Kingston Upon Thames
4 December 2000
When Tishman Speyer Properties (TSP) bought a 2.47-acre site next to the Tower of London in July, the message was clear: the US property giant, owner of the Chrysler Building and the Rockefeller Center, is determined to make its mark on London's skyline. "You're likely to hear a lot more from us," says European general counsel Mark Kingston, who is closely involved in the company's European strategy.
TSP, headed by billionaire Jerry Speyer, opened its London office in late 1994 and has acquired three London office properties since, including the Millbank Centre. But the decision to embark on its first London development project shows that the US mogul has really arrived in the City. "What we've done is to establish a real presence," says Kingston. "We have a very experienced team here. We have all the capabilities - construction, legal, finance and property management. Some of the other US companies haven't done that yet. It takes time to establish credibility." Billionaire Texan Gerald Hines, owner of Hines Interests, is the latest US developer to arrive in London, while Steven Witkoff, of the Witkoff Group, successfully entered the market when he outbid both Speyer and Hines for Shell-Mex House last year.
Despite the competition, TSP believes its own expansion is assured. Kingston says: "We're very well established in the UK as a company. We get to hear about the big schemes on the market and we network ourselves. Because we're a global business we work on relationships with existing tenants." The Tower Place deal is a prime example of this strategy working perfectly.
TSP bought the Tower Place site from US insurance broker Marsh & McLennan, which is currently a tenant in Chicago. TSP plans to build two office towers, encompassing about 400,000sq ft of space, of which at least 200,000sq ft will be leased back to Marsh.
Sounds okay, but the tough negotiations are still fresh in Kingston's mind. "It was a horribly complex transaction," he says. Kingston acted as key negotiator, supported by a team from Clifford Chance led by partner Sally Lovitt. All aspects of the deal were outsourced, from the site acquisition to the development agreements, the financing and the complicated pre-lets agreed with Marsh & McLennan. All in all, there were 63 documents on the closing table.
The tax structuring was particularly complex, involving no less than four different jurisdictions, (the US, Spain, The Netherlands and the UK).
Then there was the City freehold, which gave rise to yet more documentation, plus the site's famous royal neighbour and its proximity to the Thames. Even archaeological issues had to be tackled. And to top it all, the new building is designed by the controversial Lord Foster, of Erotic Gherkin fame. The fact that the deal involves a large US occupier and a US property company embarking upon its first major UK development only served to intensify City sensitivities over the deal.
Kingston says: "You name it, it was on that agreement. The negotiations were extremely tough. It took a lot of work on all sides, but Clifford Chance handled it very well."
TSP does not have a formal panel for European work, but Kingston says there was no question about using Clifford Chance on the Tower Place deal. "Sally Lovitt is particularly good in my opinion," he says. Clifford Chance had previously advised TSP on the acquisition and recent sale of City Gate House and is one of the company's main advisers on the Continent. For the Tower Place deal, international capability was important, and Kingston is impressed by the seamless service Clifford Chance offers from its Dutch and Spanish offices. Herbert Smith, which has also represented TSP in the past, and which continues to advise on Millbank Tower, was instructed by Marsh & McLennan on the sale.
Kingston's choice of external counsel naturally depends on the work involved, but he holds tight to the principal that a firm is only as good as the last job it did for you. "That sounds ruthless but it's part of life. There are other firms out there which are excellent," he says. As TSP's portfolio expands in Germany, France, Poland and Spain, Kingston is not just looking for an impressive performance during the transaction. "One of my jobs is to identify risks for the company," he says. "But I'm not going to be able to identify everything in each different country by myself." Kingston needs proactive lawyers with a thorough knowledge of local legal and corporate issues. "That practical advice is where I consider added value to be," he says. But jetting off to Paris, Krakow, Berlin or Madrid is still essential for Kingston. "There's no substitute for being on the ground. Even in these days of video-conferencing you need to look people in the eye," he says.
Notwithstanding these high demands, good working relationships with his lawyers are a must for Kingston. He says: "They need to know how we work, what I like and how I like it. That sounds ridiculous, but assuming that a person is a good lawyer - and I wouldn't go to anyone who wasn't - what's important is the quality of service they give and whether or not I can get on with them. It sounds basic but it's so important."
TSP schemes tend to demand capability in areas such as tax and employment as well as in property. "We choose the best firm in each location," says Kingston. In France, Gide Loyrette Nouel is currently advising TSP on the construction of a 500,000sq ft glass and steel tower, while in Krakow, CMS Cameron McKenna's Polish office is advising on a 30-acre development. Kingston also uses Camerons in the UK and rates construction partner Ann Minogue extremely highly. Back on the Continent, TSP has just won planning permission to start developing a 10-acre plot in Madrid, advised by Clifford Chance partner Alfonso Benavides. In Germany, both Clifford Chance Pünder and White & Case Feddersen advised on the newly-opened Sony Centre in Berlin.
Kingston estimates that TSP's annual legal spend amounts to between £2m and £3m. "It depends on how transactional we are, but there's always a legal spend," he says. The company has only three other lawyers in Europe, all based in Germany. Their role is to undertake the day-to-day work, such as small leases, which would not be cost-efficient to send out.
Given TSP's high level of European activity, it is hard to believe that Kingston's job simply did not exist two years ago. The position was created when Europe became too big for the property giant to handle from its New York headquarters. Kingston explains: "The company was expanding rapidly in Europe, as well as in the US and South America. It has always held general counsel positions in high regard in terms of the need to identify risk for the company. That stretches across everything we do. So there was a need to create a general counsel position in Europe, which had simply become too big for the company."
The newly-created position took Kingston out of private practice for the first time after 11 years at Nabarro Nathanson on the back of articles at Linklaters & Alliance. In London he now works closely with TSP's senior managing director for Europe Michael Spies, and is also in regular contact with the company's general counsel in New York Andrew Nathan. An eight-strong in-house legal team is based in New York.
Kingston says: "When we're structuring matters we are basically dollar denominated. Certain things feed back through to the States, which is where the ultimate structure of the company is. We are therefore in regular contact with Andy on every project - on the financial side, the structuring side and on corporate issues such as who the directors of a company are going to be."
For all the challenges it presents, Kingston says he has no regrets about moving in-house. "The changeover makes you see things from the other side of the fence. It gives you a different perspective on the deal," he says.
Kingston says he had always wanted to move in-house at some point. He says: "I just never thought this kind of job existed. It combines a legal role with business and being a principal. It's great fun and a very dynamic environment to work in. We're engaged in the challenge of building on our European business and enhancing the company globally."
Kingston is likely to take on another lawyer in the near future. "There's a hell of a lot to handle," he admits. The issue is whether to look for an experienced property lawyer or a legal assistant to take on corporate housekeeping work, of which there is a great deal. The general preference in the company is to leverage external council rather than build a big in-house team, so an assistant seems the most likely option.
European general counsel
Tishman Speyer Properties
|Organisation||Tishman Speyer Properties (private company)|
|Employees||165 in Europe and 55 worldwide|
|Legal capability||13 in-house lawyers worldwide|
|European general counsel||Mark Kingston|
|Reporting to||General counsel Andrew Nathan, based in New York|
|Main location for lawyers||One in London, three in Berlin and nine in New York|
|Main law firms||Clifford Chance in the UK, the Netherlands and Spain; Clifford Chance Pünder and White & Case Feddersen in Germany; and Gide Loyrette Nouel in Paris|