Investment Articles
Sir Stelios Plans Return to Property - FT.Com
EasyGroup entrepreneur Sir Stelios Haji-Ioannou is to return to the commercial property market in the expectation that the sector is nearing the bottom of its two-year slump.
The EasyJet innovator, who does not own any commercial property, is planning to create a special vehicle to buy London office buildings at depressed prices. He plans to turn these properties into hotels and offices for use by his budget franchises, EasyHotel and EasyOffice.
Sir Stelios sees the London property market as becoming attractively priced after losing more than 40 per cent of its value since its peak in 2007.
"I am tempted to call the bottom of the property market in London," he told the Financial Times. "I don't own any property in the UK at the moment but now I am looking again at London real estate. The numbers have come down for everyone - suddenly you can buy a building in London for £3m."
Sir Stelios is focusing on buying empty office properties in London, where prices have been particularly hard hit given the slump in demand from occupiers because of the economic downturn. He said there is much less downside risk even if the market was to fall a further 10 per cent.
He sees this as an opportunity to exploit the pricing to expand his franchised chains. "I'm looking at office property, both for use as Easy-Office space and for conversion into hotels. I've got an advantage there. I don't need windows in the hotel rooms," he said.
EasyHotel has six branches - four in central London and at Heathrow and Luton airports - and he can see this number doubling in the next two years. He is looking at central London as well as Gatwick for property.
Sir Stelios said that he would use cash given the difficulties in finding bank debt for property deals, and look to leverage the deals once they become income producing. The plan is to ultimately sell the hotels to the franchisee. * Sir Michael Rake, chairman of BT, will join the board of Easyjet, the airline will announce today, in a move that is hoped will end the dispute between Sir Stelios and the Easyjet board. Sir Stelios, who has a 27 per cent stake in Easyjet, has the right to appoint two board members, and has criticised its bullish expansion plans in a slowing economy. Sir Michael would remain in his role at BT.