Hilary Joffe

THERE is not much about UK property group Liberty International that its new chairman wants to change.

"The company is in very good health and clearly has got its staple product about right — why change a great deal when you’ve got a success?" says Sir Robert Finch, who took over as chairman at the beginning of July on the retirement of founder Sir Donald Gordon, who has become president for life.

Finch wants to ensure that Liberty International keeps asking whether it should be investing and looking to use its expertise in other regions, if the risks are acceptable. That might include Europe, where it has no presence, or the US, where it has successful retail property interests in California.

It is asking whether it should consider India, and if so, on what basis. But the group’s central focus will remain in the UK, says Finch, particularly on the shopping centres that make up 80% of its gross assets of £6,2bn.

Its £1,4bn development programme is expected to keep it busy for the next five years. It will, in effect, be developing new shopping centre schemes in Oxford and Cardiff, as well as revamping and expanding existing centres. Chapelfield in Norwich, its development that was opened on September 21.

Finch, a leading UK property lawyer who served as lord mayor of London in 2003-04, was in SA this week to visit Liberty International’s local shareholders. South African investors still hold about half the shares of the group, which was unbundled from Liberty Life in 1999 and listed in London, with a secondary listing in Johannesburg.

The South African holding includes about 15%, which is held by the Gordon family on the SA share register. The family holds a further 7% on the UK share register, making it by far the largest shareholder in Liberty International with 22%.

Gordon’s passion for the UK group that he built up is well known. Being the dominant shareholder and president for life, he will not be far away. But Finch, who has a long and close association with Liberty International, welcomes Gordon’s continued involvement.

Finch, 59, was head of the commercial real estate division of UK law firm Linklaters — lawyers to Liberty International and other large South African companies — until 1999 when he stood down to become sheriff, and then Lord Mayor of the City of London.

Gordon approached him to become a director of Liberty International, which he did in February.

Liberty International CE David Fischel says a slowdown in UK spending affected secondary shopping centres rather than premier centres such as those in the Liberty International portfolio. Liberty centres are focused more on fashion and luxury items than furnishing.

Retail spending trends have relatively little effect in the short term because only about 5% of Capital Shopping Centres’ income is turnover-linked. In SA a much higher proportion of the rent is usually turnover-linked.

The bulk is fixed and reviewed and stepped up only every five years, unlike in SA where it escalates every year. About 20% of Capital Shopping Centres’ rental income comes up for rent review this year, and should boost income.