Copyright: David Lawson- Property Week March 1998Home page
Michael Elliott & Ptns
The conference call seemed a mistake. Put several investment brokers on one phone line and it is almost impossible to tell who is saying what. That does not seem to matter at Michael Elliott & Partners, however. The firm is so closely tuned that one director finishes a sentence the other has started.
'We are very much a team....' says Mark Shipman. '....and we play off each other,' adds fellow director Dominic Rowe. 'You need to be out on the street....,' says Rowe.'.....and we do a lot of financial analysis,' finishes Shipman, taking the ball cleanly before passing it back.
The football analogy is not out of place for this group of Spurs fanatics, although recent results indicate the firm is doing a lot better in the big league than its favourite club. In the last few months these include a 23.5m pound West End deal between Argyll and P&O and a 13.7m pound property swap between Great Portland and Standard Life in the City.
Michael Elliott & partners started life in the mid-Eighties, nurtured by close relationships with entrepreneurial clients. Its first deal was for Elliott Bernerd's Chelsfield; last year it did 100m pounds worth of work with the firm including the 38m pound sale of Wool House to Benchmark. But institutional clients are also now a prime source. Two of the founders, Mark Shipman and Peter Goldstein, came respectively from Michael Cooper & Partners and a family company. Stewart Braddock and Dominic Rowe joined in the Nineties and the four directors are supported by surveyors Ola Pettersson and Lee Maytum.
The tightness of this group is part of the secret of success. 'We can move faster and react quicker than bigger outfits....' says Shipman. '....and follow through deals better,' adds Rowe. They spark off each other in an open-plan office, as one director looking for investments calls across to others handling sales. But it is out on the streets they see the biggest advantage. Some 60% of work is within central London, which they claim to know like the back of their hands. They see senior partners in bigger agencies locked into the wine-and-dine circuit while searching for new business rather than knocking on doors with deals and then following them through.
Institutions are wooed by hefty information on cashflow and internal rates of return. Once a lead is established, this is backed up with detailed analysis. 'We are well known for our sales brochures,' says Shipman, referring to weighty background reports which can run to more than 50 pages. Banks are another rich source of work. The firm beat off competition from some of the big agencies to sort out a 155m loan book for Nippon Credit because of its strategic planning abilities.
But knowing who wants what - and moving quickly - is the main foundation for success. The P&O sale of 237 Tottenham Court Road hinged on knowing what David Hunter of Argyll wanted. So did the 77m pound purchase by Treasury Holdings of a secondary portfolio from Hermes. Sometimes that means acting as matchmaker to clients who don't even realise they are attracted. The epitome of this pro-active approach came up this month when Standard Life and Great Portland swapped buildings in Victoria Street and Bishopsgate to merge freeholds and leases.
'We had no previous involvement in either building but knew what both parties were looking for,' says Rowe.
Green and Spencer
Not many people get a second chance at success, but the two Tonys - Green and Spencer - are taking theirs in both hands. First time around they were a general agency, taken over in the furore of the Eighties by Union Square. But the Nineties have meant a return to independence and a new kind of boom. A surge of portfolio deals over the last few years has put the firm back in the headlines as firmly as its beloved soccer team Arsenal - another candidate for a second coming. Only this month AG&S sewed up the Raglan Properties sale of 35m pounds worth of industrial to Norwich Union. It was also stitching together joint ventures involving 30m pounds of offices in the proposed 1m sq ft redevelopment at Puddle Dock in London's Blackfriars.
Green says they still provide a complete package of services including agency and consultancy. He handles investment with Tony Two overseeing development. But the firm is more narrowly focused as a niche player than it was and investment is the main earner. Like most agencies, it is reluctant to reveal income but it is not hard to make a guess on the basis of around 10 major deals a year of between 30m and 40 pounds each. This owes a good deal to close relationships built with two new investors.
The firm helped Roger Orf of Pelham Partners launch his career after Goldman Sachs by stitching together a 35m pound partnership with Capital & Regional through a portfolio from Norwich Union. Kevin McGrath of REIT Asset Management has also become a regular client, involving similar purchases from Norwich Union along with deals worth 80m and 60m pounds with Legal & General and Sun Life of Canada. But the Two Tones are not in the business of boosting turnover for its own sake. 'There is a lot of froth in the market and we reject most of the deals we are offered,' says Green. 'We see ourselves as filters as much as matchmakers.'
Other regulars include Hampton Trust, which has recently picked up a slew of investments. The marrying of broking and development advice also comes to the fore with Frogmore. On the one hand AG&S has sold a portfolio of secondary property to Dawnay Day for 20m pounds while on the other, brought the firm into the Blackfriars joint venture. These tight personal relationships are vital, says Green. 'There are far fewer players than in the Eighties and you are constantly dealing with the same buyers and sellers. Success is very much a question of trust.'
If there was any grinding of teeth when partners at Richard Ellis filled their boots with Insignia's takeover cash, the loudest noise should have come from Lewis Ellis's small suite of offices in London's Albermarle Street. Everyone has arrived here from RE's investment department.
But there is no sign of envy. For all its perks, being part of a major group runs counter to everything this kind of niche player stands for. In any case, independence brings its own rewards. In five years, the firm has put together more than 250 deals, according to Simon Lewis. Reticent to put a figure on the overall value, he did not deny that in one of the early years they hit 250m pounds.
A buoyant investment market will have raised that figure. So has an extension into the West End since John Olney joined the original team of Lewis, Jeff Ellis, John Ellison and Manchester-based Nick Barnes-Batty. The client list has not expanded in the same way, with about 10 core names including the Prudential and Scottish Widows on the institutional side and property companies like Rugby and London & Cambridge on the other.
'You have to watch you don't spread yourself too thinly,' says Lewis. 'This business is about personal contact. The fact that clients get constant attention from partners is one of the main advantages over larger agencies.' But there have been additions such as Mercury Asset Management. Olney says he has done a lot of work with the fund in his booming London patch. Overseas clients have also joined the roster. Selling 74 St James Street for the receiver to Singapore investors for £26m showed the firm's ability to handle 'messy' assets.
'But it also disproved the accepted wisdom that you need overseas experience to be in this market,' says Olney. Success also breeds success. Work for Asda properties selling to Refuge Assurance led to a successful pitch for a portfolio being sold by the fund. That led to another sale bringing the total sold to 50m pounds. Another significant deal was City Centre House in Birmingham, sold last year to the Prudential for more than 90m pounds. 'This was because we could demonstrate the growth potential,' says Lewis. At around the same time the firm sniffed out Nottingham Retail Park and then picked it up from Boots for GRE/Morgan Grenfell for 45m pounds when it hit the market.
'We have been lucky at getting the big deals,' says Olney. But Lewis is quick to add this is because the firm is highly focused on large projects. 'That's where the money is,' he says, which perhaps puts the RE cash mountain into perspective.
Narrowing down to pure investment broking holds little attraction for Holley Blake, which spun out of Brian Cooper and Partners a couple of years ago. 'We think people want integrated services,' says John Reavley. While he specialises in investment, other partners deal with agency, and development. 'Clients seek our advice because they know we can back this up with knowledge of occupier needs.'
So how can the firm compete with the same sort of mix by one of the giant agencies? 'Because we are small enough to be all on one open-plan floor,' he says. Deals can emerge from a call between desks from one specialist to another, rather than forcing their way through committees and blizzards of memos. Advice for TBI on schemes like Belfast Airport, for instance, meant it was married up with a 35m pound portfolio from Helical Bar earlier this month. It probably helps, as well, that Vick Spencer of TBI was once at Brian Cooper.
'This business is all about knowing the right people and, most importantly, getting along with them,' says Reavley. That provides an insight into what they want, so the firm can cherry-pick. It is crucial to gain a certain status among sellers, however, to net property before it hits the market. Holley Blake was among only a handful offered the portfolio by Helical.
Close relationships have developed with some major clients. Three industrial estates were bought for Thornycroft, the private investment group, last summer and sold within six months for 4.5m pounds to Sun Life. Private Israeli investors are a rich source of business, with their insatiable appetite for UK property over the last year.
Among funds, AMP has become a regular customer. Deals include the purchase of Barwell Business Park, Chessington, for more than 30m pounds as well as some major sales. BZW, Norwich Union and Threadneedle are also on the list.
Two areas this integrated firm refuses to dabble in, however, are management and valuations. 'We play to our strengths and are transaction-based,' says Reavley. 'We are not interested in spending lots of money just to get into cut-throat areas of business.'