Laying the foundations for growth
Grovemere Property has an impressive commercial property portfolio, which it can look to expand now it has funding in place
- Company turnover: £2.7 million
- Sector: Real estate
- Cambridgeshire-based Grovemere Property evolved out of an agricultural supplies company and into a commercial property development and management firm with several sites in Cambridge and Norfolk.
- Finance arrangements with their incumbent bank didn’t provide Grovemere with sufficient working capital to maintain the company portfolio while developing new properties.
- Santander provided three credit lines: a long-term investment loan to fund the property portfolio; an overdraft for short-term working capital requirements; and a development loan to fund a new project.
- Santander was keen to understand Grovemere’s cashflow situation, as well as discuss the company’s portfolio and plans for the future. A Santander credit partner also visited the company to ensure a full understanding of Grovemere’s proposition, and the new financing arrangement was completed within a month.
- Santander’s facilities freed up Grovemere’s cashflow and allowed the company to bolster its green credentials and invest in new technologies including a solar installation, providing five bicycles for a bike-share scheme, and bringing a fibre optic exchange onto the estate to provide all tenants with superfast broadband connectivity.
Based near the cathedral city of Ely, Cambridgeshire, Grovemere Property is a family-owned commercial property management and development company. At their major development in Lancaster Way Business Park alone, the company lets space to 150 businesses employing approximately 1,200 people. Grovemere aim to expand that site to the point where they can comfortably accommodate businesses with up to 3,000 employees. It’s an ambitious target that may be within the company’s reach now its managers have re-banked with Santander.
Dating back to 1924, when the great-uncle of current Managing Director David Brand set up business as a greengrocer, the family-owned company that eventually became Grovemere Property has been through several stages of evolution. The company expanded into agriculture before changes in European agricultural policy prompted a move into property development, a change that took advantage of the company’s land and property assets. Having sold the agricultural business, Grovemere invested in converting properties into commercial spaces. Today, the company’s major development is located in the Lancaster Way site on the outskirts of Ely, but it also has a range of smaller sites and developments across Cambridgeshire and in Norfolk.
Barriers to growth
In order to sustain revenues in uncertain economic times, Grovemere must keep as many of its properties leased as possible. The company works constantly with local agents in order to source new tenants. The ideal is to secure tenants on long leases, but the company does offer shorter leases, often to enable tenants in short-term financial difficulty to continue trading from Grovemere sites.
In 2012 Grovemere realised that its existing funding arrangements were preventing the company from achieving its goal of maintaining its portfolio while developing new properties, either speculatively or on behalf of specific clients. “We had swaps in place and the arrangement put restrictions on cashflow that were preventing the company from moving forward,” says Marketing Director Nicola Brand (David’s daughter). The incumbent bank had also undergone an internal re-shuffle that resulted in several changes of relationship manager. “The incumbent didn’t really understand our cashflow requirements,” she says.
Santander Regional Director Martyn Dawson arranged a meeting with Relationship Director James Wade, and Relationship Manager Sebastiano Carrelli. Nicola was impressed by what she saw at that first meeting. “It was clear that Santander was keen to understand our cashflow,” she says. “It was refreshing to have someone come in and sit with us. Within a short space of time, James understood the company and knew exactly what we needed.”
This desire to connect was especially appealing to a company like Grovemere, who prides itself on understanding the needs of its own customers. Relationship Director James explains the depth of that understanding. “We talked about their entire portfolio and their aspirations,” he says. “What really impressed us was the quality of the management team. [MD] David has a huge amount of experience, but what we also saw was a youthful, well-qualified team.” His colleague Sebastiano adds, “We had access to all the financial information we needed. I had a very good relationship with Lydia [Grovemere’s Accountant], who knew all the numbers.”
To fully understand both the opportunity and the risk, Santander also sent a credit partner to visit the company. A credit partner provides a bridge between the Relationship Managers and Santander’s credit committee who make the final decision on facilities. The partner’s visit helped ensure the Grovemere proposition was fully understood at every point of the application and approval process.
Credit where it’s due
Santander eventually offered three credit lines: a long-term investment loan to fund the property portfolio; an overdraft for short-term working capital requirements; and a development loan to fund a new project. Santander had beaten another bank in the running, Grovemere’s final decision influenced by the positive chemistry of their relationship with Santander, but cemented by hard commercial factors. “It was a very competitive offer,” says Grovemere’s Marketing and Development Director Harvey Bibby. “We liked them, they understood us, and the price was right,” adds David.
The deal was completed within a month, no mean feat considering that property deals require time-consuming due diligence on leases, the company’s finances and the reliability of its customers. “We had a few late nights but we did it,” says Relationship Director James. Such commitment has continued post-completion, with both sides remaining in constant touch to discuss Grovemere’s ongoing plans. “We quickly established a very close working relationship with the Grovemere management team,” says James. “Since then they have been very keen to keep us in the loop.” As Nicola points out, this two-way relationship is important to the company. “I know I can pick up the phone at any time and speak to James or Sebastiano – you can have a question and it’s answered straight away,” she says. “It comes back to them understanding our business – actually knowing what we need.”
A sunny forecast
The Santander facilities have freed up Grovemere’s cashflow, enabling the company to press ahead with their ideas for expansion. Grovemere have already invested in facilities including a bike-share scheme, a solar power installation, a car-share facility, and the implementation of a fibre optic exchange to provide tenants with superfast broadband. As such, the company are well on their way to creating an attractive and environmentally friendly space. “It’s enabled us to do things to make our tenants’ businesses work so much better,” says Grovemere Marketing and Development Director Harvey. “In the end, we hope this encourages new business to come to our estate and enables existing tenants to grow their business, and in turn renew five, ten or 15-year leases.”
While Grovemere Property itself employs relatively few people, the company contributes significantly to the local economy by helping to facilitate jobs and prosperity, a contribution that will no doubt increase as the company expands its Lancaster Way development. And, as a final testament to the company’s trust in Santander, MD David Brand has been introducing the bank to the company’s tenants. This is clearly a relationship that has opened doors for both parties.
All lending is subject to status.
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Relationship Director Comments
We quickly established a very close working relationship with the Grovemere management team and since then they have been very keen to keep us in the loop.