Nama in spotlight as €2bn Bat­tersea profit pre­dicted

Irish Independent - Business Week - - COMMERCIAL PROPERTY - Ronald Quin­lan info@paulm­c­

NAMA’S de­ci­sion to sell its in­ter­est in Lon­don’s iconic Bat­tersea Power Sta­tion has been called into ques­tion once again, with the rev­e­la­tion that its new own­ers ex­pect to make a profit of Stg£1.8bn (€2.02bn) from its development.

The eye-wa­ter­ing pro­jec­tion is con­tained in an assess­ment of Bat­tersea’s po­ten­tial con­ducted in 2008 by BNP Paribas Real Es­tate for Wandsworth Coun­cil, the lo­cal au­thor­ity with re­spon­si­bil­ity for the area.

While the £1.8bn fig­ure has been met with anger in Lon­don, ow­ing to Wandsworth Coun­cil’s ap­proval of an ap­pli­ca­tion from Bat­tersea’s own­ers to re­duce the number of af­ford­able homes on the site, the pre­dicted profit will also in­vari­ably serve to fuel crit­i­cism of Nama’s de­ci­sion to dis­pose of its in­ter­est in 2012.

That crit­i­cism has, un­sur­pris­ingly, been led by de­vel­oper Johnny Ro­nan whose for­mer com­pany, Trea­sury Hold­ings, con­trolled the site prior to its ac­quis­tion out of receivership by a Malaysian con­sor­tium of SP Se­tia, Sime Darby and the Em­ploy­ees’ Pen­sion Fund of Malaysia (EPF).

Nama, for its part, has con­sis­tently ar­gued that it sold out of Bat­tersea Power Sta­tion at the right time, and for the right price. De­fend­ing the de­ci­sion in 2014 against claims that Nama should at least have held out for a higher price, Nama chair­man Frank Daly said: “We didn’t sell early, we sold at the right time. We sold that loan for Stg£500m [€600m]. So we got back the full value of the loan.”

Mr Daly added that the idea that Nama should have held on and de­vel­oped Bat­tersea and other Lon­don sites with a view to re­coup­ing bil­lions of euro down the road for the Ir­ish tax­payer “misses the re­al­ity”. He claimed the Bat­tersea development alone would amounted to a “€6bn prop­erty play in Lon­don with no guar­an­tee of a re­turn”.

Wandsworth Coun­cil, mean­while, has sought to down­play the Stg£1.8bn profit pro­jected for Bat­tersea, with a spokesman say­ing that the es­ti­mate dates from a vi­a­bil­ity study con­ducted for the site in 2008.

Not­with­stand­ing Nama and Wandsworth Coun­cil’s re­spec­tive views on Bat­tersea’s po­ten­tial, the site is ac­knowl­edged by the prop­erty in­dus­try glob­ally as the best un­de­vel­oped land left on Lon­don’s river­side.

Only re­cently, Prop­er­tyEU mag­a­zine recog­nised Bat­tersea Power Sta­tion’s ac­qui­si­tion out of receivership by its cur­rent own­ers as the ‘Development Deal of the Decade’. Com­ment­ing on the progress of the Bat­tersea’s regeneration to date, the jury said: “The re­de­vel­op­ment is prov­ing a suc­cess, with the first two phases break­ing records for the number of apart­ments sold and prices achieved. Phase 1 saw the most suc­cess­ful sales event ever in Lon­don, with over 850 apart­ments sold in just four weeks for Stg£750m, while Phase 2 gen­er­ated Stg£600m of sales in four days.”

Last week, Bat­tersea Power Sta­tion Development Com­pany CEO Rob Tinck­nell se­cured 43rd spot in Prop­erty Week’s ‘Power 100’. The mag­a­zine recog­nised Mr Tinck­nell (the for­mer man­ag­ing di­rec­tor for the UK and in­ter­na­tional arm of Trea­sury Hold­ings), for hav­ing landed the big­gest deal of 2016 when Bat­tersea signed up Ap­ple as ten­ants. The 46,500 sq m (500,000 sq ft) deal will see 1,400 of the US tech gi­ant’s em­ploy­ees based at Bat­tersea when it opens in 2021.

AN in­ter­est­ing con­se­quence of writ­ing this col­umn is the number of times read­ers send me copies of com­plaints they have made to es­tate agents. They also e-mail me with the de­tails of a problem they are hav­ing with an agent, and ask for my opin­ion. Nat­u­rally, I don’t get in­volved in any of th­ese. How­ever, while the volume of deals is down, the amount of com­plaints I’m see­ing is in­creas­ing. I put this down to the re­ver­sion to pri­vate own­er­ship of prop­erty, fol­low­ing re-sales of in­sol­vency port­fo­lios.

The no­table thing about th­ese com­plaints is that they tend to be about the same is­sues, and agents make the same mis­takes in deal­ing with them. So what are the pit­falls to avoid, and how can agents ac­tu­ally strengthen their re­la­tion­ships with clients, through bet­ter han­dling of com­plaints?

The clas­sic problem that arises is when a sale has failed to ma­te­ri­alise as ex­pected and that first f lush of en­thu­si­asm and hope is evap­o­rat­ing. Com­plaints rarely arise when a prop­erty has sold for above the ex­pected price, but it’s a dif­fer­ent story when the ad­ver­tis­ing bud­get has been spent and the view­ings haven’t re­sulted in any of­fers. The client was lav­ished with at­ten­tion and pos­i­tiv­ity when the agent was try­ing to win their in­struc­tions, but once the prop­erty starts ‘go­ing stale’, ven­dors some­times feel their agent changes tune and be­gins ‘man­ag­ing their ex­pec­ta­tions’ down­wards. Some com­plainants say that they be­gin to ques­tion who their agent is act­ing for — them or the of­feror!

The re­quire­ment for agents to ad­vise their clients of the ad­vised min­i­mum value in writ­ing has re­duced this problem but agents should be aware that a client, who has paid their fee af­ter a dif­fi­cult sale, is not nec­es­sar­ily go­ing around ex­tolling their agent’s virtues.

A com­mon com­plaint arises over a lack of con­tact from an agent. This is down to hu­man na­ture as it’s far more pleas­ant to be ring­ing clients whose sales are go­ing well, than those whose cam­paigns have gone f lat. How­ever, it’s this lat­ter cat­e­gory that needs the most at­ten­tion. Once you feel the mo­men­tum go­ing out of an in­struc­tion, pause and come up with some pos­i­tive ideas to re-in­ject life into the sale and keep call­ing your client. This will main­tain a much health­ier re­la­tion­ship with your ven­dor, you’ll be more likely to agree on a deal to­gether, and they will ap­pre­ci­ate your en­thu­si­asm and the fact that you are not giv­ing up.

When a client com­plains, be grate­ful, be­cause they have given you a chance to rec­tify the problem, whereas most un­happy clients are go­ing around dam­ag­ing your rep­u­ta­tion with­out you know­ing about it. When a client (or prospec­tive pur­chaser) does com­plain, make sure that you re­spond im­me­di­ately. Al­most every re­sponse I see to com­plaints starts off with “please ac­cept my apolo­gies for the de­lay in re­spond­ing” — but gives no rea­son why there has been a de­lay. This is a huge mis­take as every com­plainant is an­gry by the time they com­plain and they will get an­grier every day that you leave them fes­ter­ing, mak­ing the problem harder to re­solve.

Most busi­nesses use the pro­tec­tive shield of e-mail when han­dling com­plaints. The only rea­son for that is that it’s THE es­tate agency busi­ness was sad­dened by the death of David O’Neill last week. A bar­ris­ter and char­tered sur­veyor, he had a dis­tin­guished ca­reer with Lis­ney and Hamil­ton Os­borne King (Sav­ills). David was a gen­tle­man, highly re­spected by clients as a val­uer and al­ways ready to help out a fel­low sur­veyor with friendly, ex­pert ad­vice. May he rest in peace.

Bat­tersea Power Sta­tion is ac­knowl­edged as the best un­de­vel­oped land on Lon­don’s river­side

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