn debt pile at a discount Agents continue to suffer: Drivers Jonas makes 30 redundancies; Colliers CRE scraps its dividend after posting £4.9m operating loss Oriental City gets reoriented Development Securities calls in receivers to repossess the 100,000 sq ft Oriental City scheme in Collindale, NW9, from private investor Peter Virdee, who failed to complete on a £68m sale agreed in 2007 SFO investigation Companies related to property investor Achilleas Kallakis are revealed to be at the centre of an alleged fraud against Allied Irish Bank. Kallakis is reported to be assisting the Serious Fraud Office with its investigations Time, gentlemen JD Wetherspoon wins its fraud claim against pub agent Van de Berg & Co   MAY The UK commercial property market enters a “technical recession” as capital values fall for second consecutive quarter More agents suffer: DTZ’s Paul Idzik is among the UK directors and associates who take a temporary pay cut as the agent cuts another 130 jobs; Christie + Co cuts salaries by 10%; Cluttons considers adopting a nine-day fortnight as a cost-cutting measure; CBRE’s EMEA division posts a 6.1m operating loss; JLL’s EMEA region reports a $21m operating loss British Land announces a £3.9bn loss. Land Securities reports £4.8bn loss. Capital & Regional announces a £50m equity raising to shore up its £632m X-Leisure Fund. St Modwen undertakes a £102m equity raising Leo Noe’s Pinton Estates investment vehicle falls into administration after it fails to make bond repayments. At the same time, Athens Investments – a joint venture between Elliott Bernerd’s Chelsfield Partners and AIM-listed investor Mission Capital – also collapses into administrative receivership, following two years of poor performance The Olympic Delivery Authority’s design concepts for a media centre on the Olympic Park in east London are slated as “impractical” by East London Business Alliance – the body formed to galvanise interest in the scheme post-games. The designs are later revised Croydon council terminates its five-year-old agreement with Minerva to develop the 1m sq ft Park Place shopping centre after the scheme’s planning permission runs out Network Rail and British Land put their £1bn redevelopment of London’s Euston Station on hold The Homes & Communities Agency invites expressions of interest from investors to develop a funding model for new private-rented housing. By June, it receives 64 responses. But, in August, the plans suffer a blow when it emerges that the government may not guarantee the rent for the new homes Buy-to-letdown Grant Bovey’s Imagine Homes, one of the UK’s largest buy-to-let businesses, finally goes into administration, after months of negotiations with lenders Carpeted Allied Carpets also falls into administation Trend setter JJB Sports becomes the first major UK retailer to avoid going into administration by securing a company voluntary arrangement with its creditors Mad for Max Nick Leslau returns to listed property, setting up AIM-listed Max Property Group. He raises £220m at IPO   JUNE Paul Kemsley’s Rock Investment goes into administration Brixton agrees to a £109m takeover by SEGRO Paul Smith, David Hanrahan and John Olney join forces in a new West End agency as a rising number of agents break away from the big firms CBRE and JLL announce plans to raise $750m of equity to repay debt. JLL asks directors and graduates to agree to a cut in base pay of between 5% and 12.5% Mike Hussey quits as head of Land Securities’ London offices division following the REIT’s decision last year to call off a three-way split How uncool The Crown Estate faces legal action from one of its leaseholders, Criterion Capital, and is accused of “class war” after it blocks a deal to lease a 22,000 sq ft shop in Piccadilly to discount clothing store TK Maxx. The case is dropped in June, when a new tenant, Cool Britannia, is found for the shop Flood takes a bath Brendan Flood’s Modus Ventures, the Manchester developer behind Wigan’s Grand Arcade and Blackpool’s Houndshill shopping centre, collapses into administration Blond bombshell London mayor Boris Johnson demands minimum space standards for homes built after 2011 in his London Housing Design Guide Princely opposition Qatari Diar finally withdraws its plans for the £3bn Chelsea Barracks development following criticism of the Lord Rogers designs from Prince Charles. He described the designs as “unsympathetic”   JULY More agents break away: DTZ loses most of its West End agency team as nine former Hodnett Martin Smith agents resign to set up their own niche practice, Hanover Green. DTZ later persuades two of them – Richard Howard and Craig Norton – to stay Agents continue to suffer: Cushman & Wakefield makes eight junior planners redundant. GVA Grimley’s 68 directors accept a pay cut of more than 20% and a freeze to pension contributions Developer and investor Terrace Hill’s executive directors and senior staff agree a 10% reduction in base salaries and a moratorium on bonuses Olympic strains: the London Development Agency says it will divert cash from non-core projects to plug a £60m-£100m hole in its Olympic budget due to a “considerable overspend” on fees and costs. Meanwhile, it emerges that the Olympic Delivery Authority accrued £3.5m in legal and banking fees in its failed attempt to sell a stake in the Athletes’ Village to Lend Lease. The LDA begins to transfer Olympic sites to legacy body the Olympic Legacy Directorate. However, wrangles about transferring the £800m of debt from land acquisitions continue Nomura takes UBS’s and Oxford Properties’ 525,000 sq ft Watermark Place office block, EC4 – with a whopping six-years rent-free deal Deals start to materialise: Nick Leslau’s Max Property Group negotiates to buy Dunedin’s Industrious portfolio from administrator. Two months later, the deal is subject to legal action from Citigroup, one of Dunedin’s junior lenders, but the deal is finally completed in October. Chester Properties is the front runner to buy Aviva Investors’ £800m Project Ed portfolio of 47 central London and South Eastern properties, but the deal collapses four months later. The £201m sale of Brixton’s, PRUPIM’s and the South East Industrial Trust’s 2.9m sq ft Equiton Portfolio to US fund Westbrook Partners and asset manager Centurion Properties collapses as the buyers try to chip the price. In September, it is sold to USS. Advantage West Midlands cuts funding for 122 regeneration projects Weymouth plans capsize Irish investor and developer Howard Holdings plc is wound up by the high court in London after failing to pay bills of £1.2m. The winding- up order is led by Barlow Henley Architects, which claims £900,000 in unpaid fees for its work on the £135m Weymouth Pavilion project, which was slated to hold the sailing event for the 2012 Olympic Games Time’s called on Halabi’s £1.15bn loan The £1.15bn securitised loan held against Simon Halabi’s London office portfolio is called in after he fails to cure an LTV breach. The portfolio’s value had halved since it was refinanced in 2006. Three months after the loan is called in, Ernst & Young is appointed administrator to companies owning six of the nine properties   AUGUST Lloyds Banking Group reports a £5.8bn loss on loans to UK commercial property in the first half of 2009. Royal Bank of Scotland announces a plan to offload £34bn of its £51bn UK commercial property loans by running them down or selling them off over the next 3-5 years. The bank plans to create vehicles to buy back distressed commercial property it has lent against to prevent fire sales A fifth of shops in Northern cities lie empty, according to the Local Data Company Bondholders behind Cœur Défense go to court to decide how to restructure the ¤1.6bn property debt secured against the 1.9m sq ft building. A month later, the court decides to extend Lehman’s and Atemi’s protection from creditors until 2014. The Paris building was involved in Europe’s biggest property investment deal when it was bought by Lehman Brothers and Atemi in 2007 for ¤2.1bn, The IPD all-property index of capital values increases for the first time in 26 months – by a modest 0.2%. They continue to rise over the next three months Australian property company Stockland says it will wind up its loss-making Halladale UK business Property investor Chek Whyte, who appeared in Channel 4’s Secret Millionaire programme in 2007, is declared bankrupt Focus DIY agrees a company voluntary arrangement with its creditors allowing it to dump empty stores Thanks to its takeover of Brixton, SEGRO returns to FTSE 100 after two-year hiatus Hansteen buys 18.5% stake in Warner Estates John Richards’ career at Hammerson comes to an end after more than 30 years at the company Mexican stand-off Grupo Financiero Inbursa, a bank owned by Mexican billionaire Carlos Slim, sues Nick and Christian Candy over a $357m loan provided at the height of the boom for a luxury condo project in Beverly Hills on which the brothers defaulted Walbrook get-out Metrovacesa agrees to pay a £100m penalty to Legal & General to pull out of the Walbrook Square office development project in EC4   SEPTEMBER Lloyds Banking Group sells its 14% stake in Quintain. Three months later, the company to undertakes £180m rights issue Songbird Estates carries out a £1bn capital raising – the largest of any UK property company in 2009 – to avoid breaching loan covenants. It is partly underwritten by China Investment Corporation British Land sells a 50% stake of its Broadgate estate to Blackstone for £77m Minerva completes the restructuring of its £1bn debt after agreeing a deal with lenders to relax covenants. The company continues to be stalked by South African investment firm KiFin, led by entrepreneur Nathan Kirsh Andrew Jones announces he is leaving British Land to set up a retail fund The London Development Agency pulls the plug on its £1.5bn Silvertown Quays joint venture because its partner cannot secure funding More agents quit big firms: Holley Blake founders Simon Holley and Simon Blake resign from CB Richard Ellis to set up a £1bn industrial fund; Keith Dowley and David Turner also quit CBRE to set up their own industrial agency business; and two former Chancerygate directors, Paul Jenkins and Charlie Withers, launch a £140m industrial fund Pound stores are the only ones coining it Poundland, Poundstretcher and 99p Store all announce expansion plans Silverburn forced sale Lloyds Banking Group forces Paul Green’s Retail Property Holdings, owner of the 1m sq ft Silverburn shopping centre in Pollock, Glasgow, to put the property up for sale. At the same time, Protego is forced to sell the only assets in its UK shopping centre fund – three centres in Shrewsbury – by special servicer Hatfield Philips   OCTOBER The recovery continues: IPD records its largest monthly capital growth since June 2006, a climb of 1.1% in September. Commercial property sales figures rise above asking prices for the first time since the start of the credit crunch. Prime regional office yields strengthen in Q3 for the first time in two years Agents move forward: Colliers CRE ensures survival with £18.4m share placing – Canadian agent FirstService Real Estate buys a 29.9% stake in the UK business. Jones Lang LaSalle returns to the black, announcing a $20m profit in Q3 RBS and Lloyds start trimming their property loan books. RBS appoints Stephen Eighteen to begin the bank’s winding down of non-core loans, while, at Lloyds, head of real estate Nick Robinson and head of joint ventures John Moran leave the company US property lender Capmark files for chapter 11 bankruptcy protection David Cameron lays out the Tories’ new “localism” agenda at the party’s conference in Manchester. The proposals promise to boost the planning powers of local councils LandSec announces a new lease structure for retail tenants, which allows them to pay rent monthly, rather than quarterly The government blocks P&O Estates’ and Morgan Stanley Real Estate Funds’ 1.5m sq ft Three Sisters scheme in Waterloo, SE1, following a public inquiry. Two months later, Morgan Stanley puts a 50% stake in the site up for sale Cambridge dons buy Dome Quintain and Lend Lease sell the O2 Dome in Greenwich, SE10, to Trinity College Cambridge for £24m after it was originally put up for sale in December 2008 for £50m. A month later, Quintain launches a £184m rights issue Czar quality Andrew Altman, former deputy mayor of Philadelphia, starts work as 2012 Olympic legacy czar More retailers in trouble First Quench Retail, the owner of off-licence chain Threshers goes into administration. Camping chain Blacks undertakes a company voluntary arrangement Grosvenor de-escalates Grosvenor pulls out of its £700m, 1.5m sq ft Tithebarn jv with Lend Lease in Preston a month after the scheme is called in. The Duke of Westminster’s company says the move is part of a new strategy to concentrate on medium-sized mixed-use projects   NOVEMBER Kenmore Property Group becomes the latest major property firm to fall victim to the credit crunch when administrators are called in British Land unveils a management shake-up. It appoints Steve Smith from AXA and Charles Maudsley from LaSalle Investment Management as part of a new strategy aimed at investing outside its core retail and central London office markets for the first time in a decade. It says it is considering investing in sectors including student housing, healthcare and rented homes Hermes and Threadneedle Property Investment limit cash inflows to their funds due to the weight of money trying to enter the property sector Lloyds Banking Group asks investors for £13.5bn in the UK’s largest ever rights issue. It emerges that HBOS’s property joint ventures division, Uberior, has made a £610m loss. RBS says it will put £39bn of its £91bn commercial property loans into the government’s asset protection scheme Loan workouts begin: Great Portland Estates establishes a joint venture with Eurohypo to take over Dubai-based Istithmar’s West End office development Marcol House, W1. Rockspring buys a portfolio of 13 industrial assets for £27m from RBS as part of a loan restructuring where 60% of the capital is a loan provided by RBS Nigel Hugill and Robin Butler set up new development venture, Urban & Civic, to invest in large-scale residential schemes. It buys an airfield in Cambridge for £27.5m Dubious world Dubai World causes global panic when it says it cannot afford to make payments on its $26bn of debt. The Dubia government refuses to guarantee the debts. A month later, neighbouring emirate Abu Dhabi provides a $10bn bailout Manchester Arena goes on the market GE Real Estate and Capital & Regional put their Manchester Arena up for sale for £60m . By late December Threadneedle is frontrunner to buy it   DECEMBER Tony McCurley leaves CBRE to set up a new business with his former partner, BH2’s Tony Gibbon The UK’s commercial property debt pile shrinks for the first time since records began a decade ago. According to De Mortfort University, UK property debt stands at £224bn, down from £225.5bn six months before. New lending is at an historic low Two property portfolios sold by RBS to private investor Joseph Ackerman for £175m are put into administration Warner Estate and Invesco Property Income Trust both report negative net asset values of -43p a share and -6.7p a share respectively ASDA disinstructs Savills from all planning advisory work and logistics management after a clash of opinions over the Competition Commission’s proposals to introduce a competition test for supermarkets Dunlop Haywards’ former City head of valuations, Ian McGarry, is charged in a long-running Serious Fraud Office investigation into an alleged £11.5m Birmingham mortgage fraud Davenport charged Edward Davenport, the multi-millionaire entrepreneur, and two others, are charged with £12m of property fraud offences, including an alleged advance fee fraud and price ramping allegations Black horse takes the bit at Ashwell Lloyds Banking Group uses a pre-pack administration to restructure the South East developer Ashwell Property Group, founded by Paul Thwaites, which fell into administration in January. The bank will become a major shareholder in new company Brookgate, headed by Sven Topel, set up to buy the assets in a debt-for-equity swap