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[June 10, 2008]
TalentshowsINTRODUCTION: Simon Cowell's brother Nicholas (right) and his partner Adrian Levy see opportunity knocking in the downturn - and a refinancing has given them a hefty war chest. Paul Norman reports. Portraits by Tom Campbell
(Estates Gazette Via Acquire Media NewsEdge)
"Just don't make it too cheesy." The plea highlights just how aware Nicholas Cowell, brother of music mogul and TV personality Simon, is of the effect that the merest whiff of celebrity can have on a journalist's copy.
Twenty-five years into a successful property career in agency and investment alongside long-term business partner Adrian Levy, Cowell is resigned to articles on the duo being peppered with references to "prop idols" and "schemes with an "X-factor".
Not that they are complaining too much. Following the recent completion of a refinancing of their portfolio by HSBC Private, the duo are more than happy to publicise the fact that they are on the acquisition trail with a "substantial war chest". Cowell refuses to divulge exactly how much, but says the move has left them "well placed" to take advantage of the market downturn.
"We are looking at situations on a deal-by-deal basis, from properties valued at ?500,000 to a mixed portfolio of ?80m. We prefer central London because that's where the value is right now, but we have bought properties all over the country."
Both 46, Cowell and Levy make for a classic good cop, bad cop double act. Cowell strongly resembles his more famous elder brother, although is a little taller - both siblings are disarmingly laid back, super-confident, expensively groomed. The shorter, stockier Levy comes across as the bruiser of the team, and has a more frenetic manner, continually alluding to deals done or forthcoming.
Since buying out Sir David Garrard's and Bruce Green's agency business, Garrard Smith & Partners (later to become Estate Office), in 1983 as ambitious 22-year-olds, the pair have been involved in an impressive array of deals.
Their company, Estate Office - launched with an unsecured loan of ?30,000 from Barclays Bank - specialises in investment, principally in London and across all sectors.
Highlights range from an early coup selling the "first ?1m homes" in London's St John's Wood - on Elm Tree Road - to the ?10m sale of the former Saatchi Gallery on Boundary Road to Oakmayne Properties and Vanderbilt Properties for residential development, and recently acting on the ?180m sale of BT's 120 Holborn headquarters on behalf of a private family.
Since the crash of the late 1980s, the company has also generated an income stream via its own property acquisitions. In 1993, Robert Bearman was enlisted as a director to help the agency reinvest its earnings in property via a string of vehicles, particularly under the Abbey Road brand.
Many of these have been in joint ventures with well-known names such as William Pears and the celebrity investor firm aAIM. And yes, some have involved co-investing with Cowell's famous sibling. "We are Simon's property adviser," says Levy. "He consults us when he is offered properties, including substantial recent deals in Dubai and the US."
Cowell adds: "The majority of investment for Simon remains totally private. He is not a director of any companies we are involved in, but suffice to say he likes the property business and it has been successful for him."
Both Cowell brothers appear to hanker after one another's careers. In 2005, Nicholas appeared as the judge on an ITV2 Pop Idol-like property development show called The Block.
Pop and property run in the family - their father, Eric Philip Cowell, was both an estate agent and music industry executive. Like his father, Cowell tends not to take centre stage, popping up only sporadically in the business and property press, despite a client list that includes Berkeley Homes, Grainger Trust, the Candy brothers and the Livingstone brothers.
The agency's ?180m sale of BT's offices at 120 Holborn to an unnamed private investor in the middle of last year came two years after the group had bought it on behalf of a private family for ?120m - but both substantial deals went unreported at the time.
The principal reason for the relative lack of fanfare has been the need for discretion. Cowell explains: "We set up the business to target the huge amount of unmodernised property in central London.
"But we wanted to deal purely with people in the property business, rather than trying to compete with the mainstream chains. It was a different perspective based on building a database of contacts."
This emphasis on discreet client relationships gave the group an edge in its infancy, Cowell says, and the company now wishes to place itself in the same bracket as Michael Elliott and Davis Coffer Lyons. "Our database now encompasses wealthy private individuals through to some of the leading names at the top property companies.
"We know people who are cash-rich and want to invest in property," he adds. "We do business with the major Israeli investors, for instance, and have worked with the Qataris for many years. But these families rely on discretion and we respect their privacy."
Without a trace of bashfulness, Cowell declares that his early successes were built on the group's creation of the "first attended exchanges". "To inspire people to sell their properties, we'd say: 'If I show someone a property in the morning, we will get their lawyers and sit them down with you at the table and exchange contracts later that day.' Now, it's a fairly common practice to have all the papers ready, but in those days it was unheard of, and we got a reputation."
An early example, he says, was the sale of a flat at 48 Grosvenor Square in the West End. "We were kind of fearless," says Cowell. "The owner had been trying to sell an unusual basement flat with a swimming pool for many years. We took it on and found we had such a powerful database that we had 20-30 people chasing it."
Today's troubled property market has caused Cowell to rethink his strategy of avoiding the media, and both he and Levy are now keen to get the word out that their various property investment subsidiaries are on the acquisition trail. A "substantial war chest" has been built up, says Levy, partly via a refinancing of much of their portfolio just before the crunch struck last year.
"We talked to HSBC Private for quite some time about our business and then took the decision about 12 months ago to instruct Savills to do a revaluation, which led to the refinancing with HSBC," he explains.
The principal focus continues to be on opportunities for adding value, either via asset management or re?development.
Levy says they are also targeting individ-uals who are retiring and wish to sell on their businesses and portfolios of assets.
The agency business continues to grow, headed by director Chaim Aziz, who joined five years ago to build up investment sales. Cowell is also developing his relationship with property syndicator aAIM, following the launch in January 2005 of a ?400m fund investing in commercial property. "aAIM approached me about three years ago to get investment from ourselves or from Simon. It is one of the leading companies for arbitrage on yield compression and it was doing some interesting deals. We liked the company so much that we wanted to get involved, and as a result we formed a discretionary fund which we owned jointly."
More recently, the downturn has prompted Estate Office to pursue work as an adviser to banks and receivers on forced sales. Cowell says: "We stayed in business in 1990-91 and we are proud of that. In part it was because the receivers and the banks recognised our talents and used us as consultants in the break-up of some serious property port-folios, both residential and commercial."
Cowell's parting shot is a warning about the perils of buy-to-let investment. "We know where yields really are, and if prices fall then investors' homes will be at risk. My advice is: read the small print." Cheesy perhaps, but a good soundbite.
the Estate office story
Late 1970s Nicholas Cowell and Adrian Levy leave school and start as estate agency office juniors. Cowell lands job at 17 at Sir David Garrard's and Bruce Green's Garrard Smith & Partners Levy joins Druce & Co
1983 Garrard buys public company Land Investors and quits agency work. Backed by an unsecured loan of ?30,000 from Barclays Bank, Cowell and Levy, who have got to know each other, take over Garrard Smith & Partners (later known as Estate Office), focusing on unmodernised properties in central London. Through "sheer hard work" the duo begin to advise on sales and acquisitions in Hampstead, St John's Wood, Kensington and Chelsea
Late 1980s The property crash hits business. The duo keep trading by advising banks and receivers on forced sales
1993 Reinvesting in acquisitions. Former Bairstow Eves man Robert Bearman brought in to focus on Estate Office's separate property investment vehicles
January 2005 Cowell joins forces with property syndicator aAIM to launch a ?400m commercial property fund
2007 Refinancing property portfolio with HSBC Private to raise cash for acquisitions
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