Ladbroke property pioneers make comeback
Copyright: David Lawson - Property Week 1998
Clues lie scattered around the country in unlikely places. A small property company breezed into Blackpool last year with ambitious plans for reviving a derelict cinema. This set off inevitable nudges and winks among locals over a bunch of outsiders struggling with the nightmare of overlapping leases and funding problems. The same story was repeated in Burton, Wolverhampton, Grantham, Derby and Scarborough. And all the threads lead back to an anonymous business centre deep in the north London suburb of Finchley.
It is no coincidence that this is called Gable House, the company taken over by Labroke a decade ago to create a property trading arm. Under the new name First London, directors Jonathan Gold and Howard Harris are doing much as they always did - finding market nooks and crannies others either miss or cannot negotiate.
The Blackpool hulk is typical. These veterans saw it as a golden opportunity on the Golden Mile. 'How could you not succeed with a seafront location and 17m visitors a year,' says Gold. Today the site is a multi-themed Edwards pub and worth twice the million pounds or so it cost to buy and renovate. 'We were only five days into the project when Bass came knocking on our door,' he says.
Simple does not mean easy. Endless hours of talks and countless trips between London and Blackpool were required to work through the mess. Similar hard work has turned other sow's ears into silk; a former Wolverhampton department store, a derelict Woolworths in Burton and a clapped-out Derby shopping centre. All have become leisure outlets, a niche market discovered in the years since leaving Ladbroke.
Gold, his brother Alan Goldberg and long-time colleague Howard Harris built their expertise developing flats and nursing homes before being bought up by Ladbroke's Cyril Stein in the Eighties for 22m pounds. With access to such deep pockets, they moved into a different league, producing giant London projects like the Farringdon Road office complex and 250,000 sq ft of Bayswater apartments.
When Ladbroke turned against property in 1991, they saw this as an opportunity rather than a disaster. Goldberg went off on his own and the other two set up First London. They were joined by fellow director Jason Harris (confusingly, a nephew of Jonathan rather than Howard), who brought investment expertise picked up at Herschfields and Michael Elliott.
It seemed impossible not to make money. 'We could buy any number of good quality covenants at high yields,' says Jason. But within a couple of years they sold out to Peter Lewin, who used their 6m pounds worth of stock to help float Newport Holdings. 'It was the end of an era when you could buy assets at low prices and watch them grow,' he says.
First London re-emerged almost immediately, however. Contacts built among pub groups and restaurateurs had revealed a big gap in the market. 'They were desperate for new outlets,' says Howard. 'At the same time, local authorities were desperate to bring life back to high streets,' adds Gold.
Putting the two together has generated a 40m pound portfolio in a few short years. The firm specialises in schemes other small outfits feel are too complex or funders will not touch. But its success has now attracted high-quality support. United Bank of Kuwait is a joint-venture partner in Derby and Wolverhampton.
The secret lies in climbing out of the rut of conventional thinking. Buildings in good locations lie underused or derelict across the country. 'All they need is a little imagination - which so many public companies appear unable to provide,' says Gold.
In Burton, for instance, the firm did the unthinkable by reducing the floor area by a third. But this left 20,000 sq ft and a large beer garden suitable for a JD Weatherspoon pub. Bought for 500,000 pounds, the property is now worth around 1.5m pounds.
A 100,000 sq ft, near-empty Sixties shopping centre in Derby's Duckworth Square was spotted because it is 'on the circuit,' says Howard - in other words, a watering hole used regularly by young people. Bought for 1m pounds, about the same will be spent creating a leisure complex.
The team insists it takes few risks. Even in the Ladbroke days, giant developments were pre-let. Today's semi-derelict buildings are the result of false perception of risk, says Howard. Whether a building is empty and derelict is irrelevant; it is the potential for letting that is important. Development, its seems, comes back to that basic adage: there are only three important factors for success: location, location and location.