Sometimes being in the right place at the right time is all it takes to get a business off the ground – well, maybe add to that a lot of perseverance and hard work. This was certainly the case with Landmark East.

Established by the East Belfast Partnership, an inter-sectoral regeneration agency, the original idea was that Landmark East would access public funds to develop derelict property in disadvantaged areas where the private sector had lost interest. At the same time an asset base would be built which the Partnership could use to fund future urban regeneration.

While it was considering how to take the idea forward, the Partnership became aware of a property development project already partly developed by another organisation which had funding agreed in principle, but which for various reasons was not able to proceed. Enter the newly formed Landmark East with an offer to take the project on and the fledgling new business was on its way!

The concept behind Landmark East was to identify derelict sites and seek grant aid funding to develop them and bring them back into economic use within the community. The rationale for this was that if such properties could be developed they may act as a catalyst for the private sector also to invest in these areas. As Landmark East was a not for profit company then the high level of grant aid was not an issue as such public funds would not find their way into private hands. Indeed, as Landmark East was owned by a charity committed to urban regeneration, any profit derived from such a project could end up being used for further regeneration.

While the concept appeared sound, its implementation was not as straightforward as property needed to be identified, acquired and then appropriate funding sourced. However, the decision was made to proceed and a number of people were identified to put the idea into action.

These included Sammy Douglas and Maurice Kinkead, the Chair and Chief Executive of East Belfast Partnership, Peter Osborne, the chair of the partnership’s working group on the environment, Maggie Andrews, then director of East Belfast Community Development Agency, Colin Johnston, a property developer and finance director at the Bairds pharmacy group, Peter Lavery, a property developer (and major lottery winner), Ronnie Rutherford, a local businessman, and Gordon Wright, a local bank manager. Observers included Noel Scott and Michael Meenan from Making Belfast Work and Robin Hawe from the NI Housing Executive. The company was formed in June 1998 under the name of Landmark East.

Although the first project had more or less ‘fallen into their lap’ it took approximately two years and a multitude of meetings to get the funding package through economic appraisal. In late 2000 funding was released and Landmark East began building its first property, later named Lagan Village Tower. The total development cost was approximately £800,000, all of which was sourced through the International Fund for Ireland and the Department of the Environment (using EU funds). The building was completed on time and within budget in November 2001 and tenants were signed up for the entire space prior to completion.

Buoyed up by the success of the new project, other derelict properties were identified for the same treatment. These included a disused office building on the Newtownards Road, perhaps the most rundown main road in the city. This building had at one stage been the HQ for the Ulster Defence Association prior to it being declared an illegal organisation. The building, by now in a dangerous condition, was purchased and demolished and funding was sought to build a replacement building. Today, with funding from the International Fund for Ireland and the Belfast Local Strategy Partnership (distributing EU funds), a brand new high specification social economy centre named Avalon House stands on this site.

Another building identified was a former well known shoe shop in what had once been the thriving commercial heart of East Belfast – Holywood Arches – but which was now seeing many of its businesses closing down or moving elsewhere. As this was a landmark building in East Belfast terms, the decision was taken to retain the existing structure and undertake a major refurbishment. Also, rather than seek 100% grant aid this time, the board of Landmark East took the same approach as any private developer, borrowing money from the bank and seeking an Urban Development Grant from government to fund the shortfall. The International Fund for Ireland continued to be very supportive and on this occasion was able to fund some of the fit-out costs for tenants and also purchase an adjacent property. On completion, the redeveloped Bloomfield House offered accommodation of approximately 8000 sq ft and was valued at £500,000, against which Landmark East had a loan of £350,000 and rental income of just over £50,000 a year.

With these developments complete Landmark East now has three properties totalling around 20,000 sq ft, all of which are fully occupied at the time of writing. And they are already working on their biggest project to date – a 25,000 sq ft multi-purpose centre in the Ballybeen housing estate, due for completion in mid 2008 at a cost in excess of £2 million.

Difficulties

Apart from the normal difficulties that any property developer would have, such as obtaining planning permission, dealing with cost overruns and disputes with contractors, Landmark East has also faced a number of challenges as a social economy company.

The Landmark East board recognise that without funding Landmark East would simply not exist – two of their three properties developed to date have benefited from virtually 100% public funding, which has given them an asset base on which to plan further development. However, public funding quite rightly comes with many conditions, and at times complying with these, and the bureaucracy surrounding them, has been a major challenge. One economic appraisal took over two years to complete which meant a two year gap between agreeing to purchase the building and actually completing the sale!

Landmark East has also run into problems with funders mid-contract when the funder has considered that its compliance was not sufficient and release of funding was halted although the commitment to keep paying the contractor continued. At such times a very positive relationship with its bank, First Trust, has proved critically important.

The other main challenge Landmark East has faced has been in relation to decision-making. Buying and selling property, appointing professionals and contractors, managing each development – at times the structure of full time management staff and voluntary directors has struggled to cope with making effective decisions quickly, especially if funders also had to be consulted. Sometimes by the time the decision was made, the opportunity had long gone. It did however force the company’s hand in looking for more effective decision-making processes.

Future plans

To date Landmark East has taken a somewhat conservative approach to development which has probably been right given the funding environment in which it was operating. It also means that at this stage it is in the happy position of having very little borrowing, a good asset base and steady rental income, all of which allows it now to take on new development with some confidence.

The next major development will be the new retail, community and healthcare centre in the Ballybeen estate, being developed in partnership with Castlereagh Borough Council and the South and East Belfast Health and Social Services Trust. This will cost in excess of £2 million and funding is being made available from the Department for Social Development and the International Fund for Ireland. The health trust is also making a considerable investment of £500,000 in the project.

When complete the centre will consist of a number of retail units, a new day support facility for vulnerable elderly people and community facilities managed by the council. At this early stage most of the space is already agreed for letting with only a couple of small retail units remaining.

The board of Landmark East are also now ‘taking stock’ and giving serious thought to future strategy. As a key aim of the company is to make a profit which can be used for future regeneration, they are giving consideration to issues such as geographical areas considered for development, attitude to risk and level of borrowing and recognise that future developments may differ greatly from what they have attempted to date.

Lessons learned

Maurice Kinkead, now Chief Executive of Landmark East, acknowledges that the company remains on a steep learning curve as a property developer. However, with an excellent board of directors with significant property development experience, added to the direct experience gained over the past seven years, he is confident that they can rise to the challenge of building a profitable property development company which will help sustain the urban regeneration task in east Belfast for many years to come.

Among the many lessons learned he would highlight the following:

There’s no such thing as ‘free money’. Landmark East would still only be an idea had it not been for support from a range of funders, but it has learned the hard way that such funding still comes with a cost. The application process can be very time consuming, obviously with no guarantee of success, and it can spread over several years, especially where joint funders are involved.

Different funders of the same project can also have different (and potentially conflicting) criteria. There is also a heavy commitment to comply with funders’ requirements. The important lessons from this are to read the small print – even ‘friendly’ funders may enforce it – and to allow for the resources needed to fully comply with the funder’s requirements (which are often much more onerous than those of a bank).

Develop strong relationships built on trust between board and managers. It is not ‘normal’ to run a small business like Landmark East with three paid professional managers and 10 voluntary directors. However, to make best use of the range of skills and experience of directors and yet make decisions effectively and sometimes very quickly, requires clear processes and a high degree of trust and confidence in management staff. Otherwise decision-making either becomes unwieldy or directors are bypassed, neither of which are acceptable.

Don’t cut corners on professional advice. Running a property development company requires expert professional advice, from architects, surveyors, solicitors, accountants; don’t do this on the cheap. By all means look for value for money, but again Landmark East has learned the hard way that you get very little for nothing; pay for your professional advice and then accept nothing but the very best quality of service.

Don’t be afraid of being opportunistic. Don’t forget the opposite of opportunism is failing to take opportunities. Alongside all the skill and hard work, you also need a good eye for an opportunity and the ability to move with some agility to take it.