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Property
US private equity beaten by Russell Brand
From the Financial Times of Fri, 19 Dec 2014 18:27:48 GMT

A US private equity firm has admitted defeat in its attempt to redevelop an estate in east London and sold it to a social housing foundation after an 18-month battle that highlighted the shortage of affordable homes in the capital.

The battle between Westbrook Partners and the residents of the New Era estate in Hackney had become a symbol for perceived inequality as it drew in the family of Richard Benyon, the country’s richest MP, on one side and comedian-turned-social activist Russell Brand on the other.

Attracted by London’s booming property market and Hackney’s burgeoning reputation as an up-and-coming area on the edge of the City, Westbrook bought New Era, a 1930s estate comprising 96 flats and 12 small shops, last year and sought to renovate the flats. It wanted to then increase the rents from a maximum of £182 per week for a two-bedroom flat to more than three times that amount.

The rents are so low for such a relatively prime location because the previous owner was a charitable trust committed to providing affordable accommodation to people on lower incomes and spent relatively little on maintenance.

Westbrook teamed up with the Benyon Estate, a property management company owned by the family of Mr Benyon, the Conservative MP for Newbury whose wealth is estimated at more than £100m.

The private equity firm, which has £7bn in assets, including properties in New York, San Francisco and Tokyo, issued new leases and tried to raise rents by 10 per cent.

Incensed by Westbrook’s plans and facing eviction by Christmas, the New Era residents started protesting, both on the estate and at the US company’s Mayfair office. Their demonstrations included marching on Downing Street carrying placards reading “Westcrooks” to present a petition signed by 300,000 people to David Cameron.

Mr Brand joined their cause, adding celebrity stardust to the campaign. They were also supported by Boris Johnson, London’s mayor, Meg Hillier, the local MP, and Hackney council.

As the protests became more passionate, with residents threatening to barricade themselves in their flats, Westbrook began negotiations to sell the estate to Dolphin Living, part of the Dolphin Square Charitable Foundation. The sale completed on Friday for an undisclosed sum that is thought to be in the region of £20m.

Jon Gooding, Dolphin Living’s chief executive, said on Friday that the foundation wanted to “secure the legacy of the New Era estate as a community which is affordable to working Londoners”.

“The deal we have reached with Westbrook helps us to deliver on our primary objective, which is to provide high quality, rented homes for working Londoners and to guarantee the future of the New Era estate,” he said, adding that there would be no rent increases during 2015 and consultation on its longer-term plans.

In a series of tweets on Friday Mr Brand applauded the residents for their victory over “lazy government and greedy corporations”.

Ms Hillier described the sale as “a great early Christmas present for the residents. Westbrook didn’t realise what they’d taken on and when they did, they did the right thing,” she said.

Jules Pipe, Hackney’s mayor, welcomed the deal but said it was not an isolated case. “There are thousands of private tenants in London suffering from escalating rents and insecure tenancies,” he said. “This case highlights the urgent need to reform and regulate the sector.”

Westbrook said Dolphin Living, would be “ideally placed to secure the legacy of the estate”, The firm added it took its responsibilities as a landlord very seriously and would work to ensure a smooth transition.



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