Nabarros bond weakens” />NINE UK property companies became real estate investment trusts (Reits) on 1 January 2007 – the biggest of which was Land Securities. But as a new era for property companies dawns, Land Securities is at the centre of a battle that could change the landscape of City property practices.
There is no doubt that Nabarro Nathanson still holds most of the cards with its relationship with Land Securities. Historically, the firm has been the company’s key legal adviser. Indeed, it holds all of Land Securities’ title deeds onsite.
However, in recent times that relationship has taken a twist, with the perils of aggressive property litigation in a relatively small market coming back to bite the firm.
There was a time when Nabarros’ relationship with Land Securities was untouchable and rival real estate practices could only look on with envy. Increasingly, though, the gathering pack has grown bold, with a noticeable amount of work now going elsewhere. Nabarros now finds itself looking over its shoulder.
And few hunters have been so bold as Freshfields Bruckhaus Deringer.
Publicly, both firms have nothing but the nicest things to say about each other, as if the most egregious compliments would win the next deal. Behind the scenes, though, Freshfields has pounced on its opportunities with ruthlessness and Nabarros finds itself in a difficult position.
Of course, everything could be on the brink of change, with Land Securities set to appoint a corporate general counsel in the next month. But for the moment the key figure commanding Freshfields’ rise to prominence with the company is board member and managing director of the London portfolio Mike Hussey.
Freshfields’ international real estate group head Chris Morris has taken personal responsibility for managing his firm’s fledgling relationship with Land Securities. His relationship with Hussey goes back to when he was at Knight Frank before joining Canary Wharf Group in 1997.
Between 1997 and June 2002, Hussey was head of leasing and marketing at Canary Wharf and enjoyed a highly successful relationship with Clifford Chance.
Hussey joined Land Securities as director of the company’s London portfolio in 2002 and in September 2004 was made a board member.
The Hussey connection is what gave Freshfields its first toehold at Land Securities, when in May 2004 the firm was instructed to negotiate a 25-year lease with Time Warner and subsidiary IPC, the magazine publisher. When IPC decided it wanted to purchase the building instead, Freshfields’ toehold turned into a seat at the table.
The Hussey connection is also what has had Nabarros partners shifting uncomfortably in their seats ever since he was appointed.
At Canary Wharf Hussey was one of four directors named in an unsuccessful, and rather bitter, £20m legal battle between advertising agency WPP and the Canary Wharf Group, which ran between 1998 and 2000.
In a twist of fate that Nabarros must rue with hindsight, Nabarros head of property litigation Iain Travers represented WPP and claimed fraudulent misrepresentation by Hussey, along with co-defendants Canary Wharf chairman Paul Reichmann, chief executive George Iacobescu and general counsel Michael Ashley-Brown, over the failed negotiations for a lease to WPP.
In August 2000 Mr Justice Ferris found in favour of the defendants and was reported in the property press describing them as “‘honest, frank and straightforward”.
Canary Wharf was represented by then Clifford Chance head of property litigation Wendy Miller, who has since joined the Robert MacGregor-led ex-Clifford Chance posse at Berwin Leighton Paisner (BLP). BLP’s ex-Clifford Chance connections have got them an even smaller sniff at Land Securities, but Nabarros probably isn’t helping its own cause with Travers still trumpeting the case as one of his career highlights on his website profile page.
However, Nabarros senior partner Simon Johnston, who is the firm’s relationship partner, remains bullish about his firm’s relationship with Land Securities.
“We’ve never seen any lessening of the work we do and our relationships remain incredibly strong,” says Johnston. “Year on year we’ve grown the work we do in different areas, but across the board. We’re absolutely their big-ticket firm.”
Morris’s careful view reveals much. “It’s been very exciting to have the opportunity to work with Land Securities at a time when they’re so actively developing their London portfolio,” he says.
Land Securities has a UK-wide portfolio – clearly Freshfields sees London, and Hussey, as key to its fortunes.
Freshfields and Nabarros are working together on a number of Land Securities’ major London projects, including 20 Fenchurch Street, the site of a proposed 39-storey tower, and the redevelopment of One New Change, the former headquarters of Allen & Overy.
In both cases Nabarros has handled the site assembly, while Freshfields has secured instructions to negotiate the lettings and construction aspects. For One New Change Freshfields took a step further and was instructed to advise Land Securities on potential joint venture arrangements.
That situation would also raise an eye at Slaughter and May, the firm that handled the corporate and tax aspects of Land Securities’ conversion into a Reit.
Nabarros has completed some £2bn worth of deals for Land Securities over the past two years, but Freshfields has put the firm on notice. The lure of a FTSE100 client is an attractive one and gives Morris enough room to manoeuvre on fees in order to compete. It is by no means an easy challenge, but then the best clients never are.
Land Securities’ London deals:
47 Mark Lane, EC3 – advised on purchase
Ashdown House, Victoria – advised on purchase
Regis House, 41-43 King William Street, EC4 – advised on sale
10 Fenchurch St, EC3 – advised on sale
20 Fenchurch St, EC3 – advising on site assembly, title and rights of light aspects
One New Change, EC4 – advising on site assembly, headlease regearing, vacant possession and rights of light aspects
Freshfields Bruckhaus Deringer
1 Bankside, SE1 – advised on sale and construction aspects
One New Change, EC4 – advising on joint venture commercial aspects, construction and letting
Dashwood House, 69 Old Broad St, EC2 – advised on construction and letting aspects
Park House, 455-497 Oxford St, W1 – advised on construction and letting aspects
Wilton Plaza, SW1 – advised on construction and letting aspects