Press Release - Surveyors reach for property heights

27 Jul 2006 Jul 27 2006 Sion Barry, Western Mail

SOME of the biggest property investment deals in London this year have been struck by a Cardiff firm of chartered surveyors.

Stephenson & Alexander established a niche property investment office in London two years ago. And after an initial number of deals below the £50m mark, the firm has now positioned itself as one of only a select number of investment specialists dealing in higher value property deals - worth in excess of £100m - in the English capital.

In the past five months alone it has been involved in three major property investment deals in London with a combined capital value of £500m.

These include - acting for a private Irish investor - the acquisition of Governor's House in the City of London for £100m.

The building, which commands an annual rent of £42 a square foot, serves as the headquarters for the Prudential.

And in one of the largest transactions in London in the first quarter of this year, Stephenson & Alexander acted on the £320m acquisition of Woolgate House, which is let to international bank West LB.

The firm's successful move into the London investment market, is complementing its Cardiff office which is active in the South Wales and West of England investment markets.

Yesterday director Peter Graham said the firm's London office, which is headed by Jonathan Baines, a former equity partner with chartered surveyors Healey and Baker, had exceeded initial expectations.

Mr Graham said, "As a Welsh firm setting up in London it shows what can be done. Quite a few property firms in the past have established offices in London, especially from Bristol, and have failed. What we have demonstrated is that a niche practice, with the right blend of contacts and experience, can succeed in London at the higher-value end of the property investment market.

"In terms of our initial expectations for the London office [located in Hanover Square], we always thoughts we could be advising on the sort of deals we are currently involved in."

In the last year the London office has bid on some £5bn worth of potential investment deals.

The London office specialises in so called off-market deals, where it works closely with clients to acquire properties with a certain capital value and yield - the return it would receive on its investment from rental income.

The firm then draws on its expertise and network of contacts to find suitable properties for its clients - who don't want the publicity of putting out their requirements to the wider market.

On its three biggest deals this year in London, Stephenson and Alexander acted on behalf of Irish investors.

Mr Baines said, "There has been a tremendous amount of money made in Dublin with the emergence of its so called Celtic Tiger economy. Investors there are looking strategically at acquiring prime properties in London with secure 10 to 15-year incomes."

For the investment market for the rest of the year, Mr Graham believes there is still room for capital values to grow - with the result that yields could be driven even lower. In London average yields are below 5% - similar to the position in Cardiff.

And Mr Baines said that over the next six months in London, institutional investors are likely to become more active in the property investment market. But private investors, deterred by a further compression in yields, could look to focus more on the mainland Europe market - where properties are expensive so provide more competitive yields.

"Over the next six months I believe there will be even more of an appetite from institutions [like Morley and Legal and General] to invest into commercial property funds," said Mr Baines.

"However, with a hardening of yields, some private investors are likely to look more closely at mainland Europe."

For the next 12 months Mr Baines said it is envisaged that Stephenson and Alexander's London office will mirror its performance of the past year.

However, he said the firm was now looking to get more property investment sale mandates, where in the past two years it had mainly focused on acting for acquirers.

Mr Baines, "Historically the hold period on a property investment in London has been 10 years. However, because of the improvement in capital values, people are now only holding for between 2-5 years before selling."