Birmingham sparkles on the day of Brindleyplace property sale

Jul 9 2010 By Alun Thorne

With the sale of Brindleyplace almost complete, Birmingham Post Editor Alun Thorne spoke to the men behind one of the biggest commercial property deals outside of London.

There’s nothing like a little bit of lady luck when you are trying to part somebody from nearly £200 million – just ask Gary Taylor.

Negotiations over the sale of the bulk of Brindleyplace were reaching a crescendo and a senior team from one of the world’s biggest property investors was arriving in Birmingham from America and the Argent boss was keen to make a good impression.

“The guys came over from the States and landed on a Sunday morning and before they met me at Brindleyplace they went and had a walk around the city,” he said.

“By the time they got here they were amazed at what they had seen – the sun was shining, the food market was on in Victoria Square and there were thousands of people out and about – the city had a real buzz. In the end it was not the reason they decided to invest but it bloody well helped.”

The team from the US were from international property company Hines who last week joined forces with the Moorfield Group to acquire a total of eight buildings at Brindleyplace in a deal that, at nearly £200 million, eclipses the previous biggest commercial property deal in the city and is possibly the largest ever outside the capital.

The buildings that are being sold are Three, Four, Five, Six and Nine as well as the multi-storey car park, the Costa coffee building, the Ikon and the Crescent Theatre.

The estate was owned by the Brindleyplace Limited Partnership which was made up of institutional and private investors as well as Argent itself, which originally developed and manages the estate as well as owning the recently completed Eleven Brindleyplace.

The sale of five prime office buildings on the estate – as well as the restaurants and theatre – follows the sale earlier in the year of Seven, Eight and Ten Brindleyplace to investors for about £100 million.

Nevertheless, while Mr Taylor is clear that the deal works for both the previous investors and the new owners, it was not a deal that Argent had instigated.

He said: “From our perspective this was not a forced sale. These guys made an offer that was opportune at the time – we didn’t actively market the estate – and this was a conversation that eventually turned into a proposal for a deal that has been done quickly and professionally.”

For Hines and Moorfield it was an opportunity that was too good to miss. Anthony Leonard, who has led the project for Hines, said the combined qualities of the city and the asset made it a particularly attractive proposition.

“There are several reasons why we looked at Brindleyplace and Birmingham,” said Mr Leonard. “Birmingham is a place Hines has been looking at for many years because it is great city with huge potential.

“Then there’s the estate itself and in our view Brindleyplace offers the best location for office workers anywhere in the UK so the quality here is obvious. We are firmly behind how it is managed by Argent, we share the same values as Argent and I think the fact that it is 100 per cent let speaks for itself and sums up why we like Brindleyplace.

“There’s no denying that Argent has managed Brindleyplace fantastically for the past 17 years with the focus on the public spaces and the restaurants and so on so I don’t expect there will be major changes,” said Mr Leonard.

“Hines can learn from Argent and visa versa and who knows what might happen in the future. When you walk over the canal you are hit by how special Brindleyplace is and we don’t want to change that.”

“From the Hines and Moorfield perspective this is an incredibly well run asset and we don’t want to change quality of the buildings but there are issues such as length of leases which we can look at,” said Marc Gilbard, chief executive of Moorfield. “This is not a passive investment and there is lots to do in the coming years.”

Mr Taylor added: “There are always things that you can do better. Over the past three months we’ve met the guys from Moorfield and Hines, which has been enjoyable as well as intense.

‘‘They manage large buildings like we do – everything from the car parks to the air-conditioning. We think we are best in class in the UK but they do things differently in the States and when the dust settles we are looking forward to taking a working trip over there to really understand how that works.

“The biggest opportunity in the near future is Five Brindleyplace – the BT lease expires in 2012 and from my perspective there is unlikely to be that standard of Grade A in the market. Five Brindleyplace will be the some of the best new space in the market as nobody is developing anything between now and then so it is a big opportunity in Birmingham.”

The Brindleyplace deal is the latest in a string of major investment deals in Birmingham over the past 12 months – many involving foreign money including the acquisition of One Snowhill and 125 Colmore Row. Stephen Musgrave, chief executive of Hines UK, said the market conditions in the UK – and Birmingham – make the right asset very appealing.

He said: “From anybody’s perspective it was a good time to buy into this. These kinds of assets don’t come along too often therefore it’s a tremendous opportunity in the Moorfield and Hines camps to be investing in this as over the next few years we believe the value of the asset will continue to rise.

Mr Leonard added: “In the current market when a high quality asset comes into the market then it will be in demand. The current exchange rate with the euro helps and cities in the UK that attract big corporates and enjoy significant employment opportunities remain attractive to investors and Birmingham has been very active recently.”

And as for that little bit of lady luck, Mr Gilbard was in no doubt as to where the responsibility should lie.

“Gary couldn’t have managed it better if he tried,” he said.