This is the time for getting back to the basics of asset management. In the second of our quarterly series on maximising the value of your assets, Mark Jansen reports on how four landlords are squeezing more out of their portfolios

ROM: Distressed buyer

Robert Whitton is looking for distressed assets. As chairman of ROM, a UK opportunity fund formed with Bank of Scotland, he has £400m to spend on assets being sold off cheaply by investors who are in trouble. He has already found one in Clacton-on-Sea, Essex.

Clacton Factory Outlet Centre had a vacancy rate of almost 50% when Whitton bought it for less than £5m at the end of 2007 from an investor that had gone into receivership.

ROM was able to buy Clacton ahead of other bidders because it had the cash, having completed its fundraising before the credit crunch.

Restoration project

Only 12 months earlier the centre had been valued at £15m and Whitton is convinced he can restore its value to that figure or more within two years.

To make the centre look busier and more attractive to visitors, part of the 117,000 sq ft space has been sealed off and the tenants concentrated together in the remaining units. There have also been eight new lettings, some of which Whitton admits are on short-term leases with rents based on a share of turnover only.

‘We want to let as much as possible, as quickly as possible,’ he explains.

Phase two will be an extension to the centre. It is on 14 acres of land, most of which is undeveloped. ROM has submitted three planning applications for a 20,000 sq ft garden centre or trade counter outlet, 12,900 sq ft of restaurant space and a car showroom of 6,600 sq ft. Whitton says: ‘There are no attractions [at present] to encourage shoppers to dwell at the centre for longer.’

Decisions are expected this month and Whitton is optimistic because the council wants to see the centre thrive. He has taken care to cultivate local opinion by joining the local chamber of commerce and has also had meetings with the local MP, the chief executive of the council and the planning officers.

Nothing will be built without a prelet, but Whitton is sure that national retail brands will take space.

The local demographics suggest there are plenty of potential shoppers in the area and ROM is spending money on marketing, events, rebranding and signage. In addition it has spent £1m on the planning applications and revamping the centre.

A project such as Clacton is ‘hard work’, says Whitton, pointing out the risks such as a failure to win planning permission or significant new lettings, both of which are essential for creating extra value.

Yet the centre’s potential has been carefully analysed: ‘We can tell a compelling story [to retailers] and the demographics support this location. It is a question of attention to detail, being skillful and being determined,’ he says(...).

Mark Jansen.

http://www.propertyweek.com, 01.08.08.