Real Estate

Christmas is a time for giving, right? After toiling long and hard to maximise the shareholder value of quoted property companies, real estate lawyers are giving their corporate colleagues a generous piece of the action as a winter flurry of quoted property groups bids farewell to the stock market.

The inevitable has a sneaky habit of coming to pass like that. Real estate lawyers have been discussing with their clients for several years the option of going private if the quoted sector continued to trade at large discounts to net asset values.

Most recent to join the club is, of course, Burford Holdings, currently in management buyout (MBO) discussions. As a longstanding client, Clifford Chance is advising the independent directors and the company, while the MBO team has appointed Weil Gotshal & Manges and Lehman Brothers is being advised by Freshfields Bruckhaus Deringer.

Burford follows hot on the heels of the Wates Group, another Clifford Chance client, which was bought by Pillar Property/Schroders in November. Again, Clifford Chance advised the target, while Gouldens and Norton Rose acted for the acquiror. Frogmore Estates went for an MBO in the same month, with longstanding adviser Dechert advising the company and Ashurst Morris Crisp winning the work for the MBO team, North Row Estates, in a beauty parade.

So what does all of this mean for real estate lawyers? The short answer would be that all activity is good activity. And there is no denying that these deals are good in a reputational sense for real estate lawyers who have brought the targets this far. After all, they are playing key roles in achieving fantastic deals for shareholders.

But what does the future hold for the longstanding client/adviser relationships thrown into question by the moves? In a nutshell, no one is quite sure… yet. Ditto for the architects, agents, accountants and engineers, no matter how carefully they have nurtured their relationships with the company in question. And they could face a long wait before it all becomes clear. Making decisions about future panels of advisers is not always top of the list after one of the most momentous events in a company’s life. Experience shows it can be a slow evolution. It was three years before Prudential told CMS Cameron McKenna that it would be kept on as property adviser to Scottish Amicable following its takeover of the fund, with its huge property portfolio. Scottish Amicable had consistently been among Camerons’ top three property clients over a long relationship, but there was nothing to stop Prudential from switching the work to its usual panel of Lovells and Berwin Leighton. RREEF, the fund manager for Scottish Amicable, did not fare so well out of the deal. It will take on a scaled-down version of its previous role.

Clifford Chance has done well out of the public to private trend on the back of its existing and ever-impressive client base, but its real estate department now faces a similarly painful wait to find out if it will be kept on by Burford and Wates. Personal relationships will be key. Clifford Chance’s relationship with Burford’s management team is naturally a strong one, and could survive the acquisition. Meanwhile at Wates, there will undoubtedly be some continuity of personnel. Whether there will be enough is the bigger question. It could go either way.

Which brings us back to that easy answer: all activity is good activity. And there is sure to be more to come. Analysts have suggested that Burford’s hotel interests could later be demerged and floated on the Stock Exchange. More work for corporate lawyers who will no doubt repay the favour by sharing it with their real estate colleagues.