Monday, February 08, 2010

Putting The Con Into Confidence

Welcome to the weird & wonderful world of Warren Bradley. Cllr Bradley never tires of telling us, via his PR agents on Oldham Hall Street, what an unalloyed success story Grosvenor-pool has been for the city. He was at it again this morning in the Daily Ghost (love the "relaunch", btw, Mark, how long have you been given?) , rhapsodising about the council's handover of the land colonised by Grosvenor ( ).
Alan Weston was the one to draw the short straw & put the best possible gloss on a shabby stitch-up. However, his valiant efforts were pitifully transparent as he briefly described the general outline of the arrangement:
"Under the terms of the lease, Grosvenor will own the 42 acres of land occupied by Liverpool One for the next 250 years, in return for which the city council will receive 5% of the rental value -- now standing at £1.7m a year.
"But with the complex not yet fully occupied and discounted rent deals for some stores coming to an end, that figure is sure to rise in future years."
Hmm, so let me get this straight. The council's take from the arrangement will be 5% of £1.7m: £85,000. Right, I see. That's what I call good business. Another fly in the ointment is to be found in Weston's breezy assurances of sunlit uplands & eternal happiness for the retail behemoth. He undermines the faux feel-good factor later on in his piece with his admission that "More than 95% of the 1.6m sq. ft. scheme is currently let".
Not much scope there for extra revenue from the complex, eh? There's also the distinct possibility that retailers will respond to the end of the discounted rent scheme in the way they did at the Albert Dock two decades ago, ie., leave. The recession may be technically over, but retailers know as well as shoppers that its effects are still taking place.
At which point, let's consider the words of local soothsayer & saviour, Warren Bradley. Bear with him here. After all, he did once say in a TV interview that the Three Graces were as old as the city itself (btw, the Cavern started as a Cavalier hang-out for King Charles' troops in between civil war battles for Liverpool Castle). Anyway, speak up, Warren, take it away:
"Liverpool One has brought real confidence back to the city centre, and just as importantly, to those outside the city centre."
Ah yes, Warren, you can really see that "confidence" in the rising number of empty retail spaces on Church Street. What's more, the residents in Dingle, Belle Vale, Speke, Croxteth, Kirkdale, etc. really exude that "confidence" because of Grosvenor-pool. What happens in their own neighbourhoods is strictly secondary, isn't it, Warren? Any other pearls of wisdom, councillor?
"The council is now seen more as a company than as a local authority, and we have conducted ourselves in a way that is appropriate to a major development."
Absoluteley! Why think of yourselves as heading a council when you can tell yourselves & others that you're really a crack team of business people; that deal with Grosvenor confirms how business-savvy you are, right? Anything else to add before we bid adieu?
"The 42 acres now occupied by Liverpool One were previously low grade and didn't offer anything. What we have now represents a good deal for the city council, and we should be grateful to Grosvenor for having the confidence to do it in Liverpool."
Perfect, Warren, perfect. Yes, "confidence" is the word; just add the term "trick" & you have the summation of the Fib Dems' Bread & Circus approach to running a major UK city. Oh, btw, the original Chavasse Park wasn't exactly Edenesque. Nor, however, was it "low grade". I seem to remember that it formed a natural amphitheatre for one of the main stages during the Matthew Street festival. So are you slighting a festival you normally praise ad nauseam? Surely not, eh, Warren? That would affect "confidence", wouldn't it?


Liverpool Preservation Trust said...

I have to admire your pluck to spell out the truth with a cutting edge through the council PR trash that is the Daily Ghost and the Trinity "Smoking" Mirrors Group in general.

Keep up the good work the city needs more represention from honest individuals such as you.

Anonymous said...

I think you've made a mistake here. The council is getting £1.7 million a year from the deal. That is 5% of what Grosvenor is getting in rent. You didn't really think that Grosvenor would shell out one billion pounds to make only £1.7 million in rent a year did you?

Ronnie de Ramper said...

Sure, Correspondent made a mistake with his numbers. But so what? Taking the numbers in the best light possible for Grosvenor, it's they not Correspondent who have the problem.

From £1.7 mill to the City Council in rent, that makes £32.3 million to Grosvenor. Now, assume the £1 billion cost of the development was funded by loans @ 7% annual interest (pretty generous but not unlikely). That means Grosvenor needs to raise £70 million from rents merely to service its debts, and before it pays off any of the capital.

In other words, rents will need to double just to service the debt. And as rents double, so occupancy levels will tumble, reducing the take and forcing rents up further.

If Grosvenor isn't careful, it'll be running up the down escalator, never quite getting off the treadmill before collapsing in a heap of debt. Meanwhile the boards will start going up over the next few years as vacancies cannot be let.

One further point: Liverpool City Council & the LibDems punch the air in triumph because the Council takes 5% in rent. Is this good or bad? Judge for yourself. Sheffield takes 8% at Meadowhall; and Birmingham takes 10% from the Bull Ring development.

Correspondent said...

@Anonymous: Yes, I did misread, & therefore misunderstand, the figure. My apologies.
Ronnie starkly lays out the predicament that Grosvenor may well face. Any attempt Grosvenor makes to redress shortfalls would be unlikely to work. Why occupy a space in a supposedly prestigious development when it becomes increasingly uneconomic for your business?

Liverpool Preservation Trust said...

Do we really know what the details of the lease says. The point Correspondent and the other commenters make are fair but we have just sold a third of the city centre for a share of profits that may fall. But look at what is happening to the likes of the old Rapid Hardware on Renshaw Street that Grosvenor own. Once proclaimed the longest shop front in the country.