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Interview: Derwent London FD Damian Wisniewski

20160524_fd_damian_wisniewski_0052_c2AS quarters go, the first of 2016 has got off to a blistering start for FTSE-250 property outfit, Derwent London.

The London-centric real estate investment trust (REIT) – the biggest in the capital with a portfolio valued at £5bn (as at December 2015) – delivered an upbeat set of results, thanks in part to a winning mix of robust letting activity and its sizeable development pipeline.

It posted a decidedly upbeat £13.2m of annual rental income on the year to date, spurred on by letting or pre-letting over 185,000 square feet to commercial tenants. Among that pre-letting boon is 29,500 square feet to Capital One at the still-to-be completed White Collar Factory in the Silicon Roundabout heartland of Old Street on the City fringe.

Allied to this, the firm currently has one million square feet under construction with 40% (400,000 square feet) due to be finished by the middle of 2017. Of that, some 57% is already pre-let.

And leading the firm’s strategic financial charge, is the grandson of a Polish cavalry officer, finance director, Damian Wisniewski.

Wisniewski, also a talented pianist, joined Derwent’s board as finance director in 2010. He says his career in accountancy started at Arthur Young “without much real thought” back in 1983 after dismissing a career in mechanical engineering.

“I saw it as very much like a second degree, so, not only was I getting paid but I’d get a qualification, and I would learn something about an aspect of the world which I was pretty naive in,” he tells Financial Director.

Property blooding

Wisniewski experienced his property ‘blooding’ at Stockley Park Consortium, where he was seconded to become financial controller and company secretary.

“There was no finance director so I would attend and participate at board meetings,” says Wisniewski.

At the relatively tender age of 27, he was asked by the FD of Stanhope Properties (one of the consortium members) to control and monitor financial elements of several major projects such as Broadgate, Chiswick Park and the ITN building.

Wisniewski’s knowledge of the real estate sector was rapidly deepening and he was duly appointed group financial controller at asset manager Chelsfield, spearheading the finance function from 1992 to 2005, securing the group FD role in 2003.

His career at Chelsfield began after its MD – who sat on the Stockley Park Consortium board – approached Wisniewski to see if he’d like a role there. And those informal methods have been a constant throughout his working life.

“I haven’t had to apply for a job, really. All the way through people have approached me. I’m lucky enough to have been in good places at good times and worked with some wonderfully talented people, and that’s been a really sweet way of going through a career.”

The business, ran by the British property veteran Elliott Bernerd, experienced rapid growth before being floated in December 2000 for £2.1bn. Wisniewski describes Bernerd, responsible for developing Britain’s first American-style business park, as a “very charismatic property guy” who had “lots of balls in the air” which meant that “there were always amazing things being looked at”.

While the majority never came off, the bigger play – growing the wider business – can only be dubbed an enormous success given its transformation.

“When I joined the business it was a private company worth probably £80 or £90m and by 2003 it was worth £3 or £4bn,” Wisniewski says.

While there, Wisniewski took on responsibility for financial reporting, appraising market opportunities and financing a swathe of equity issues, taxation, bank loans and IT. He also owned several projects including the White City and Stratford shopping centres – later sold to the Australian outfit Westfield; Merry Hill in the Midlands, co-location player, Global Switch and a string of properties peppered across Europe and the USA.

During his baker’s dozen sojourn at Chelsfield, it was floated with a full London listing in 1993, taken private in 2003/4 before being sold for a hefty £2.1bn price to Westfield, the Reuben Brothers and Multiplex, now Brooklfield.

20160524_fd_damian_wisniewski_0026Value through the cycle 

Wisniewski has clearly taken the most pertinent lessons from those more buccaneering days and fused them with a calmer and arguably more strategic approach.

For example, Derwent London’s raison d’etre is to “create value throughout the property cycle by regenerating our buildings via development or refurbishment, effective asset management and capital recycling”.

Typically, that means buying property in what it calls “off-market” central London locations that have relatively low capital values and modest rents in “improving” locales. These are almost all, without exception, in the West End or Tech Belt.

The fact they can still unearth these gems is testament to a finely attuned nose for such discoveries and the ability to then do the right thing to transform and unlock their nascent value.

Allied to that the business has a strong balance sheet modestly leveraged, a vigorous income stream and flexible financing arrangements.

Much of that fiscal intelligence applied by Wisniewski was further honed and developed at the Wood Wharf Limited partnership where he was chief operating officer for three years between 2005-2008 and then for the following two years as COO and CFO at Dawnay Day Treveria and Treveria Asset Management.

For at Wood Wharf he was asked to join and create a team to run the freshly formed public private partnership vehicle – jointly owned by British Waterways, Canary Wharf and Ballymore. The fusion resulted in a six million square foot masterplan for a mixed use scheme. Wisniewski arranged all the finance, penned the business plans, negotiated site assembly deals and worked closely with the planning, master-planning and legal teams at Canary Wharf, all the while acting as CFO/COO.

Wisniewski was duly enlisted to Treveria by Dawnay Day to help steer the ailing AIM-listed Treveria vehicle – set up by them in 2006 – back to fiscal health.

Following a strategic review and the collapse of Dawnay Day in mid-2008, his role was soon internalised and he worked with – and for – chairman Ian Henderson and a management team across London, Luxembourg and Germany as COO/CFO.  He successfully helped keep it AIM-listed and it was eventually sold to opportunity and hedge-fund investors.

“It was very political, there were a lot of difficulties, and then most of the big institutions sold out as the share price fell because it was clearly over-leveraged and property values were falling fast. The shares were then picked up by hedge funds and special opportunities funds as the nature of the business changed and there was more fire-fighting. It recently sold out of all its property interests and restructured and renamed itself but retains an AIM listing.  That was a fascinating time.”

Diversified funding

And having – like many others in the property game – realised that the 1990’s and Noughties saw the sector over-exposed itself to the banks. “I felt we should diversify the sources of finance,” he says.

“I wasn’t the only one doing this, it was good common sense. It was also good business sense because you don’t want all your eggs in one large basket. We ended up with a mixture of flexible bank financing, “revolving” facilities that can move up and down, and long-term fixed rate debt.

“We’ve got, for example, a £550m unsecured facility with the four main UK clearing banks. We’ve also got another unsecured revolving bank facility and, in an industry like this where you’re taking some quite long-term decisions sometimes, you want a fair bit of fixed rate debt that you can essentially tuck away for 15 or 20 years.”

And with his finance team of 18, the foundations of what is already a pretty solid business look to be in rude health, much like the central London market in which Wisniewski so clearly relishes working in.

 

 

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