Advice on Earls Court estates sale considered ‘inadequate’

An unnamed independent real estate advisory consultant, appointed to carry out a preliminary review of financial advice provided to Hammersmith and Fulham Council on the sale of the West Kensington and Gibbs Green Estates to developer Capco in 2012, “concluded that the financial advice was inadequate in several respects”. The council subsequently agreed on 18 July to launch an investigation due to concerns over “other land sales at the time being significantly higher in the borough”, and many of the terms of the deal were deemed “bad value” for the local residents. It is now in the process of appointing an independent investigator to look into the sale of the West Kensington and Gibbs Green Estates to developer Capco in 2012, for a cash consideration of £105m and 760 replacement residential units, it said in a statement. Next stages In a document on Hammersmith and Fulham Council’s website, dated October 2012, it is reported that SNR Denton (now Dentons) provided legal advice, JLL provided commercial advice and PricewaterhouseCoopers (PwC) provided financial advice, best consideration and due diligence advice on the conditional land sale agreement with Capco. JLL and Amino Consulting were also instructed by the council to prepare an options appraisal (the economic appraisal) “in order to explore fully the rationale for the redevelopment of the Estates and understand whether inclusion of the Estates offers the optimum way forward”, the document said. It adds that the cash amount for the estates with the new replacement housing were considered to have a value of between £220m and £289m “depending on the valuation approach used and officers, relying upon the specialist external advice of JLL and PWC, are of the view that the deal under the CLSA currently represents best consideration”. The council said it expects the investigation to last around three months once the independent investigator is appointed, and it is “finalising” the scope of the next stages and gathering evidence. This latest news from the council follows a letter from its leader Stephen Cowan sent earlier this week to the residents of the two estates, in which Cowan wrote that Capco’s chief executive Ian Hawksworth had told the council in March that Capco’s board had agreed it was in the best interests of both Capco and the council for the firm to return the West Kensington and Gibbs Green Estates, Gibbs Green School and Farm Lane to the council. In its latest financial results, released last month, Capco reported that basement works have already been carried out on a block at Lillie Square [pictured above], near the main Earls Court scheme. This would be the first phase of replacement housing for residents of the West Kensington and Gibbs Green Estates, on which Capco has exercised its option under a conditional land sale agreement. To date it has paid Hammersmith & Fulham Council £75m of the £105m cash consideration. Planning powers At another council meeting earlier in July, Hammersmith and Fulham Council agreed to designate the West Kensington and Gibbs Green Estates a neighbourhood plan area and forum. This gives the communities the power to ensure they get the type of developments they want and to set planning policies, which are used in determining planning applications and granting planning permission through neighbourhood development orders. It allows communities to choose where they want new homes, shops and offices to be built, what they should look like, and what infrastructure should be provided. At the time, Capco objected to the neighbourhood area status being granted due to the strategic site designation; a land sale agreement and planning permission already being in place; and the inclusion of parcels of land it did not consider to fit with the largest residential character of the proposed area, according to the council’s report. A spokesperson for Capco said: “The London Borough of Hammersmith and Fulham have expressed interest in pursuing alternative options for the estates. Capco continues to engage with LBHF and other stakeholders in relation to future plans for the estates. “In the meantime, the Conditional Land Sale Agreement, a binding agreement entered into with LBHF in relation to the estates in 2013, remains in place.” Dentons and Amino Consulting have been contacted for comment. PwC and JLL declined to comment. To send feedback, e-mail Louise.Dransfield@egi.co.uk or tweet @DransfieldL or @estatesgazette