Foreign invasion transforms UK parking

Copyright: David Lawson

Published: Property Week 2007

If anyone is a natural candidate to dominate parking, you might expect it to be car obsessed Americans. But this is one sector they have failed to conquer.  CPC, the world’s largest operator, has just retreated from Europe after struggling to reach the top spot.  But foreign interests still rule the multi-storey roost.

 Apcoa

 The UK arm of a German-controlled chain jumped to second place behind NCP after buying CPC’s business in Europe and effectively doubling its holdings in this country.   Ironically Apcoa sprang from US roots. It comprised a series of affiliates in several countries until these won independence more than 25 years ago. They were gradually consolidated under German control as Apcoa grew into Europe’s biggest operator.

  The latest chapter came with the Euro885m sale to French investment group Eurazeo early this year. European turnover is expected to reach Euro570m this year from more than 850,000 parking spaces across 15 countries.  Almost a third of Apcoa’s staff is in the UK, giving an indicator of the importance of this arm. It recently took over the 900-space Modus car park in Wigan for a rumoured price of more than £1,000 per space. Morley also chose the company to operate its futuristic £11m multi-storey in Cardiff Bay.

  Q-Park

  Dutch based Q-Park is number three in Europe, with 525,000 spaces in more than 4,000 locations. Its foothold in the UK came from acquisition of Universal Parking from Town Centre Securities for £16m in cash and repayment of £20m of debt in 2001.  Net assets of Universal at that time were an estimated £1.1m and pre-tax annual profit around £1.6m. Latest figures for the international group show net profits of Euro40m.

  Q-Park has concentrated so far on specific UK centres, aiming to dominate local markets. It is big in Glasgow and Leeds, and recently paid more than £11m for the Midland car park in Sheffield.   The UK arm of this international conglomerate pulled off the biggest commercial property deal in the country when it agreed with Grosvenor Estate in 2004 to lease and manage more than 2,000 parking spaces around the Paradise Street redevelopment in Liverpool.

Vinci Park

Vinci is rumoured to be in line for two large shopping centres, adding to more than 40 existing contracts.  The group includes construction giant Norwest Holst, giving an in-house ability not just to manage but design and fit out major projects, such as the famous Mayfair car park under London’s Park Lane.  But the bread and butter come from a multitude of less glamorous projects.  Last year Vinci invested more than £4m building a decked car park at Broadgreen Hospital, Liverpool, as part of a 15-year Public Private Partnership contract with the health trust. A modular design future proofs the project by enabling addition of an extra deck of parking when required.  Vinci has the firepower to finance such schemes, with more than £60m a year flowing in from parking receipts and record £32m pre-tax profits on a turnover of £632m in 2005, the latest published accounts.

  Demand from institutions and private equity for alternatives to a rapidly weakening conventional property market is moving parking onto the same stage as infrastructure such as road tolls and airports.  Mission Capital, one of the brightest new stars in property, run by the equally bright Emma Sinclair, saw the opportunity a couple of years ago, by taking over KML.  Created in 1992 to advise on maximising income from parking sites, the small Kent-based group has regularly featured among the top 50 firms in the sector.  Sinclair has said she sees KML as a core part of Mission’s strategy, marrying expertise in maximising parking income flows with the capability to see property development opportunities.

  This might reawaken the interest of Delancey, another of the many failed suitors for NCP, which was taken over by Macquarie. Chief executive Jamie Ritblat said at the time he was willing to put £100m in the sector. Delancey’s involvement so far has been limited to a deal with Britannia to pay £3m for the Fullerton Street Car Park in Ayr, reflecting an initial yield of about 8%. Pressure on conventional investment yields could bring the sector back into focus. 

  Interest is not just confined to the UK.  3E Car Park Investors has linked with some of the top parking management names and construction giant ILF to seek the same opportunities in eastern Europe.  3E has launched a fund regulated in Luxembourg with a target size of Euro600-700m to create a portfolio of car parks in this relatively untapped area. It believes this could generate yields of 8-9% compared with an average 6-7% for commercial property. Three institutional investors are understood to have committed Euro50m before the fund’s first closing.