Case Studies:
Proven expertise in commercial property
John Pike has a successful track record in creating, developing and executing property strategies for UK businesses.
The following case studies represent a small selection of his achievements.
HBOS Estates Strategy:
In 2007, John produced for HBOS it’s first ever overarching property strategy for its UK estate of 2500 retail units, offices, call centres and data centres. The central theme was to embark upon a transformational programme to radically change how the company perceived and used its buildings whilst reducing costs. This was against a background of a fragmented and ageing estate with multiple small offices and a tendency towards divisional occupation.
This strategy brought together five key aspects:
estate rationalisation; flexible working; reduced running costs; sustainability and a policy of developing major office campuses or hubs with superior working environments.
At its core was the opportunity to introduce flexible working which identified four high level work styles: Fixed office, Flexible office, Mobile office and Home office – recognising the different work patterns that would lead to one of these styles.
The objective was to consolidate into fewer buildings and create a modern sustainable and affordable working environment to support the needs of the business. A strategy was developed to realise value from the surplus estate. Delivery of the overall strategy involved working across divisions, with the IT and HR departments.
Network Rail: Value Creation to support Railway Enhancement
The London stations of Victoria and Euston required substantial updating to meet the needs of the increasing numbers of passengers travelling to and through the stations and to avoid congestion.
There was no doubt the stations needed to be brought into the 21st Century to provide world class station facilities for the travelling public and enhanced retail and commercial opportunities for Network Rail. The question was how could the money be raised to do this?
An exercise was therefore undertaken to understand the value that could be realised through development of the land around the stations and air rights above. A vision and development concept for each station was developed setting out the key constraints. A professional team of architects, structural and railway consultants, cost consultants, valuation consultants, financial advisers and planning consultants were appointed to complete a report and information pack.
Developer competitions were then initiated using the OJEU process, and developers with the right track record and of sufficient covenant strength were invited to tender. Necessarily the tender process was long and involved and the preferred developer for each station, The British Land Company plc for Euston and Hammerson plc for Victoria, was appointed on the basis of a list of criteria. This ranged from the proposed station solution to the maximisation of the commercial opportunity.
The redevelopment of these stations will cost many millions of pounds and will be a complex affair because of the need to continue to provide a rail service from them during the construction works. John was instrumental in identifying the opportunity and running the process to appoint developers.
BT: Property Divestment and Outsourcing
By the year 2000 British Telecommunications plc had an unsustainable debt mountain of £30bn. It needed to reduce this rapidly and the divestment of its 6000 telephone exchanges and 1500 other buildings was seen as part of the solution.
A small team from the property group was quickly put together and charged with devising a sale and leaseback of the asset to raise the maximum amount of capital whilst retaining sufficient occupational flexibility. The in-house property team was also to be outsourced requiring the development of an ICU (Internal Client Unit) to act as the interface between the business and landlord/supplier.
The deal took a year to construct and conclude. Careful thought was given to a mechanism to allow BT to flex in and out of space as well as participate in future sales and development. A database was constructed and the basis on which BT would pay the accommodation charge determined.
It was clearly important to ensure that the operational side of the business would not be adversely impacted by the deal. A tender process was then initiated, initially through the OJEU process, bid requirements put in place and a short list of property investors / managers drawn up. Telereal, a joint venture between Land Securities Trillium and The William Pears Group, was eventually chosen. At £2.38bn this was and remains the largest deal of its type in Europe.
BT: Joint Ventures
Much of BT’s estate such as telephone exchanges, telephone engineering centres and offices tended to be in city centre or edge of town locations and represented valuable redevelopment opportunities.
With a significant rationalisation programme of its estate underway in the mid ‘90s came the opportunity to capitalise on properties surplus to the business. Traditionally to minimise risk property departments tended to gain planning permission for alternative uses then sell on with little interest in the completed development.
Southgate Developments Ltd was set up in 1998, with John as its Managing Director, as a wholly owned subsidiary of BT to extract value from assets following divestment by working in partnership with developers. Property was bought into the company which then entered into joint ventures with recognised sector developers.
A dedicated in house team was established whose objectives were to create first class investments from redundant property and to maximise shareholder returns. Risk was managed by SDL retaining the land asset until completion of the development and by the pre-letting of all schemes.
