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Ardeshir Naghshineh’s Norwich-based Targetfollow Group has gone from strength to strength from small beginnings in 1992 and now has a portfolio valued at more than £1bn, containing about 60 investments in office, industrial and retail buildings. It is also expanding into Europe.
Originally from Iran, Mr Naghshineh trained as a civil engineer, graduating in London and working on projects such as the Thames Barrier. He has lived in East Anglia since 1967.
Mr Naghshineh always attributes Targetfollow’s successes to his “first-class and highly professional team” – pointing out that the property group is “far from a one-man operation”. With a staff of more than 250, Mr Naghshineh’s businesses also include serviced office provider Targetspace, national car parking firm RCP Parking, cycle security specialist Sekura-Byk, Norwich private members’ club Reed’s and an organic farm at Salle.
A shrewd business operator with a fast-growing profile in the commercial property world, he remains a modest, thoughtful man who discourages personal publicity – preferring instead to promote Targetfollow’s role in regenerating brownfield sites, boosting local economies and improving urban landscapes. He has become a keen patron of the arts and charitable causes, has developed an interest in ‘green’ issues and remains passionate about all things Norfolk.
Norwich-based Ardeshir Naghshineh, founder of Targetfollow, has amassed a £440m property portfolio and an organic farm. James Whitmore met the entrepreneur for whom money is not everything. Photographs by Gautier Deblonde
Ardeshir Naghshineh is a most unusual property developer. The fact that his company is called the decidedly unproperty-like Targetfollow and that he is based not in Mayfair or a big provincial city but Norwich, gives some clue to his personality.
But it is the diversity of his business interests that really makes him stand out. As well as owning a £440m investment portfolio, he owns a private club in Norwich of which comedian and writer Stephen Fry is a member; he co-owns with his brother Shapoor a car parking company, Regional Car Parks, and Sekura-Byk Cycle Security, which produces bicycle and motorcycle security stands; and, last but not least, he is an organic farmer.
In 1994, he went to Salle Moor Hall Farm in north Norfolk and fell in love with the house and its 75 acres (30 ha) of land. Having acquired it, he began to buy adjoining land and he now has 380 acres (154 ha). ‘I began to convert it to organic in 1996 and finished in 2001,’ says Naghshineh. ‘We sell 500 boxes a week, of which I get one. Financially, it does OK but it will do very well because prices can go up and the competition is very limited.’
Naghshineh’s property portfolio is just as diverse, comprising around 60 properties of all types in 20 cities and towns. He acknowledges that he is not a typical property man.
‘I wouldn’t do everything for money, I really wouldn’t,’ he says earnestly. ‘But there is a method to my madness. We like city centre buildings that we buy at less than their replacement value.’
The most valuable property is a mixed-use block in London’s Bloomsbury, called 40 Bernard Street, which Naghshineh says is worth more than £100m. It houses offices and a Holiday Inn hotel, which is subject to 25-year rent reviews. The next review is in 2019.
Other inner city office buildings within the portfolio include Wembley Point, the tallest building in Wembley, north-west London, Alexander House in Manchester, St James Court in Warrington and Wycombe House in Barking, east London.
Naghshineh is passionate about Norwich and owns £80m of property in the city, including Grosvenor House in the centre, South Norwich Business Park and the adjoining Hall Road Retail Park.
Watershed developments
But today, 13 years after founding Targetfollow, Ardeshir Naghshineh has reached a watershed. He plans to sell £40m of properties, refinance the portfolio and use the proceeds to buy out minority shareholders that have put money into Targetfollow over the years in order to gain 100% control. Once the restructuring is complete he wants to become involved in development, and he has already lined up projects in Birmingham, the City of London, Stockport and Norwich which, with other schemes, have a potential end value of £1bn.
The focus on development is designed to make Targetfollow more profitable. ‘Our cashflow is weak,’ Naghshineh reveals. ‘Our interest rate bill and rental income are equal, so we have to live off our profits.’
Not that he is complaining. He has more than enough money to live on, which was certainly not the case in the 1980s, when he first arrived in Norwich. He had fled Iran after the revolution in 1979.
“I wouldn’t do everything for money – I really wouldn’t. But
there is a method to my madness
”
Ardeshir Naghshineh
It was not the first time he had been to England. Twelve years earlier, he had been sent by his father, an oil man, to be educated at King’s School in Ely. ‘I didn’t like boarding, so I went to Norwich City College instead,’ he recalls.
It was there that he met his future wife, Clare, the daughter of military historian, Correlli Barnett. The pair married in Iran in 1978, but a year later were forced to leave when the Shah fled into exile and his father was detained by the revolutionaries, led by Ayatollah Khomeini. They left with nothing but gold jewellery worth about £2,000.
After six months unemployed and writing 50 to 60 letters a day applying for jobs, Naghshineh finally landed a well-paid job with a firm of consulting engineers, working on the Thames Barrier project. When the barrier was finished, he moved to work with another firm of consulting engineers on the M2 and M20 bridges, a job he found ‘soul destroying’.
He decided to quit and go into business on his own. In 1986, he and Clare sold their home in Greenwich, south London, and moved next door to Clare’s parents in Norwich.Ardeshir Naghshineh
For three years, Naghshineh struggled trying to sell, initially commodities and then development sites around the M25. His breakthrough came in 1989, when he earned a £35,000 fee for being involved in the £19.5m sale of Camelford House on London’s Albert Embankment for Land & Property Trust. ‘The fee was enough to keep me going,’ he says. ‘I did a few more deals, then the deals dried up.’
In 1991, however, his luck changed. Through an estate agent, who worked at Aylesfords, Naghshineh met Tom Bullus, who developed flats in Knightsbridge and also had an insurance business in Yorkshire. The two set up as property investors at a time when the market was on its knees and bought their first property in Barnsley from receivers. They then bought an ‘off-the-shelf’ company, Targetfollow, and carried out sale-and-leasebacks with BET (now Rentokil) and Shoprite before selling the entire portfolio to Ossory Estates, which at that time was run by Bill Higgins and David Sebire.
In 1996, they bought what is still the firm’s largest asset, 40 Bernard Street, from the McAlpine family, and carried out a small refurbishment of the office space. ‘Rents at the time were £10/sq ft,’ Naghshineh recalls. ‘They peaked at £50 and now they’re £30.’
They moved away from buying high-yielding, single-let office and industrial premises to multilet properties. ‘Then we realised we had to add value because we could no longer ride on the back of the yield/interest rate gap,’ he says. But the company was prospering. ‘We had money coming in from investors and from the profits of our deals,’ he says.
By 2001 Ardeshir Naghshineh and Bullus were spending less time together – Naghshineh was based in Norwich, Bullus was in London and Spain. So Naghshineh carried out a refinancing of the £140m portfolio, replacing an £87m Nationwide loan with £114m of funding from Morgan Stanley, and used the proceeds to buy out part of Bullus’s stake.
A second refinancing followed a year later. Bank of Scotland provided a £193m facility to enable Naghshineh to buy a £61m portfolio from Pervaiz Naviede’s Legendary Property Company. ‘We wanted to buy some high-yielding properties to improve our cashflow. With the Morgan Stanley facility, cashflow was tight,’ he says.
Further acquisitions in the past three years have increased the size of the portfolio from £250m to £440m. The number of staff has risen to 110, which includes eight executive directors: Naghshineh and his brother, Naghshineh’s second in command Ian Fox, who came from Chesterton in 1999, finance director Vanessa Fletcher, two development directors – John Barnes, who came from Morston Assets in 2003, and former Turnstone director Russell Tame – special projects director Ken MacDougall and human resources director Tina Moore.
“Interest rates in europe are low, yields are higher than in the uk and we can’t find the stock over here
”
Ardeshir Naghshineh on target
On target
The team is now focused on the £1bn development programme to improve Targetfollow’s financial performance. The most advanced scheme is Baskerville House in Birmingham, which is one of the four big office schemes in the City alongside Abstract Land’s Colmore Plaza, Masshouse Developments’ Masshouse and Urban Splash’s redevelopment of Fort Dunlop.
Naghshineh reckons the 197,000 sq ft (18,300 sq m) office development is the largest speculative scheme outside London. He bought the grade II-listed building as long ago as 1997 from Birmingham City Council for £10.5m in staged payments.
The building is being refurbished at a cost of £30m to a design by Rolfe Judd. Completion is due in June 2006, when Naghshineh believes it will be valued at more than £70m, based on a rent of £27.50/sq ft (£296.01/sq m) and a yield of 6.5%. And architect Terry Farrell’s firm has been appointed to draw up a masterplan for the land around Baskerville House, which is in the heart of the West End regeneration zone.
Targetfollow’s second big scheme is in Norwich. On the 20 acres (8 ha) of land that houses South Norwich Business Park, which
is the former Bally shoe factory, and Hall Road Retail Park, Benoy has been appointed to draw up a masterplan. Naghshineh aims to submit a planning application at the end of next year for a mixed-use scheme that will be around 70% residential. He is in talks with housebuilder Crest Nicholson about a possible joint venture.
The third development is proposed for the City of London. Ardeshir Naghshineh plans to convert the 37,160 sq ft (3,450 sq m) Chatsworth House at the northern end of St Mary Axe into a three-star business centre, when the tenant Barclays bank moves to Canary Wharf in June.
The fourth scheme is at Stockport’s Grand Central Square, where Targetfollow bought the UGC Grand cinema in May last year for £10.8m. The 76,000 sq ft (7,060 sq m) building was sold at a yield of 9% and will be redeveloped.
Naghshineh also has designs on deals in Europe. ‘I think it’s a good market,’ he says. ‘Interest rates are low, yields are higher than in the UK and we can’t find the stock over here.’ Ardeshir Naghshineh
He claims he may float Targetfollow one day but that ‘it is not my immediate intention’.
That is just as well. Public property companies are required to focus on one or two sectors, they are highly regulated and have to play by the rules. For a man like Naghshineh, who likes to go off piste, that would surely be a step too far.
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Ardeshir Naghshineh, the commercial property investor who owns a 10 per cent stake in Woolworths, is thought to be in talks with another entrepreneur to make a joint bid to buy the high-street chain.
Mr Naghshineh, who is the retailer's biggest stockholder, is believed to have spoken to a "prominent financier" about tabling a joint offer for the group. This could derail the £1 offer for the Woolworths' high-street assets which emerged yesterday and is understood to have been tabled by the turnaround specialists Hilco.
Any deal would let the curtain fall on almost a century of history for one of the high street's most recognisable stores, the first of which was opened by its American owners in Liverpool in 1909. A source said: "Mr Naghshineh believes the balance sheet of the company is much stronger than many people are giving credit. There remains property assets owned and leased by the firm that are being severely undervalued."
Mr Naghshineh and other large investors in the retailer, including the Icelandic group Baugur, are thought to be incensed at the Hilco bid, according to insiders.
Woolworths confirmed reports it had been approached yesterday morning, but declined to name the suitor. The retailer's board announced it was "in preliminary discussions regarding a possible offer for the retail business" which includes its network of 815 stores across Britain.
Later in the day, Paul McGowan, Hilco's chief executive in the UK, confirmed his company was in talks with Woolworths over a potential deal, but said that they were in the "very early stages". Woolworths is currently understood to only be in talks with Hilco, despite an approach from a rival consortium earlier this year. The nominal £1 deal would see the US group saddled with Woolworths' extensive debts - which sat at £286m in September - as well as the £160m-a-year rent on the stores. There are also negotiations over the company's pension deficit, valued at £58.2m.
The news of Hilco's offer was met with dismay in the market yesterday, as the shares plunged almost 40 per cent, dangerously close to penny stock territory. It closed at 2.35p.
John Stevenson, an analyst at KBC Peel Hunt, said that any bidder faced an uphill battle to turn around the business. "For a potential buyer, after the high debt burden and pension funding requirements, which may stretch beyond the deficit, the 800-store base and £160m-plus rent bill remains a major stumbling block," he said. "Indeed, we struggle to see a strong market for store disposals in the coming year. The chances of a successful deal being concluded remains quite doubtful to us, although equally, the group's finance providers will be facing a bleak year ahead in 2009."Ardeshir Naghshineh
Last month, Deloitte, the accountancy group, was appointed to conduct a review of Woolworths by leading creditors to the retailer, the banks Burdale Financial and GMAC Commercial Finance. The two financial groups headed a syndicate that approved a new four-year lending facility to Woolworths worth £385m in January. As lead creditors, they must approve any potential takeover and it is understood that discussions between the parties are underway. Sources close to Burdale, a Bank of Ireland subsidiary, said last month that the group was keen to see Woolworths remain a going concern but ceded that a break-up was possible in certain circumstances.
The group has been in decline since its shares peaked at 55p in 2005, but has especially struggled to deal with the onset of the credit crunch. There are now just five weeks left of the pre-Christmas shopping period, a time when companies like Woolworths traditionally book the largest amount of revenue for the year. Last month, a Panmure Gordon analyst, Philip Dorgan, said the consumer environment was "the worst for more than 30 years" and he picked Woolworths as the most vulnerable retailer on the high street.
The emergence of a possible bid from Mr Ardeshir Naghshineh is the latest twist in the Woolworths saga. Earlier in the year, the Woolworths chairman, Richard North, rejected a take-over bid of £50m for its stores from a consortium fronted by Malcolm Walker, the founder of the Iceland food chain. The bidders also included Baugur, although the crisis in its home market of Iceland is thought to have forced the company to put its plans on ice.
In the spring, Woolworths' then chief executive, Trevor Bish-Jones, was forced out of the top job by Mr North. He was replaced by Steve Johnson, the former Focus DIY chain boss, who took up his new role in September. Just weeks after his arrival, Mr Johnson was forced to unveil "unacceptable" first-half losses at the retailer nearing £100m, and announced it was to scrap its dividend. At the time its auditors questioned "the company's ability to continue as a going concern". The group announced shortly after Mr Johnson's arrival that six directors were to leave as part of his plans to restructure the business. Analysts at the time were vocal in their fear for the group's future, and Numis said Mr Johnson had the "toughest of retail challenges on his hands".Ardeshir Naghshineh
This came shortly after Euler Hermes, Atradius and Coface, the UK's top credit insurers, withdrew cover for suppliers to trade with the group, hindering its attempts to fully stock stores in the run-up to Christmas.
Mr Stevenson, of KBC, remains unconvinced about its future prospects, despite the strong performance from other cut-price retailers such as Poundland and Home & Bargains. "We would be surprised to see Woolworths transform its fortunes in its current form; a smaller store base and range changes are likely necessary to our minds," he said.
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Ardeshir Naghshineh, the biggest shareholder in Woolworths, yesterday set out a new plan to rescue the retail chain. Woolworths is on the brink of bankruptcy and up to 30,000 jobs are at risk. But yesterday Naghshineh - an Iranian-born property tycoon who owns London's Centrepoint office building and 10% of Woolworths - said he was determined to save the loss-making retailer by selling some of its leases to boost cash flow. The property developer said: "Woolworths has a very strong balance sheet and its retail division enjoys a unique place on the high street with one of the best loved and recognised brands." He added: "The banks have now said to me they have open minds. This was the first time an alternative business plan has been put to them and I'm pleased they are prepared to listen."Ardeshir Naghshineh
Woolworths struck a deal with Hilco, which specialises in buying up distressed companies, to sell its 800 stores for £1, with Hilco taking £265m of Woolworths' £385m of debt. The other £120m of debt was to be transferred to two other Woolworths businesses, EUK and 2entertain, which are profitable. But Woolworths' lenders objected to the plan, saying they stood more chance of getting their loans repaid if the entire group went into administration. Over the weekend Hilco offered to take on more debt to get its deal through, but the banks have yet to accept.
Yesterday Ardeshir Naghshineh said: "The company's other divisions, EUK and 2 entertain, are performing well." Selling leases, he said, would put the business "on a sound platform for the immediate and long-term future". Woolworths declined to comment but an executive close to the Woolworths' boardroom said: "There is nothing in what he has suggested that they haven't thought of or tried to do."
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Property baron enters fray to bail out Woolworths30 Nov 2008 Press DigestArdeshir Naghshineh, who saw his 10% equity holding ... Theo Paphitis, the retail entrepreneur, has also emerged ... Comment: What Woolies' failure highlights is that UK ... Sources said that the property tycoon is this ... His restructuring plan for Woolies includes the sale...
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2.Woolworths in talks to rebuff £1 offer from Hilco21 Nov 2008 Press DigestWoolworths was on Thursday talking to its largest ... It is understood that Ardeshir Naghshineh, who controls...
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