For a man who claims that he is “not a property guy”, Robert Ware has been at the helm of a surprising number of UK development companies during the past 25 years.
Having experienced equal measures of success and controversy, along with some failures, he has started again with his London-based property company, Conygar.
Ware, 52, kept a relatively low profile after playing his part in taking MEPC private in 2000, but he jumped back into the property spotlight last May when he outbid more than 20 seasoned investors to buy 40-53 Bedford Square, WC1.
The former Crown Estate portfolio of Grade I listed Georgian houses left Conygar coffers £58.3m lighter.
“After MEPC, we tried some big things that didn’t work,” he says of several attempted deals. These include corporate acquisitions he looked at through the failed Oxiana vehicle that he created with other former MEPC directors.
“We set up Conygar in parallel to that because we thought we would find a use for it,” he says.
Conygar was set up with former colleagues Gavin Davidson, Peter Batchelor and Steven Vaughan a few months after they left MEPC in June 2003. Davidson left shortly after its inception to pursue other interests.
As a cash shell, Conygar raised an initial £4.4m on the AIM, thanks to the team’s reputation in the City, coupled with support from friends and former MEPC colleagues. But, despite bidding for around £2.5bn of property since then, the company made little impact in its early years.
London assets
It made a £15.7m joint venture acquisition in Sheffield, but bid unsuccessfully for many large mixed-use and industrial portfolios and London assets, such as the £123m Euston station office campus, which was sold in 2005.
Indeed, in 2005, Ware appeared to be more focused on an unsuccessful attempted takeover of garden centre group Wyevale (see box, p45) than his new property company.
A trained chartered accountant, Ware, Conygar’s chief executive, says the heat in the market was partly to blame for the slow start. However, he is unapologetic: “I don’t need to be seen to have bought something. I need to be successful.”
So when the Bedford Square estate was put up for sale, at around the same time as Ware’s Wyevale hopes were fading, few West End operators would have tipped Conygar to emerge out of the ranks of interested parties as the highest bidder.
While several high-end residential firms were stalking the restoration opportunity, Conygar took the bullish view that the office rents at the 95,000 sq ft estate could be improved from an average of £27.50 per sq ft at the time of the sale to £40 per sq ft.
“It comes down to who has the faith. There is huge built-up demand from occupiers,” he explains.
His faith turned out to be well placed. Agents say Conygar will shortly achieve £40 per sq ft, and it will soon have sold on five of the 14 properties. The company’s 75% share of the profit on those sales should amount to £3.68m before tax.
Buying and trading on is a far cry from the traditional developer approach adopted by his former stable, MEPC. But Ware believes that the market has changed. “We needed to instantly de-risk it,” he says. “We paid more than anyone else was willing to pay, but we felt that there was an upside. The individual lots are worth around £5m each, so they are small enough for most people to buy.”
He has no qualms about the “trader” tag Conygar could be stuck with, adopting the same approach for his second major acquisition a few months later.
Trader approach
The Buckingham Estate, WC2, was put up for sale in June 2006 with a hefty £32m, 5% yield, asking price. Despite seemingly handing vendor Dawnay Day a considerable profit within 12 months of its own purchase, Ware again believed that the investment offered an opportunity.
Conygar outbid the market to buy the estate for almost £34m. It has already traded three of the eight assets, and negotiations are under way on several others.
“We knew from experience in Bedford Square, and the West End generally, that there is an awful lot of pent-up demand for small freehold properties,” says Ware.
Despite his involvement in other firms (see CV, p43), Ware says that Conygar and its shareholders are his principal work concern, and he is ready to take the company to the next level.
On 1 February, Conygar raised a further £40m – before costs – on the AIM, taking its market cap to £80m. “We wanted more firepower. Most of the shares have been bought by existing shareholders, which gives us a lot of confidence. AIM is an effective, cheap and efficient way of fund raising,” Ware says. “The property market has been taken up with real estate investment trusts, but there are tax advantages to AIM.”
He has many friends in the industry, but admits that he probably has just as many enemies: “I call a spade a spade, and lots of people don’t like that. I should have learned by now to keep my mouth shut.”
One or two of these opponents were quick to raise eyebrows at the incentives available in the option packages of the Conygar directors. But given that the company share price must show substantial growth for the bonus to kick in, few shareholders will begrudge it.
Ware may claim he is no “property guy” but as investment specialist Franco Sidoli, the agent who worked closely with him on the MEPC break-up, puts it: “He knows and understand the game inside out.”
Ware: transforming Conygar from a cash shell into an active player in London property
Away from the West End, Conygar has embarked on a much longer-term play. In 2005, it bought a 50% stake in a proposed £100m marina development at Pembroke Dock, west Wales. It has been working its way through a myriad of planning issues ever since.
Robert Ware, Conygar’s chief executive, got involved in the project through a former colleague at 1980s property group Clayform. They formed a joint venture with construction giant Vinci to launch a successful bid for the marina and hope to secure planning consent in the next few months for 300 berths, 450 houses, shops and restaurants.
“The potential profit for Pembroke is huge,” says Ware. “No one has ever built a marina or so many houses in west Wales, so it’s difficult to price. But these properties command a premium everywhere else in the country.” He says that he is looking at three other marina opportunities in the UK, and a fourth in Europe.
Pembroke Dock: Conygar hopes to win planning approval for a major marina development in west Wales
Born 1954
1964 Queen’s College Taunton
1973 University of Exeter
1977 Joins auditor Peat Marwick (now KPMG)
1985 Joins property company Clayform, which was turned into Development Securities by Martin Landau in 1993
1994 Moves to property company Dunton Group, but it struggles in the recession
1997 Joins MEPC as corporate development director. Promoted to executive committee as deputy chief executive two years later
2003 Formed Conygar, becoming chief executive. Now owns 7% of the company
Director of several other companies, including Raven Mount, the company run by Anton Bilton and Glyn Hirsch
Lifestyle Married with children. Interests involve family, rugby, cricket, travel, and charities
High profile
Company looks to marina opportunities
Robert Ware is no stranger to controversy. He and his four fellow MEPC executive directors endured intense criticism after banking the lion’s share of a £63m bonus pool from MEPC’s £3.6bn privatisation in 2000.
Such was the controversy over the remuneration that even reclusive millionaire developer Harry Hyams was moved to publicly condemn it. There were claims that the bonus scheme gave the MEPC directors an unfair incentive to take the company private rather than liquidate its portfolio while still quoted.
But the Takeover Panel cleared MEPC of any malpractice. The sting of the criticism must also have been soothed by the £43m the five directors ultimately received.
Then in 2005, Ware was at the centre of a lengthy and bitter takeover battle for Britain’s biggest garden-centre chain, Wyevale.
Isle of Man-based hedge fund Laxey Partners, which had built up a 29% stake in Wyevale, began a campaign to install Ware as chairman to turn the business around. “The potential was phenomenal,” he says. “The business had 7m sq ft of retail space, and it underperformed.”
Many in the market believed that Laxey wanted to pull the property out from under Wyevale, and developers started circling the company. But Ware denies it was a property play, and says he believed that only 20 of the 74 freeholds could be redeveloped.
It was a battle that pitched the new City against the old. Laxey won support from US hedge fund Millennium Partners, and was pitched against institutional investor Hermes, which was backing the board.
Laxey succeeded in getting Ware elected to the Wyevale board in December 2005, but failed to secure his nomination as Wyevale’s chairman. Four months later, the business was sold to Sir Tom Hunter for £311m.
Despite his team’s failure, Ware credits himself and Laxey for helping to raise the share price, and a significant premium was paid by the eventual buyer of the business. “We may not have won many friends, but everyone should be very, very happy,” he says.
