All eyes are on private Derbyshire developer Clowes Developments. The property firm, which is owned by 68-year-old entrepreneur Charles Clowes, recently bought Wilson Bowden Developments’ 290-acre industrial and distribution portfolio for the knock-down price of £46m. It was part of owner Barratt Homes’ sell-off of WBD’s commercial division (see box below).
The portfolio first came to the market through Jones Lang LaSalle’s Corporate Finance team in quarter one of 2008 with a juicy £90m price tag attached. Interested parties are said to have included Palmer Capital Partners-backed Opus Land and Gazeley. None of the bidders reached the original price tag, and a deal was finally settled with Clowes in December for just over half the original price.
The portfolio includes several high-profile sites strategically located across the East Midlands, including the 2m sq ft Castlewood business park, which is yet to be developed, near Mansfield, Nottinghamshire, as well as the circa 100-acre East Midlands Distribution Centre at Castle Donnington, Leicestershire (see box right). These make up what Ian Dickinson, finance director at Clowes, calls the backbone of the entire portfolio, making up two-thirds of it.
So why did Clowes acquire the portfolio, and what are its plans?
Dickinson explains: “This portfolio fits in nicely with our Dove Valley industrial park scheme in Derbyshire. Along with Castlewood and the EMDC, we now have a triangle of opportunity. We obviously looked at what’s happening in the wider economy, but we’re in a strong financial position to buy, and we don’t have huge amounts of debt.”
This statement is backed up by Estates Gazette’s Rich List 2008, which reports that Clowes has a personal fortune of £145m. He owns all the shares in the 40-year-old company, which made a £6.9m profit from £13.5m sales in 2006-07.
Clowes is said to have put the business on the market for around £300m in 2007, but has since put the sale on the backburner as a result of deteriorating market conditions.
Clowes Developments has a history of retail, residential and industrial development. Its sister company Conder Developments has developed Dove Valley Park, transforming the 200-acre former airfield into a major industrial and distribution hub.
The portfolio acquisition, which was a counter-cyclical opportunistic buy for Clowes, heralds the next phase of development for the company. “This won’t be our last purchase,” says Dickinson.
Since acquiring the portfolio, the developer has been working out what to do next. When asked what the company’s plans are, Dickinson declares: “We hope to sell it and make lots of money!”
Market conditions
He confirms that the company is “open to all offers” with regards to how the portfolio is developed, and will not rule out breaking it up and selling it off in chunks if the circumstances are right.
“We’re quite happy to market the sites, or do design-and-build, or sell-and-build. It depends on the offers and the market conditions at the time,” he says.
Cameron Mitchell, head of industrial at Jones Lang LaSalle’s Birmingham office, says: “This acquisition puts Clowes in a strong position in terms of competing in the occupational market. It becomes a much larger developer in one hit, and the more flexible it can be, the easier it will be to secure deals.”
Whatever decisions are made, overseeing the 290-acre portfolio will be management intensive and would benefit from experienced staff. Market observers are speculating that former WBD employees could resurface at Clowes to help manage the new stock and land, especially as Wilson Bowden confirmed in August last year that it is to cut up to 15% of its workforce.
A source says: “It makes sense for Clowes to draw on that expertise, and as redundancies happen at Wilson Bowden, talks are likely to be taking place.” Wilson Bowden was unavailable for comment.
Dickinson says: “We’re in a hand-over period at the moment, but we have a number of enquiries for prelets and presales on all the sites, which is most gratifying despite the traumas in the wider economy.”
What Clowes has bought from WBD
East Midlands Distribution Centre, Castle Donnington
The 96-acre development sits close to junction 24 of the M1. It will comprise units ranging from 40,000 to 800,000 sq ft
J28, Castlewood, Mansfield
The 115-acre industrial and office development is next to junction 28 of the M1, south-west of Mansfield. The site will comprise units ranging from 20,000 sq ft to 800,000 sq ft. The first phase of 85,000 sq ft is due to be speculatively developed
Bentley Bridge, Wolverhampton
The scheme lies within 1 mile of Wolverhampton town centre. The 6.6-acre site comprises industrial units ranging from 15,000 sq ft to 80,000 sq ft
Alpha Court, Centrix Industrial Estate, Corby
The remaining area of the original 39-acre site will comprise units ranging between 30,000 sq ft and 110,000 sq ft
Gateway 28, Sutton in Ashfield
The scheme sits close to junction 28 of the M1. The remaining area of the 16-acre site will comprise 260,000 sq ft of industrial space
Paradigm Industrial Park, Peterborough:
The 6.2-acre site lies three miles south of the Peterborough city centre. The site will house units of 20,000 to 40,000 sq ft
Summit Park, Glasshoughton
The industrial and office development is north of junction 22 of the M62. The remaining area of the 26.6-acre site will comprise units of between 2,000 and 116,000 sq ft. The site is held in a joint venture with Waystone Developments
Omega, Erdington, Birmingham
The site is near junction 5 of the M6. Speculative development of 83,000 sq ft of small units was completed in December. A further 109,500 sq ft is available for design-and-build
British Timkin site, Northampton
The site has outline planning consent for B1 and B2 uses
Ivanhoe business park, Ashby de la Zouch:
The development lies close to junction 22 of the M1. The undeveloped area of the 29-acre site will comprise 15 units of between 7,000 sq ft and 60,000 sq ft
Run up to WBD’s portfolio sale
June 2008 Parent company Barratt breaks up the Wilson Bowden Development’s business in hope of a quick sale as the housebuilder’s share price plunged from £3 to 50p in a month.
August 2008 Barratt announces that it is in consultation to cut up to 15% of its workforce – around 25 staff – as part of the firm’s comprehensive business review due to difficult economic conditions.
December 2008 Barratt sells £109m of WBD assets, which include offices, mixed-use and retail portfolios.
