Logistics Property Feature Harbert who?
Last month, Harbert - the Alabama-based landlord - bought Rochdale’s Heywood distribution park and a large
slice of Manchester’s Trafford Park. The deal also included Birmingham’s Norton Business Centre and Meteor Park. In the process it all but doubled its UK warehouse portfolio, which now stands at around 9m sq ft, much of it acquired from Heathrow and Thames Valley landlord Segro (see side panel). But who is Harbert, and how will life change for its tenants and potential tenants?
FAMILY BUSINESS
A clean, sharp-suited approach to management is expected from the fam- ily business, founded in 1949 to ride the construction boom as the US re- built after the Second World War. Immediately after acquiring the North
West and Midlands assets, Harbert closed Segro’s small management offices in both Manchester and Birmingham. Long-time collaborators Canmoor Asset Management will take day-to-day control from its Manchester outpost.
Then the real work will begin. The problem
Harbert faces is that, despite a campaign of asset management by Segro, the latest buys need TLC.
Roughly a quarter of the income-generating floorspace at the four estates was empty on 31st March – and this space needs filling, or demolishing and replacing with something lettable, say experts. Harbert also needs to work on improving (from its point of view) the lease terms signed by occupiers. Today, on average, leases have an unexpired 4.3 years until a break clause or lease-end. No wonder the sale proceeds, net of lease incentive top-ups, were approximately 2.9% below the 31st December 2011 book value of the vast portfolio.
WINNING STRATEGY? According to Tom Davis, partner at North West consultancy B8 Real Estate, invest- ment in new building could be high on the Harbert/Canmoor agenda. Davis predicts: “Canmoor will make a real
difference. They will take a sharp knife to the Heywood distribution park and demolish the older properties. That would be a good move. Although it’s a difficult market, they need to take the medium-term view that we’ve reached the bottom and we’re on the way up.” Building at the bottom of the market could be a winning strategy, especially in the North West. It is certainly one that has crossed the minds of many close to Harbert’s strategy. “Asset
It’s a long way from Alabama to Rochdale. Yet a £204.5m deal has brought the two locations a lot closer together, thanks to US investment manager Harbert, writes David Thame.
management isn’t rocket science,” said one London-based observer. “It’s all the usual stuff about getting rid of the assets that don’t pay, and squeezing more value out of the assets that do.” Harbert has shown itself to be a long-
term investor: so far it hasn’t sold heavily in the UK, preferring to nurse its assets whilst capital values rise and income grows. The new portfolio contains plenty of opportunities to growth both, say observers. And Herbert – having spent £500m on UK logistics property – has taken a big gamble that they will. n
www.harbert.net What Harbert owns
Harbert’s UK logistics portfolio now totals around 9m sq ft. It has taken Harbert several years to reach this point. It began to buy into the UK office market in 2004, as the economic boom was gathering pace, and began to buy undervalued warehouse property in 2009.
This summer, Harbert Management Corporation
(Europe) LLC bought 4.7m sq ft at four sites: the largest were Heywood Distribution Park in Rochdale and Trafford Park in Manchester. It also acquired around 800,000 sq ft at Kings Norton Business Centre and 250,000 sq ft at Meteor Park in Birmingham.
Earlier in the year, Harbert bought the 1.6m IQ business park in Farnborough, Hampshire, for £80m.
Both deals took advantage of Segro’s decision to get out of regional property to concentrate on London, the South East and overseas. So far, Segro has sold £377m of its £1.6bn non-core assets - around one- third of its £5.1bn portfolio.
Before the latest Segro sell-offs, Harbert bought a £100m portfolio, including the 1.6m sq ft Woodside distribution park near Dunstable. Harbert has also bought from Prologis, acquiring a 858,000 sq ft UK distribution portfolio in 2009.
42 July 2012 Storage Handling Distribution
www.shdlogistics.com
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