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Conygar Investment Company PLC

Conygar Investment Company PLC Q&A with CEO Robert Ware (LON:CIC)

Conygar Investment Company PLC (LON:CIC) Chief Executive Officer Robert Ware caught up with DirectorsTalk for an exclusive interview to discuss the opportunities at their Nottingham site, the impact of a nuclear power station in Anglesey and his thoughts on the market over the next 6-12 months

 

Q1: For those that don’t know, Conygar Investment Company are a property and investment group dealing mostly with the UK property. Can you tell us about your Nottingham site and the opportunity there?

A1: In December last year, we managed to acquire 37 acres in the middle of Nottingham town centre. The exciting bit about this piece of land is 25 years ago it was the Boots laboratories and headquarters and when Boots moved out of the city centre to the outer towns and subsequently to Switzerland, basically it’s a brownfield site with a lot of road over it. Various previous owners in that 25 years have tried to build all sorts of wonderful things on it, huge great shopping malls, Tesco superstores and whatever and basically, I think at the end of the day the bank got fed up and put it up to be sold at the end of last December which we purchased it.

So, the 37 acres we intend to submit outline planning permission for over 2 million square feet of a mixture of apartments, student housing, offices, leisure uses, obviously a lot of open space and areas for people and a new faculty for one of the universities. So, it’ll be one of those sites that’s just basically property for people to use rather than try to engineer something that perhaps locals don’t want.

The outline planning should be in by Easter and then as we’re with the council, and have done for more than a year now, hopefully there won’t be too many issues from that and we can get on and start to get tenants and therefore start to get the detailed planning and build things that people want.

 

Q2: Just coming away from Nottingham, in Anglesey there’s talk of a nuclear power station there, how would that impact Conygar Investment Company?

A2: These talks about Hitachi have been going on for some time and obviously with Hinkley Point and Sellafield there’s an awful lot of controversy around nuclear at the moment let alone the pricing of it.

It would seem that Hitachi have spent an awful lot of money and their reactors apparently passed all the atomic research tests and audits that have to occur, and it passed just before Christmas.
So, the argument as you read in the press for Hitachi and our government to argue about who is paying for what, and whether if the government actually guarantees something, whatever that is I’m not sure, that therefore the price of the firm would come down. I think the point about Hinkley Point is that the government stood away, allowed utter market forces to take control so basically, in the spreadsheet everybody put all sorts of contingent liabilities that may actually mean that the price is higher than it should be. So, I think the argument is about how much our government guarantees or supports in the process.

As far as Conygar are concerned, the island of Anglesey only has a population of 66,000, the temporary workers will be around 9,000 at peak, they think over the 7/8-year period, they’ll be 6-7 every year plus then all the people that’ll be working on it for the next 62.5 years which is apparently the life of the nuclear power station when it starts.

So, we’ve got 200 brownfield acres, about 6 miles from the potential new nuclear site and Hitachi have that site under option from us for a period of time, there’s huge areas outside of Holyhead port, land that we own there, and again Hitachi have got some options over that land. Separately, Conygar and our partners Stena have a large residential development on the waterfront.

So, basically for the island of Anglesey, the day that they say yes, and they go ahead with it i.e. it gets its financing, I think will be transformational for the island.

 

Q3: Finally, what are your thoughts on regional commercial property in the UK and the market over the next 6-12 months?

A3: Well, I think our view is that it’s pretty patchy, there’s going to be one or two areas where there’s still going to see rental growth and that’ll be the Amazon-style operators who are looking for drop-off points really and then to have the smaller vans taking whatever we all buy around to our homes or offices or wherever we order it.

I think that high street retail we haven’t seen the full impact yet of the internet, it’s going to worse for the high streets, so I think they’re going to become very specialist areas which means high street shops generally are still going to come down in value, we believe.

I think there are specialist operators, successful ones that are out there growing at the moment, the ones that we see in those areas; B&M which is a cracking company, the Premier Inn is still expanding, Dunelm, there are one or two that are really growing. Lots have put their plans on ice so M&S Foodhall’s under their new management they’re waiting to see what they want to do, Next have reduced some of their pipeline of actually building properties rather than selling it all through the internet. So, I think it’s all patchy everywhere.

The wildcard is London with the RESI that’s obviously falling off at the moment, in my view due to the high stamp duty rather than any discussion over Brexit but RESI outside of London seems to be more positive than within so I think it’s all over the place.

We saw just before Christmas the Hammerson/Intu merger which for somebody who knows a little bit about it, it looks pretty defensive to me. I think some of those larger shopping centres, unless they’re absolutely perfect, are going to get hammered as far as valuation is concerned and actually any rental growth because I can’t see where it’s going to come from.

So, that doesn’t really answer the question other than I think it’s patchy and all over the place. The key with anybody investing is are the tenant going to pay the rent, if interest rates go up or something happens to their business can they carry on trading, if so that’ll be great, if not you’ve got to look at the covenant.

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