February 28, 2014
Show homes signal progression after previous owners’ abandoned plans. Christine Eade reports
Finzels Reach had yet another relaunch on 15 February.
To those who attended the site of the derelict brewery buildings in the bend of Bristol’s Floating Harbour, it must have seemed like one more plan in a succession of schemes that never happened since Courage stopped brewing there in 1999.
But this month’s open day was different. The new owner, Cubex Land, had mocked up three different show flats to market the 72 unsold units it acquired when it bought the debt from previous developer HDG Mansur. Lenders for the scheme appointed Savills as receiver last year (box, below).
There was a show home for people wishing to downsize, one for first-time buyers and one for investors. Prices range from £175,000 to £400,000.
This fresh, targeted approach is a sign that Finzels is now in the hands of a local developer that knows the Bristol market.
It was Cubex’s second launch event in less than three weeks. A few yards away, the company played host on 30 January to 56 office agents at the 46,590 sq ft refurbished One Victoria, where Cubex was development manager for M&G Real Estate.
At the entrance to Finzels in Counterslip, Cubex also developed the Paragon, tenanted by EY, and sold for £26.5m to Invesco in 2011.
Like most of Cubex’s work, the Counterslip development was funded by Palmer Capital Partners. Palmer has set up a special fund for Finzels, backed by US pension fund manager the Townsend Group. However, Gavin Bridge, a Cubex director, will not say how much is needed for this biggest project yet.
HDG Mansur had referred to a £225m project. Bridge does reveal, however, that Cubex and Palmer have a closer relationship than most developer-investor partnerships.
Bridge and fellow director Josh Roberts explain the history of their involvement in the scheme at Cubex’s offices in Clifton.
“We had been looking at the site for more than 12 months,” says Bridge, who founded Cubex in Bristol a decade ago. “Then HDG Mansur ran out of money, and Deutsche Postbank put it into receivership and we made our approach.”
In April, Cubex used Palmer’s money to buy the £96.5m of debt from Deutsche Postbank at 50p in the pound. Just before Christmas, Cubex completed a similar deal with another German bank, HSH Nordbank.
Bridge recalls: “Now we own the debt. It was the most complicated deal that Josh and I have ever done. It wasn’t just the property, but the taxation structure.
He says that Cubex opted for Bridgewater House – a part-tenanted office building – and a couple of the residential plots that were in receivership, to be retained. To buy them would have incurred stamp duty and the need to pay empty rates, which a receiver does not pay.
Matter of myth
Roberts also has deep roots in the Bristol property market. He attended Bristol Cathedral School, and after university joined JP Sturge & Co — a firm that dates from the 18th century and is now part of Jones Lang LaSalle.
Bridge and Roberts bring a local dimension to Finzels. After two national developers failed to get planning consent for office development, HDG Mansur, a US company backed by Middle Eastern and, later, German money, took over in 2004. It was led by a succession of UK property men who stayed for ever-shorter periods as the scheme foundered.
HDG Mansur renamed the Courage Brewery site after Conrad Finzel, who refined sugar in Counterslip in the 19th century. The change took away the association with alcohol, to placate Middle Eastern Muslim investors. But that was the least of the problems. Cubex has taken over unimplementable planning permissions on the 4.7 acre site, as well as some beautiful listed buildings, and a couple of myths that have attached to Finzels of which neither Bridge nor Roberts know the origin.
The most persistent is that a South African investor bought many of the flats for resale in his own country. But no one can trace him, and HDG Mansur sold only 70 flats. If all the commercial consents are changed to residential, Cubex could be responsible for the development of 450 flats — both new build and in the listed buildings.
Roberts says that after Bristol City Council grants change of use, work will start on site by the end of this year or the spring of 2015. Cubex’s approach will be different from HDG Mansur’s.
As Robert explains: “They were going to build it out on their own. But our approach is to be more collaborative. There are people who are specialist in apartments – retirement and the private-rented sector – and we are working with a number of parties at the moment.”
He adds: “Most property development is carried out in three-year cycles. And there is a lot to do here. No one developer could do it on their own.”
Reality check
The most unworkable element of the existing planning permission is the 160,000 sq ft Temple Building that was intended to be a speculative office. This is unrealistic because last year only 69,000 sq ft of grade A offices were let in Bristol, DTZ research shows. The renamed Temple Plot will be divided equally between flats and a 160-bed hotel. Roberts says he is already talking to hotel operators.
The Generator Building, where trams were charged with electricity, would not look out of place beside a Venice canal. It has consent for office conversion, but Cubex plans that this too will become a block of flats. The huge height of the windows dictate that there could be 32 duplexes.
The only office development is the 110,000 sq ft Bridgewater House, which was completed in 2011. Bridge says that he wants to improve the building and make the foyer more inviting.
HDG Mansur attracted accountant BDO into half a floor. But Cubex is negotiating with the firm to take the rest of the floor. Receiver Savills let 18,750 sq ft to Barclays last summer. Cubex is keeping the rent at £27.50/sq ft for the vacant 77,000 sq ft.
A retail consent of 90,000 sq ft is also unrealistic, because it was granted in 2004, before nearby 1m sq ft shopping centre Cabot Circus opened in 2008.
Bridge discloses that the retail consent will be changed almost entirely to restaurants.
“I am not a fan of chains, and the site doesn’t lend itself to chain restaurants,” he says. “[Agent] Insight really understands how restaurant branding works, just as it did in Royal William Yard, Plymouth.”
The most farfetched myth is that HDG Mansur commissioned a bridge to cross the Floating Harbour to Castle Park because of a planning obligation. Pedestrians and cyclists would be able to reach the prime shopping area in five minutes by crossing the bridge. The rumour is that a £3m bridge is waiting to be towed from Rotterdam up the Bristol Channel.
But Cubex’s Bridge knows nothing of this, and says: “It will probably be made in Sheffield or somewhere like that and be brought down the M1 in sections. It will cost less than £2.5m.”
The crossing of the Floating Harbour symbolises new realism at Finzels Reach.
All change for agents
There has been a change of agents at Finzels Reach since Cubex acquired the site. Some have been replaced after advising on the site for more than a decade.
Office: BNP Paribas Real Estate – HDG Mansur’s long-term adviser – and Strutt & Parker – brought in by a Middle Eastern bank – are out. Cubex has retained Knight Frank, which HDG instructed for the last two years. Cubex has also brought in Savills, which is acting as receiver.
Residential: Savills is also selling the flats at the site. It replaced Jones Lang LaSalle, which took over two years ago when Hamptons International departed from the scheme.
Restaurants: Bristol-based Insight Retail Consulting has been brought in to find restaurants. Hartnell Taylor Cook was to have been HDG Mansur’s retail agent, but the scheme did not progress far enough to embark on retail development.
Author: Christine Eade, Property Week