Carrying on regardless

Carrying on regardless

In the commercial property world, recessions can be good for acquisitive, far-sighted developers and investors. Paul Bassi, of the Real Estate Investors group, is certainly coming out of the downturn at an advantage. Sandy Simpson reports
One of Paul Bassi’s biggest gripes is that the West Midlands does not publicise itself well enough. Quite ironic, really, because Bassi has himself not always been the most visible of Birmingham businessmen during his career.

But it seems his policy is to do, rather than say, and his CV includes spells as president of Birmingham Chamber of Commerce, High Sheriff of the West Midlands, a director of Birmingham Hippodrome, former regional chairman of Coutts Bank and Deputy Lieutenant for the West Midlands.

And in 2010 he was made a Commander of the British Empire for his services to business and the community in the West Midlands.

Despite these high offices, you won’t find Bassi propping up a bar on a Friday afternoon in Birmingham city centre, bemoaning the state of the economy, having abandoned his desk for the property professionals’ perennial naval-gazing session while they wonder where all the deals have gone. Instead, he makes sure the deals are being done – and done by those who work their contacts, constantly probing to find out what is coming to market, preferably before the rest of the market knows. And while much of the investment market professionals bemoan the lack of action, Bassi has been busy.

The ‘quiet man’ of the Birmingham property scene has built on the solid foundations of his Real Estate Investors (REI) group over the past five years, emerging with a very healthy balance sheet. There is now an intention to continue paying increasingly generous dividends after the first dividend was paid
this year.

The company is also considering converting to a REIT (Real Estate Investment Trust), which will allow it to trade free of corporation tax, conditional upon paying out the majority of profits as dividends.

Taking REI alone, he has steered through more acquisitions than most in the past 18 months. These include the Apex office development in Edgbaston which REI bought for £1.69m. The previous owners had paid £4.525m in 2005. Similarly, the firm paid £475k for a freehold property in West Bromwich High Street – the vendor having paid £1.6m in May 2006.

Other purchases include Southgate retail park in Derby, Peat House in Leicester, Gateway House in Birmingham city centre for £13m and 85-89 Colmore Row in December last year for £4m. Totalling over £50m in a downturn, and all from cash resources. The portfolio now includes properties throughout the Midlands – Bassi believes in local. It is a theme he returns to constantly. He divides the UK into two countries – London and ‘The Rest’.

“In my view the West Midlands economy is far from the basket case some would make out,” he says. “The region has a positive story to tell and should be telling it. We should all be sharing that responsibility. My prediction is that the ‘country’ called London, because that is what it has become, will fall out of favour
with investors.”

He believes the rest of the UK will become a compelling business case, but that this does not come out in national statistics that are inevitably weighted by the figures from the South East.

“In the West Midlands we should look after our own, use local services, buy local products and communicate and create opportunities.”

Bassi is non-executive chairman of commercial property businesses CPBigwood and Bond Wolfe, and he cites the successes of these private equities as proof that well-run West Midlands businesses are doing well. CPBigwood, run by Rory Daly, his business partner of 30 years, and Nigel Curry, has sold over £50m worth of property annually through its rapidly growing auction department, even during the downturn, and is on track to hit £60m this year – a 20% increase in a recession.

The firm is now established as one of the UK’s top ten property management companies with over £3bn worth of property under management across 30 counties, and recently acquired Lloyds Property management in the East Midlands. Rory Daly recently announced that CPBigwood was on the acquisition trail and news on that front is expected in the autumn. In West Bromwich, where property agents Bond Wolfe are based, there has been the completion of the new Sandwell College complex, the long-awaited Tesco scheme is now coming on stream – with huge demand for jobs – and Bond Wolfe staff have noticed a significant increase in letting demand, particularly for industrial and office space.

In October last year, Bond Wolfe moved very quickly to snap up the former 44,000 sq ft West Bromwich Building Society HQ in West Bromwich town centre, following the society’s decision to relocate out of the borough. Bond Wolfe already has a number of notable local properties within its portfolio in West Bromwich, Walsall and Wolverhampton. These include its own current headquarters at West Plaza, let to Premier Travel Inn, along with Landchard House, Victoria House, Bridge House, let to the County Courts, Waterloo Court and several others totalling over 500,000 sq ft. Bassi says: “There are more cranes and construction activity now in West Bromwich than I have seen in 30 years.”

Such is his confidence that Bond Wolfe plans to build 60 two bedroom apartments in the centre of West Bromwich.

“For the West Midlands, I genuinely believe the worst is over. If you survived to this point, you will in all probably come out of the downturn in a stronger position,” he says. “And it’s  likely you will have learned some valuable lessons. What’s the secret to investing in property, for example? “Stay local,” he urges. “Learn the lessons of Dubai and Bulgaria where many got their fingers burnt. By buying locally, you can work the asset and add value. We like retail at present because you are buying off very low values. Office rents will make by far the biggest gains from here on in – both areas that have been shunned by most investors in the recent past.” He says REI has seen a big uplift in interest from occupiers looking for 2,500-5,000 sq ft on five to ten year leases – not 25 years, “and we aim to give the market what it wants.” Bassi adds: “We are working hard on finishing off asset management initiatives on buildings that we own and we will sell them into an improving market during the next few years.”

Like the old master Black Country developers, Don and Roy Richardson, Bassi bought more assets in the depths of the recession – 75-77 and 85-89 Colmore Row, Kings Heath High Street, Cathedral House, Gateway House, Apex House complex – off 20% yield from the receivers.

“We have a reputation for getting deals done,” he says. “We’ve always been cash buyers. Vendors and their agents are aware of our attitude, our reputation and that fact that we have cash in the bank.” But could the heady days of buying at the bottom in a recession be numbered? “We think the second half of the year will bring opportunities to sell some of those assets that we have worked hard on at prices that reflect the value added to them.”

Positive words but how does he back them up? “The regional economy continues to benefit from the success enjoyed by the automotive sector, in particular Jaguar Land Rover. While our portfolio is spread across the Midlands, we hold significant assets in the prime city core which we expect will benefit from Enterprise Zone status.

The £600m New Street Station redevelopment, a £129m Metro extension linking Snow Hill station to New Street station, the £65m airport runway extension, the £250m Birmingham City University campus and £188m new library, will all contribute to improving economic activity.  “We are also told that last year Birmingham saw a 40% increase in foreign investment amid a UK decline of 2%. A few years ago, I stated that the financial crisis and the property market turmoil would reveal winners and losers and I believed that REI would emerge as a winner. Nothing has changed to alter my view.”

Fact file

 

Paul Bassi Fact File

Paul Bassi started his business career in 1983, initially in financial services, branching out into estate agency in 1987 and property investment in 1989.

He is chief executive of Real Estate Investors plc, the AIM-listed property investment company with interests in quality commercial and residential properties throughout the Midlands and UK.

He is also the non-executive chairman of commercial property businesses Bond Wolfe and CPBigwood, and was the former regional chairman of Coutts Bank in the West Midlands. His private equity interests also include award-winning Indian restaurant Asha’s in Newhall Street in Birmingham, a chain of Subway stores and the Black Country estate agency chain Paul Dubberley which now has six branches.

He is also a non-executive director with EFG Independent Financial Advisers, the wealth management division of the Swiss-based EFG Private Bank Ltd which has offices in Birmingham, Wolverhampton and London. A past president of Birmingham Chamber of Commerce, he is also a former director of Birmingham Hippodrome. In 2003 he was named Entrepreneur of the Year in the Asian Jewel Awards, and was awarded the Lloyds TSB Lifetime Achievement in 2005.

Paul was appointed Deputy Lieutenant for the County of West Midlands in 2008, and his contribution to business in the Midlands region was recognised with his appointment by Buckingham Palace as High Sheriff for the County of West Midlands for 2009.

He has received Honorary Doctorates from both Birmingham City and Aston University, and was awarded a CBE in the 2010 New Year’s Honours List in recognition for his services to business and to the community in the West Midlands.

Outside of work, his interests include tennis, raquetball, football, cars and travel. He wed his long term partner Priya in 2008 and they have three children, Terri, Bobby and Nikita.

The eldest son of Sikh Punjabi immigrants, he was born in Birmingham and brought up in London. He now lives in Pedmore, near Stourbridge and has homes in Marbella, Spain, and Punjab, India.