Meltdown warning as firms look to refinance

Roderick Evans
Roderick Evans
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RODERICK Evans is taking day-to-day control of his family’s £600m property business as conditions worsen in the UK’s struggling real estate sector.

The 50-year-old chairman will become managing director of Evans Management Ltd from January, seven months after the Leeds group announced the appointment of long-term family adviser Ian Marcus to the role.

Mr Marcus, a well-connected City banker, will become non-executive chairman.

In a rare interview, Mr Evans warned of difficult times ahead in the sector as businesses try to refinance loans amid plunging real estate values.

He told the Yorkshire Post: “The **** is going to hit the fan. We have been waiting for a realisation with the lenders that they have got a tiger by the tail.

“Something like £40bn a year has got to be refinanced starting next year for the next five years and probably 70 per cent is unfinancable. That will be an amazing opportunity for somebody.

“It is going to have a deleterious effect; it is going to have a negative impact on the country and the economy. It’s not good news coming out.”

Mr Evans added: “You have got to cut your cloth accordingly.

“A war consigliere is probably different to the person you need when you are expanding the business.”

Mr Marcus, chairman of the Bank of England’s commercial property forum and the former head of European real estate investment banking at Credit Suisse, has worked with the company for two decades as lender, consultant and non-executive director.

“His contacts are unbelievable,” said Mr Evans. He does not expect to see growth in the wider economy.

“There’s going to be opportunities but it’s a difficult environment out there. We probably cannot capitalise – even with our skills and with the access to capital that we have – to the full amount.

“It’s not a short-term recession. It seems like one that’s going to go for some time. It’s not a short-term hiatus.

“There does not seem to be much light.”

Mr Marcus added: “We think values are going to come off 5-10 per cent this year; anything that’s not prime or good quality considerably more.

“We are all about protecting the downside and protecting the reputation that Roderick and his father and his grandfather have created for this business and make sure we see our way through these difficult times.”

As of May, the group’s net asset value was around £360m.

The group said yesterday that it had net assets of around £350m, “substantial” borrowing facilities and gearing of around 35 per cent.

It said its investment portfolio is “of exceptional quality in terms of covenant strength and lease length”.

Assets include the freehold of the White Rose shopping centre and 1 Park Row in Leeds, home to Pinsent Masons and Rothschild.

As of May, the group’s Yorkshire interests were worth between £350m and £400m.

The group added that it has a “significant” development pipeline, including strategic land holdings and a growing non-property portfolio.

Mr Marcus told the Yorkshire Post that Evans “enjoys excellent relationships with banks and other stakeholders” and has a talented executive team, including finance director Paul Millington, portfolio director Alan Syers, development director James Pitt and projects director Simon Bottomley. John Bell, managing director for 18 years, retired earlier this year.

“I’m still going to be sitting at Roderick’s right arm as required for the business going forward,” added Mr Marcus.

Founded by the late Fred Evans OBE, Evans is one of the UK’s most successful property companies and holds significant cash reserves after selling £600m worth of properties in 2006 and 2007.

Roderick is the eldest son of Michael Evans, the Monaco-based son of Frederick.

He said he was “very pleased” to be following in the footsteps of his grandfather and father.

Management shake-up

THE Evans Group said the management changes followed a review of succession arrangements.

Roderick Evans, 50, said: “We are delighted that Ian will continue his long association with the business, providing us with support alongside that provided by fellow non-executive directors John Bell and John Stephen.” Evans Management Ltd provides management and administrative services to the subsidiaries of Drachs Investment No3 Limited, the Jersey-based parent company.

The group floated in 1971 and went private in 1999 with net assets of £79m.