MR ALEXANDER EDWARD KINGTON on Behalf Of

REBUTTAL

of:

MR ALEXANDER EDWARD KINGTON

On behalf of:

SEGRO (PERIVALE PARK) LIMITED

In relation to:

THE MAYOR'S OFFICE FOR POLICING AND CRIME (PERIVALE) COMPULSORY PURCHASE ORDER 2020

Date:

4 MAY 2021

1 DETAILS OF WITNESS, ROLE AND RESPONSIBILITIES

Personal Introduction and Qualifications

1.1 My name is Alexander Edward Kington. I am a Vice President at Altus Group (“Altus”). Altus Group is a Canadian company listed on the Canadian Stock Exchange. It employs approximately 2,300 people in 75 offices across Europe, North America and Asia Pacific. In the UK the business was established in 1955 under the name Edwin Hill. Altus provides commercial real estate services to Landlord and Occupier clients. I head up the Altus west London agency team.

1.2 In terms of my professional qualifications, I am a Professional Member of the Royal Institution of Chartered Surveyors. I have a BSc (Hons) in Land Management and MSc in Planning and Development from the University of Reading. I qualified as a Chartered Surveyor while I was a leasing surveyor at Brixton plc in 2003.

My Career Experience and Current Responsibilities

1.3 I provide a chronological outline of my professional background including other relevant details below:

(a) I trained at Weatherall Green & Smith between 2000 – 2003 before moving to Brixton plc where I remained until 2009. During my time at Brixton plc, I worked as Leasing and Development Director. Brixton plc was a Property Company that focused on the industrial and logistics sector with significant holdings in West London.

(b) I was a founding partner of Aspect Property Consultants ("Aspect") in 2009. Aspect focused on industrial and logistics in West London.

(c) Altus Group acquired Aspect in 2018. I am currently Vice President in the Agency team within Altus and head up the west London agency team, which is based in Langley near Heathrow. Within my role, I focus only on the Industrial and Logistics sector predominantly in the South East of England with a particular bias to west London.

1.4 My current role at Altus Group includes the following:

(a) agency work including disposals for Landlords;

(b) acquisition and corporate real estate advice for occupier clients;

(d) investment sale and purchase advice.

1.5 I have been involved as letting agent at Perivale Park since January 2018, acting for Hermes Federated initially and now SEGRO.

1.6 Over the last 6 months, I have been involved in the following projects that are in close proximity to Perivale:

(a) agreed a new letting of 64,000 square feet warehouse in South Ruislip;

(b) an assignment of 24,500 square feet warehouse in Uxbridge;

(d) a letting of 18,500 square feet warehouse in Park Royal;

(e) a letting of 61,000 square feet warehouse in Park Royal; and

(f) an investment purchase of 20,000 square feet warehouse in Alperton.

2 SCOPE OF EVIDENCE

2.1 My evidence relates to the objection submitted on behalf of SEGRO to the CPO and should be read together with the evidence of Mr Ben Gomez-Baldwin and Mr Alan Holland.

2.2 Mr Gomez-Baldwin in his principal proof of evidence at §7.14 -§7.37 refers to Altus and indeed at §7.18 makes specific reference to myself and my colleague Adam Coulston. As noted in §7.16 Altus acted for SEGRO in its acquisition of the Perivale site and we have advised SEGRO for a few months on the issue of alternative sites raised by MOPAC as part of this Inquiry. I understand it had been thought that SEGRO could limit its evidence (in the interests of costs and time efficiency) to two witnesses. However in light of certain aspects of the MOPAC evidence (see below) it has been necessary for me to provide a freestanding commentary and to rebut certain matters in the interests of fairness and clarity.

2.3 My evidence seeks to respond to the evidence provided in these proceedings on behalf of MOPAC and to address an important change in circumstances, namely open offers made by SEGRO to grant MOPAC as a consequence of the continuing negotiations either a five or ten year lease of the Site with flexible terms.

2.4 My evidence comprises the following sections:

(a) Response to proof of evidence provided by Simon Warren dated 20 April 2021

(b) Response to proof of evidence provided by David Mathieson dated 20 April 2021

(c) SEGRO’s open offers made to MOPAC on 27th April 2021 of a 5 year lease and a 10 year lease with flexible terms and their effect on the case for compulsory acquisition

2.5 Paragraph references in the sections below refer to paragraphs of the relevant Proof of Evidence submitted on behalf of MOPAC.

3 RESPONSE TO PROOF OF EVIDENCE PROVIDED BY SIMON WARREN DATED 20 APRIL 2021

3.1 MOPAC's Alternative Site Search

(a) In paragraph 3.2 and 3.3 of Mr Warren’s evidence I note the description and extent of the property search exercise that Knight Frank ("KF") carried out. Mr Warren refers to sending a circular round approximately 600 industrial agents for “six to nine acres of long-term industrial land”

(b) In my view this is inadequate given the circumstances of the case and KF’s client which faced a clear impending problem as a consequence of its lease running out in 3.25 years (ie from the date KF were instructed). I would have expected KF as a minimum to have approached all of the large landlords in the search area. Such an approach would have presented the greater potential for a larger number of possible opportunities coming to KF's attention, rather than just issuing an agent requirement circular. A circular typically takes the form of one or two side A4 document that lists the search criteria and location map. They are emailed to all the relevant industrial agents via the Industrial Agents Society, which the likes of KF and Altus are members of.

(c) A circular to all the relevant agents should indeed form part of the search process but cannot reasonably be relied upon as the only search method. In the circumstances I am not surprised to hear that this method yielded few if any opportunities.

(d) I note that after this exercise KF’s instructions have been only to ‘keep a watching brief on industrial land availability’. Such a reactive approach is unlikely in my view to yield many opportunities.

(e) Mr Warren’s evidence makes no reference to consideration being given to properties with short to medium term income whilst MOPAC prepared to move from the Order Land. The inclusion of income-generating opportunities in KF’s search would again have increased the opportunities for finding sites and a solution, rather than just looking for cleared sites with vacant possession. This approach, over the limited 3.25 year period, would have in my view significantly increased the number of sites available for MOPAC's consideration. Such opportunities could have had short-term income (while MOPAC was preparing to take possession of the site) or longer income, in which case MOPAC may have needed to approach occupiers and compensate them for vacating earlier than their lease expiry date. Accepting a 5 or 10 year lease of the Order Land would allow MOPAC to adopt a strategy of looking at sites with longer occupational tenancies

(f) In addition, Altus has carried out a comparative exercise for the same period that KF carried out their search. Altus's schedule of Greater London Site Transactions – Appendix 10 of Mr Gomez-Baldwin's Proof shows that 9 sites have sold within West London since the start of 2018. These sites all had buildings on at acquisition and some have been or are due to be redeveloped and others are being refurbished but many have no or relatively short term income. MOPAC does not appear to have bid or considered these opportunities. This I have assumed is because such sites were not considered ‘land’ at the time of sale. Some of these sites are smaller or larger than

MOPAC’s ideal requirement but the option existed (and exists) with a larger site to sell the excess land off or with smaller sites the option exists to look at ways to acquire adjoining sites.

3.2 Land Availability and Market in London

(a) In paragraph 4.1.2 of Mr Warren’s evidence he refers to and relies upon SEGRO's document 'Keep London Working' to note the fact that there has been a loss of industrial land released to non-industrial use in London since 2001 and the point as highlighted by SEGRO that this means that planning authorities have failed to protect such sites even where there are planning policies which would support that protection in London. Mr Warren goes on however to put this forward as the reason why the search he carried out revealed“ no suitable industrial sites that have openly [sic] come to market in the region of six to nine acres” as far as he is aware.

(b) Apart from my evidence above regarding the limitations on the search exercise and the approach adopted, I am also aware of sites that in my view were suitable for MOPAC but which for some reason KF were unaware. This is not a reflection of the market however. The failure of planning authorities or planning policy to protect industrial sites in London is also not in my opinion a good reason for MOPAC’s inability to identify and pursue sites as and when they become available (which as set out above they clearly do). In fact, the evidence shows that apart from the HS2 land in Park Royal / Acton (compulsorily acquired for a construction zone but which is likely to no longer be needed by HS2 after construction) there are very few sites in this area of London that have in fact been ‘lost’ to alternative planning uses. Indeed in my view there is evidence that significant areas of industrial land in the local area are protected through designation as "Strategic Industrial Land" or similar protection (see paragraph 4 of Mr Alan Holland's Proof of Evidence).

(c) With regard to KF’s criteria against which a suitable site appears to have been judged at paragraph 4.1 of Mr Warren's proof I note in particular the requirement that sites that are not already vacant or “capable of vacant possession being secured within a reasonable time horizon around the lease expiry date in September 2021” were not considered suitable. This is in my view is a surprising approach as KF will no doubt understand and hopefully have advised that MOPAC could have indeed considered the acquisition of a site where vacant possession could not be obtained until post 2021, given that their current lease of the Order Land benefits from security of tenure.

(d) At paragraph 4.1 Mr Warren asserts that there have been no industrial sites of 6-9 acres openly marketed. This is not supported however by the evidence collated by Altus and attached to Ben Gomez-Baldwin's Proof of Evidence and I would be surprised if KF were unaware of these transactions.

3.3 On Market and Off-Market Opportunities

(a) Mr Warren makes no mention of off-market opportunities. In my experience, off-market opportunities do occur and KF would be aware of them.

(b) At paragraph 5.3 of Mr Warren's Proof, he notes that "I was informed by MOPAC that the Northolt site was not viable as an option for VRES to relocate to as it was simply too small". Northolt is owned by MOPAC and is approximately 5 acres.

(c) Either side of the Northolt site are three properties in third party ownership – see Appendix 1 where I have shown these on plans for information. Two of the properties are owner-occupied and one is leased. In aggregate the three properties total 4.16 acres, and in combination with MOPAC's Northolt site, the properties could be combined to create over 9 acres, which is adequate for MOPAC's needs.

(d) Two of three neighbouring properties adjacent to the Northolt site have changed hands since MOPAC bought Northolt, with one of those sites acquired by Aviva within the 3.25 year period during which KF was searching for an alternative site for MOPAC. The previous lease term for the building owned by Aviva would have expired in 2019.

(e) Altus has investigated who own the three properties neighbouring MOPAC’s Northolt site and has attempted to make contact with them.

(f) It is clear that the pursuit of the adjoining sites at MOPAC's Northolt site and altering the properties to suit MOPAC's requirements would be a less expensive option for MOPAC than the acquisition of the Order Land, given that a significantly smaller land take would be needed by MOPAC (4.16 acres as opposed to the entirety of the Order Land) in order to locate its VRES operations there. The necessary alterations to the assembled land (for example demolition and resurfacing) would not be significant in the scheme of things.

(g) In paragraph 4.2 of his Proof, Mr Warren refers to the site size criteria for a ‘suitable’ site imposed on KF’s search exercise (ie 6-9 acres). It is however not explained why MOPAC could not have considered sites larger than 9 acres with a view to disposing of excess land. One instance of such a site is Vale Refinery site in Park Royal, which is 9.5 acres and which was sold to Goodman following an open market sales process in January 2019. I am sure KF would have known of this opportunity at the time as it was a sale in the open market

(h) In addition to the above, I am aware that KF advised First Urban on an off-market purchase of a 7.8 acre Mercure Hotel site near Watford for industrial development in 2020. I also understand KF's Data Centre Team is currently involved as joint agent in preparing for the sale of Frogmore Industrial Estate in Park Royal. The site was marketed in 2020 as an industrial investment and did not sell but it will be re-launched on receipt of planning for data centre use.. This site is 4.27 acres and has two tenants who I understand have been approached to leave their leases early in order to provide vacant possession.

(i) A more proactive search strategy could have identified the opportunities at the Vale Refinery, Mercure Hotel site and the Frogmore Industrial Estate, and the opportunities to enlarge the latter through negotiation with adjacent landowners. A perfect site rarely exists in my experience but there are many ways to improve imperfect sites.

3.4 Marketing and MOPAC as a Bidder

(a) In paragraph 4.2 of his Proof of Evidence Mr Warren asserts that many former industrial sites are not marketed for ongoing industrial use. In my view there are very few examples of this; conversely there are many sites which have been purchased for ongoing industrial use (or similar i.e. data centre).

(b) Also in paragraph 4.2 Mr Warren suggests that MOPAC are in his view at a disadvantage to a developer when pursuing sites as selling agents will want the future fees. I agree that selling agents do like future fees but the decision as to whom to sell to will come down to the vendor (client) not the agent. As evidenced below (at paragraph 3.5(a)) and in Mr Gomez-Baldwin's Rebuttal (paragraph 4.10) a, number of owner-occupier transactions have taken place in recent years.

3.5 Owner-Occupier/Investor

(a) In 2014 I was involved in a sale nearby where an owner occupier / investor purchased a prime development site on the open market ahead of developers. Aspect (where I worked prior to Altus) were appointed by John Lewis to sell c. 12 acres in Kendal Avenue, Acton. There was to be a short term leaseback to John Lewis and there was significant developer interest. However we ultimately found a successful purchaser in Car Giant Limited, as they were the best bidder. Car Giant acquired the site with a view to either their own occupation or relocating some of their existing tenants, should their Old Oak Common site be redeveloped (as part of the wider HS2 development). Car Giant have subsequently acquired numerous industrial and retail sites (some off- market) by approaching the owners within the immediate area. I calculate their total ownership is now c. 38 acres in 20 different title ownerships. This shows evidence of how an owner occupier / investor out-bid competition from developers in the open market and has since been successful in acquiring nearby and neighbouring properties through on and off-market opportunities. Ultimately a site will most likely be sold to the party who bids the highest price and on a compliant basis. Various end users have acquired sites in the last 18 months (data centre operators, for example, have been active), who have acquired the site at the highest price.

3.6 Negotiations and Discussions with Landowners of Perivale

(a) In general terms and in particular with regard to the context of MOPAC alleging that it was making genuine attempts to find a new site - I would expect MOPAC, as with any credible purchaser, to have all necessary financial approvals prior to bidding for it. To that end, the pressures described in Mr Warren’s evidence and the context of the decision to make the Compulsory Purchase Order imply that MOPAC did not have the necessary approvals and resources in place. It is my understanding that there is also no evidence submitted as to available funds for the purchase of the order land. In my opinion price, speed and confidence in the purchaser are often the most important aspects when a vendor is considering bids. There is no doubt in my mind that MOPAC would be considered a reputable buyer should it have the necessary internal approvals.

4 RESPONSE TO PROOF OF EVIDENCE PROVIDED BY DAVID MATHIESON DATED 20 APRIL 2021

4.1 I have made comments above about MOPAC's rejection of the Northolt site and those comments apply equally in rebuttal to Mr Mathieson's Proof of Evidence

5 REVISED OPEN OFFERS

5.1 Mr Ben Gomez-Baldwin's rebuttal proof sets out the details of the offers which SEGRO made to MOPAC on 27 April 2021.

5.2 Five year lease – As proposed, this length of lease (with rolling tenant breaks) should provide a sufficient period of time to find a suitable alternative to acquiring the freehold of the Order Land. My assessment is based upon the last 5 years in which many sites which I consider would meet many, if not all of MOPAC's site criteria, have changed hands and I would expect opportunities to arise within the next five year period which would allow MOPAC to relocate from the Order Land. I understand that the lease would run from the expiry of the existing lease, so there would be no operational impact in September 2021.

5.3 Ten year lease – In my view, a lease for a term of 10 years is a long term lease. Further, a 10 year lease is a long term solution to MOPAC’s concern regarding security of tenure and certainly provides a viable alternative to compulsorily acquiring the freehold of the Order Land. A 10 year lease would provide MOPAC with significant time to secure and prepare an alternative site for the VRES operation. This assumes, as mentioned earlier, that MOPAC is ready to acquire an alternative site at market value and on commercial terms. As with the five year lease, I understand that the ten year lease would run from the expiry of the existing lease, so there would be no operational impact in September 2021.

5.4 The 12-month rolling break provision in each proposed lease to MOPAC also provides flexibility for MOPAC so that when the secured alternative site is ready for occupation they would not have to wait for the expiration of the relevant lease at Perivale.

5.5 I would say that the offer of such flexibility on a hardstanding site in this location is unique and provides MOPAC with ultimate flexibility. Typically the terms are reversed and a tenant has to accept that a landlord will want the flexibility to obtain vacant possession (for redevelopment etc).

6 SUMMARY AND CONCLUSIONS

6.1 Mr Warren appears to contend that MOPAC has not been kept informed by agents and vendors of opportunities because of its status as an owner-occupier. My evidence shows a number of instances where owner-occupiers have been successful in acquiring properties in the open- market.

6.2 MOPAC's ability to succeed in the open-market would, in my opinion, be no different to any other prospective bidder provided that its bid was at the highest price, compliant basis, and had all the necessary internal consents and approvals for the transaction to proceed.

6.3 MOPAC has clearly not felt able to keep up with the market and has not been able to formulate an off-market strategy and/or its "watching brief" strategy has clearly been wholly inadequate given its perceived importance of its VRES operations. MOPAC has too readily relied on its compulsory acquisition powers as a safety net for their passive and reactive property search.

6.4 A substantial amount of industrial land in North-West London is protected by planning policy. In my opinion, plenty of industrial sites are marketed for ongoing industrial uses and in my view, this will continue in future – both in North-West London and nearby. I am confident opportunities will present themselves which are suitable for MOPAC's requirements.

6.5 In my view, the most successful property searches require creative and proactive solutions – MOPAC owns the Northolt site, but does not appear to have made steps to acquire land adjacent to it, which could make the site entirely suitable for its needs. MOPAC's failure to consider options such as this cannot justify the use of compulsory acquisition powers, which I understand are to be used as a last resort.

6.6 Over the last five to ten years, we have seen a variety of opportunities come to the market. In my view, the next five to ten years (i.e. the length of the leases which SEGRO offered to MOPAC of the Order Land) will see many more opportunities, which could meet MOPAC's needs come to market. By way of example, the HS2 construction sites in nearby Park Royal which were generally compulsorily acquired by HS2 in 2018 and 2019, (totalling in excess of 25 acres)once no longer required to facilitate HS2's underground works (which I understand to be within 10 years of the original CPO). Whilst there is no guarantee all or some of the land will be released this is exactly the type of opportunity which MOPAC should be investigating ahead of the open market.

7 DECLARATIONS

7.1 In accordance with the requirements set out at PS5.4 (i) RICS Practice Statement and Guidance Notice entitled “Surveyors acting as expert witnesses 4th edition” I confirm that I have made clear which facts and matters referred to in this report are within my own knowledge and which are not. Those that are within my own knowledge I confirm to be true. The opinions I have expressed represent my true and complete professional opinions on the matters to which they refer.

7.2 In accordance with the requirements set out at PS5.4 (ii) RICS Practice Statement and Guidance Notice entitled "Surveyors acting as expert witnesses 4th edition" I confirm as follows:

(a) I confirm that my report has drawn attention to all material facts which are relevant and have affected my professional opinion.

(b) I confirm that I understand and have complied with my duty to the Inquiry as an expert witness which overrides any duty to those instructing or paying me, that I have given my evidence impartially and objectively, and that I will continue to comply with that duty as required.

(d) I confirm that I have no conflicts of interest.

(e) I confirm that I am aware of and have complied with the requirements of the rules, protocols and directions of the Inquiry.

(f) I confirm that my report complies with the requirements of RICS - Royal Institution of Chartered Surveyors, as set down in the RICS practice statement Surveyors acting as expert witnesses.

Rebuttal Appendix One – the Northolt Site