Bruntwood seeks JV to boost managed portfolio

COMMERCIAL property company Bruntwood is looking at potential joint venture schemes with institutional lenders which would see them take on the responsibility for managing sizable portfolios of office properties.

Chief executive Chris Oglesby told TheBusinessDesk.com it would be willing to abandon its traditional model of taking on sole ownership and management of buildings if it allowed the company to participate in an upside in transforming a larger stock of distressed properties.

Mr Oglesby said although the firm did not have as much equity at its disposal as previously – largely due to the overall decline in property values – it could still inject capital into schemes and had a track record of actively managing assets.

He argued that such an arrangement would make more sense to lenders than to sell to investors who will put managing agents into a building and then sit on a property until the market experiences an upturn in capital values.

Bruntwood, which is headquartered in Manchester, owns and manages three sites in Birmingham city centre – Cornwall Buildings, Mclaren and Kennedy Tower which it acquired last autumn.

Bruntwood announced results for the year to September 30, 2010, last week which showed a 3% increase in turnover to £11.2m although pre-tax profits dropped to £11.1m. The net worth of its 6m sq ft portfolio also increased by 3% to £310.5m.

“Given where we are in the property cycle we’re pleased with the way the business is performing,” Mr Oglesby said.

He added that the company’s primary focus for the coming year would be to strengthen its portfolio in its core regional city centre markets.

He said the company was more confident about regional city centre markets than London-based investors and institutions, many of whom have been predicting a “bloodbath” in the markets for secondary space.

“What people in London don’t see as much is that there are a lot of very well-run privately-owned businesses here,” he said, arguing that the emphasis on the impact of public sector contraction on northern cities may have been overplayed.

“In Leeds, we have no stock available and we’re 100% let. In Birmingham, we have a 12-month pipeline but in both cities we’re out and we’re actively looking for more.”

Oglesby also indicated that Bruntwood will soon begin to look at refinancing or replacing the long-term debt it obtained via a £440m securitisation deal in 2007.