Even though Alan Sugar is best known for his role in The Apprentice, the Amstrad computer and his previous ownership of Tottenham Hotspur football club, these days his main business revolves around commercial property. As we have covered in some previous articles, Lord Sugar is said to be worth in excess of £1 billion having built up an enormous property portfolio centred round the London real estate market. The size of his latest dividend from Amshold, his holding company, compared to his previous payments could suggest a different environment for real estate in the UK post Brexit.
Lord Sugar and Amshold
Figures from Companies House show that Amshold paid out a total of £181 million in dividends in the 12 months to June 2016. This compares to just £9 million taken out in dividends in the previous year from the company which is 100% owned by Lord Sugar. It is believed he took a dividend of £100 million in December 2015 with further dividends of £51 million and £30 million in March 2016. So, having grown his property business over the years why has Lord Sugar decided to cash in some of his dividend chips?
Property profits down
Pre-tax profits for the year to June 2016 came in at £80.2 million as opposed to £133.9 million in the previous year. Net assets of the company fell from £627.2 million in 2015 to £518.8 million in 2016. The fact that much of the property exposure at Amshold is London related explains the volatile performance over the last 12 months although the Brexit vote was only taken seven days prior to the company year-end. However, the company issued a statement suggesting that the full impact of Brexit, as yet unknown, could play a significant role in the 2017 trading year.
There are a number of high-profile properties in Lord Sugar’s property portfolio including The Lever Building, currently let out to Tesco, and Gloucester House on Old Park Lane which is the home of the Hard Rock Cafe. There are redevelopment projects near Liverpool Street station with the “The Crosspoint” due to be completed in January 2017 offering a mix of retail and office units. In light of the Brexit decision the valuation of this particular development may have been revised although longer term there would appear to be exceptional potential.
London real estate
For some time now experts have been talking down the value of London real estate and the short to medium term outlook in light of the Brexit vote. It will be interesting to see how Lord Sugar’s property portfolio performs over the next 12 months and whether his renewed interest in increased dividend payments continues. This is a man who made his initial fortune with the Amstrad computer then turning to football with Tottenham Hotspur football club and now describes property as his “main business”.
There is a growing impression that London property prices will be softer over the next 12 months until the details of Brexit are clarified. Until then it is anybody’s guess how the London and UK property markets will perform.