Power of Scotland - Iain Wotherspoon
By Helen Thomas - propertyweek.com
Little-known Scottish company Kilmartin Property Group made the headlines by snatching the prime Edinburgh Royal Infirmary site from the big hitters.
The managing director of Kilmartin Property Group and Scotland's latest rising property star, Wotherspoon has been reluctant to court publicity, unlike competitor and fellow Scot John Kennedy of Kenmore.
'I personally am a low-profile operator,' Wotherspoon says of his reluctance to talk with the media. 'The boys upstairs [his Edinburgh team of six developers and six surveyors] think we should have a higher profile – at least some exposure in the market.'
Now the preferred bidder for the former Edinburgh Royal Infirmary site, the group is commanding attention – whether Wotherspoon likes it or not. So just who is behind the property company pitted as a rival for Kenmore, that snatched this prime 7.7ha (19 acre) city centre site from under the noses of other bidders, among them big hitters like Hines, Grosvenor, Miller and Morrison?
By 1995 the group had been invited as local development partner for a number of joint ventures with Helical Bar, and was also carrying out consultancy work to generate income. These joint ventures gave the group the backing and the equity base to move into property deals. Between 1995 and 1997 it was rebranded as the Kilmartin Property Group.
Today, the company owns 22 subsidiaries, many of which are special purpose vehicles that have been established for specific developments. It is involved in nine joint ventures and will borrow a total of £150m from Bank of Scotland this year.
Employing 40 people, over the last four years Kilmartin has increased sales by more than 580% to £6.395m, and profits are up 15% to £569,000. 'We have grown quickly,' says Wotherspoon.
'But I think that is a testament to the philosophy behind the group, the strategy towards its profile and the relationship with the Bank of Scotland.'
'We have a restricted amount of time and a restricted amount of resources,' says Wotherspoon. 'By doing joint ventures we bring a partner in to help us, or they bring us in to help them. We are sharing the workload and also the risk and equity exposure, so we can do four or five joint ventures compared with one development on our own.'
Taylor Woodrow brought Kilmartin on board for the development of a mix of residential, offices and a hotel on the infirmary site.
“I want to see us as the premier Scottish developer both here and south of the border ”
Iain Wotherspoon, Kilmartin Property Group
Kilmartin has also garnered notice for several high-profile Edinburgh office refurbishments. Most notably, the group acquired 40 Torphichen Street for £3.3m two and a half years ago, at a net initial yield of 8%. After extensive refurbishment it was let to occupiers such as Business AM and Scottish Life Assurance, and then sold to Britannic Assurance for £18.6m, providing a net initial yield of 6.5%.
'I think we were a bit lucky with that one,' says Kilmartin development director David Peck. 'We caught the market at the right time.'
Next up is Hulton House on Fleet Street – previously part of the MEPC portfolio. Kilmartin is awaiting the leases of tenants including Reuters to fall in next September, and will refurbish the building on a speculative basis.
This is just the beginning of Kilmartin's involvement in the English capital. 'We are very keen to get more heavily involved in the London market,' says Iain Wotherspoon. 'We have had our iron in the fire, so to speak, but we are now looking at two or three other opportunities.'
He says the group hopes to have another two London office projects in joint ventures within the next six months.
He also reveals that Kilmartin is on the prowl for a permanent London address for occupation in six months' time. This office will help identify new opportunities for Kilmartin in the capital, and will work on obtaining planning for a mixed-use scheme on more than 40.5ha (100 acres) of land in Tunbridge Wells, Kent, which is owned by Kilmartin.
Expansion in London and the M25 is key to Kilmartin's 10-year strategy, as are its plans in the Midlands. Wotherspoon explains: 'I still maintain that we should, as a cornerstone of the company, always have strong representation and a close involvement with our backyard [Scotland]. But I want to see us as the premier Scottish developer both here and south of the border.'
However, he is not tempted to be a public 'premier' developer. 'I have no plans to go public,' he says firmly. 'I want to keep it!'
Up until now the group has always traded its properties after development or refurbishment. However, Wotherspoon is keen to see Kilmartin hold on to between £15m-£20m of its £60m portfolio. 'We are beginning to tuck away certain things,' he says cagily. Iain Wotherspoon
Kilmartin's developments to date
* Talisker portfolio – a £30m portfolio of offices and retail premises with Teesland
Kilmartin Property Group - Iain Wotherspoon
Kilmartin Property Group, founded in 1996, has become one of the UK’s leading private property companies with offices in Edinburgh, London, Sheffield and Manchester with further planned openings in Europe during 2008.
The Company specialises in property development, investment and active fund and asset management.
Kilmartin has over 130 projects being undertaken in 2008/9 from free-standing developments for investment or owner occupation to multi-million pound mixed-use schemes, eco towns, and transport infrastructure projects. These schemes include leisure, retail, commercial and residential uses.
The current Kilmartin development programme has an end value in excess of £ 1.3 billion and the investment portfolio will be worth in excess of £250 million by mid 2008.
In 2007 Halifax Bank of Scotland took a 50% stake in the company which leaves Kilmartin Property Group in a very strong position to capitalise on its underlying strength, depth and diversity in the current challenging market conditions.