Life of strife, but Halabi is still managing to rub along

Peter Bill
23 Oct 2009

Three years ago Simon Halabi had the chance to change the ending to a story that concluded this week with the appointment of administrators Ernst & Young (E&Y) to the larger part of his £2.5 billion property empire.

In October 2006 the Syrian-born investor announced the sale of £1.8 billion of assets including the Aviva Tower in EC3 and the European HQ of JP Morgan on London Wall: properties that are worth less than £1 billion today.

Perhaps “announced” is the wrong word. Information from Halabi tends to emerge through third parties: lawyers, property agents and those who spoke on behalf of Buckingham Securities, Halabi's Manchester Square-based advisory business that was put into liquidation in August.

Few have met the man whose first name apparently rhymes with the little card that goes in the back of a mobile phone. But those that speak for him always stress the fact that the 59-year old does not personally own any of the assets. These are managed on behalf of unnameable family trusts.

The man who bought Mentmore Towers in 1997 only attained real visibility in 2000, with the purchase of the In and Out Club at 100 Piccadilly.

Estates Gazette reported the plot had been bought by some Russians for £50 million. Halabi surfaced to demand a correction.

Over the next few years the money poured out of these trusts and into a series of leveraged deals. Transactions which included a stake in the Shard skyscraper at London Bridge, the £550 million purchase of the Esporta health club chain — and those office blocks now in the hands of E&Y.

Halabi's deals tended to be accompanied by strife. His 50% stake in the Shard was half-funded by the Irish Nationwide building society. His partners, Irvine Sellar and Swedish group CLS, thought he only had a 25% stake.  There was a huge legal fight, ending with each taking a third.

Halabi sold that stake. But he then managed to upset Sociétié Général who lent him £330 million to buy Esporta. No wonder, the chain was forced into admistration in 2007.

Last year architect Aukett Fitzroy Robinson got fed up with Halabi. He refused to pay £1.5m in fees for drawing up plans for a luxury hotel on the still-derelict In and Out Club site. They sued Halabi for £1.5 million. Halabi countersued. The architects won.

But it would be a mistake to think a man once worth £2.5 billion has lost everything: far from it. Halabi still controls the In and Out club site. This week his agents, Jones Lang LaSalle, said the land, which has permission for a 160,000 sq ft hotel, was for sale at five times the £50 million paid in 2000. Halabi's empire would, of course, have survived intact had he sold those office blocks in 2006 for £1.8 billion. Guess what? He refinanced instead. That gave him the chance to take out tens of millions in cash. So he will rub along. That will really annoy the banks who provided those fresh mortgages.

Something is stirring but the big boys are still keeping mum

An audience of 400 plus were anxious to hear what a group of property developers had to say about the state of the London market on Tuesday. Sadly, none was willing to reveal their full hand at the event organised by Property Week at the Royal Lancaster Hotel.

The chief executives on stage included Francis Salway of Land Securities; George Iacobescu, of Canary Wharf; John Burns, of Derwent London; and Toby Courtauld of Great Portland. In order of appearance: one very big player; one big in the east end; and a couple fairly big in the West End.

None could of course disguise the fact that they hold a far better hand than this time last year. Then most were hiding under the green baize table waiting for the fallout from Lehman Brothers to stop. Now there were what poker players call “tells” indicating that quartet were holding a few high cards: hesitant smiles and the avoidance of specifics.

What the audience wanted to be told was when and where will you start building again? Salway was the most frank: “We will start again in 2010 on two sites. Building costs are down and rents will be up by 2011.” There was no mention of starting on the Walkie Talkie tower in the City.

Iacobescu raised the possibility, first floated before the credit crunch, of Canary Wharf taking stakes in developments outside Docklands. But there was no mention of his neighbouring Wood Wharf scheme. Burns said development had become “viable again” but said little more. Courtauld was the most guarded, but conceded starting “earlier rather than later” made sense.

So what is going on? Something stirs, that is for sure. But these guys are hardly likely to confide in each other, let alone an audience.

Ronson's bonus depends on filling a whole Heron

Gerald Ronson's pay fell from £12.9 million in 2007 to £1.7 million last year, according to the accounts of Heron International published last Friday.

But before you start sending charitable donations, bear in mind that about £10 million of the chief executive's 2007 pay packet came from a long-term bonus scheme. The next seven-figure payday won't come until 2013, after the seven-year term of the 70-year old's latest scheme expires.

The private business lost £10 million: But it did pay shareholders a £20 million dividend. Net debt rose from £188 million to £418 million: but the value of the properties rose from £535 million to £698 million. Just how much the man who owns only 7.6% of Heron gets in 2013 depends a bit on fully letting the 440,000 square foot Heron tower. The offices now stand 33 floors proud of Bishopsgate and will reach the full height of 46 next March.

On Tuesday Ronson said formal marketing will start next spring — presumably with a party to mark the topping out. But he was also careful to let slip that someone is already keen to take nearly half the space.

Helical bar is back with a bang

That vast and ugly black building which squats on the London Museum roundabout at the western end of London Wall is to be transformed. The old Clifford Chance offices have lain empty since 2000 when the lawyers shifted to Canary Wharf. About £60 million has been spent on the innards by Deutsche Bank subsidiary Rreef in a futile attempt to attract tenants into the 370,000 sq ft of space; they've got a Pret a Manger — that's it. Two weeks ago Rreef announced a link with developer Helical Bar. Not much was said, but a lot is going to happen. Expect a brand new skin, extensive alterations to the just-altered interiors including high-level restaurants, plus cafes and shops at pavement level. Helical boss Mike Slade has been hinting at a comeback in the City for some weeks. Well, the man who everyone watches is back in a big way.