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Categorized | Property

Mogul keeping out the squatters


Posted on January 31, 2012

joost van gestel

Joost Van Gestel at the former statistics bureau building

Even in a neat black suit Joost Van Gestel appears slightly rumpled, as though distracted by the demands of managing thousands of far-flung properties that do not actually belong to him. The preoccupied air is understandable for someone running such a peculiar real-estate empire.

Camelot, the company Mr Van Gestel founded in 1993, is the world’s largest manager of vacant properties, placing temporary tenants at low rents in buildings that would otherwise stand unoccupied. He started the company as an “anti-squatting” broker, helping find discount tenants for property owners to keep out squatters in the heyday of the Netherlands’ anarchist counterculture. Today, with 10,000 tenants in vacant properties from Ireland to southern France, he sees Camelot’s role more broadly: filling the gap in the market between owners who cannot find market-rate renters and tenants who can’t afford market-rate rents. And, in the process, preventing the urban decay caused by vacancy. “Nowadays we talk about ‘live-in guardianship’,” Mr Van Gestel says. “‘Anti-squat’ sounds a bit negative.”

Camelot was not the first such company in the Netherlands. “It actually wasn’t such an original idea,” says Mr Van Gestel with characteristic modesty. However, other anti-squatting brokers were small-scale and informal, lacking clear business plans. Camelot has sought to bring professionalism the market.

The management challenges involved have been formidable. “With the old [anti-squat] organisations, it was sort of anarchy,” he explains. Early anti-squatting brokers had no formal legal structure. Mr Van Gestel was the first to negotiate explicit agreements with municipal governments allowing the temporary tenants he placed to fall outside of tenant-rights laws, so that landlords had confidence they would not try to contest eviction.

He says that little attention was paid to the condition of buildings, contrasting this with the meticulous care Camelot has taken of the building we are meeting in – a 13-storey brutalist concrete monstrosity in The Hague that previously housed the country’s Central Bureau of Statistics. Underneath the building lie the reinforced bunkers that once served as the Dutch government’s fallout shelter in case of nuclear attack. It now serves as home to 84 start-up companies and non-profit organisations. Two Camelot employees man the building’s reception desk. “It’s very clear who has which space. The key responsibility is clear. The fire exits are clearly marked,” Mr Van Gestel says. “You can use certain parts of the building, others are shut off. That prevents anyone from going up to the 10th floor and attempting suicide, or locking themselves in and starting a fire at night.”

Unlocking the grip
of local authorities

The key to making Camelot’s business model scalable has been establishing the legal structures in each country to carve out exemptions to tenancy laws for temporary tenants. Joost Van Gestel says convincing governments of the benefits of keeping buildings occupied has been key.

However, unexpected complications can arise. In Britain, Belgium and elsewhere, governments have tried to incentivise owners to find renters
by charging tariffs when their buildings stand empty for more than a year. In some municipalities the tariffs have become a significant source of revenue. “We went to Belgium for a conference recently and some government officials
were saying, ‘but if we bring you in then the building is being used and I don’t get my tariff fees’,” says
Mr van Gestel. “And I said: ‘Yeah, that was the whole point! The point was to get the building in use, so that the neighbour’s kid doesn’t go play there and break her leg.’ Then they say, ‘Oh yeah, oh yeah’ . . . ”

Because of the company’s security and maintenance standards, and because buildings with tenants are less likely to burn down or deteriorate, several big insurers now offer discount premiums to owners of vacant buildings managed by Camelot.

When Mr Van Gestel entered the market, he was at a point where he was ready to make a life change. The son of a middle manager at a supermarket chain and an elementary-school teacher, Mr Van Gestel got a masters degree from the Netherlands’ Nyenrode Business School (among his classmates was Jan Kees de Jager, now the country’s finance minister) and then worked in the corporate food and nutrition sector.

He never expected to become an entrepreneur. “I was forced into it,” he says. “I’d planned to work as an executive for Unilever or Procter & Gamble, spend three years in Germany, then Italy, then maybe South America, see the world.”

By 1992 he was working his way up at Kraft Foods in Germany, marketing a new line of flavoured instant coffee. He had an idea for a promotion tied to that year’s football World Cup: a pink football-shaped package filled with sampler sachets. But it proved impossible to get the company on board. “In a big organisation like that, to get people to come along with you . . . you have to make the packages, get marketing in, set prices – pushing the organisation to get that going took so much energy, even though it was a good idea. I got frustrated.”

By chance the girlfriend of his business-school friend Bob de Vilder was at that time renting through an anti-squatting broker. She was the one who came up with the idea of starting their own company. Mr Van Gestel leapt at the chance and 20 years ago he left Kraft to found Camelot.

Today, Mr de Vilder is Camelot’s marketing and sales director. He says Mr Van Gestel tends to play down his own originality, but that without his corporate experience and coherent business vision it would have been impossible to build a solid company in such an oddball sector. “Joost is a bit of a ‘sober Brabanter’,” he says, referring to Mr Van Gestel’s home region of Brabant and its reputation for down-to-earth businessmen.

The public benefits to municipalities have helped Camelot to expand beyond the Dutch market, where the anti-squatting model is less familiar. When Mr Van Gestel set up a branch in London in 2002, while securing fire permits he learnt that local firefighters were having trouble finding affordable housing in the city. That led to a joint programme, which has placed 150 London firefighters in Camelot properties. The London programme helped Mr Van Gestel convince French authorities, who also have trouble finding city-centre housing for public employees, to change rent laws so that Camelot could begin operating in France.

Camelot now operates in six countries. The financial crisis has been good for the company – properties are staying empty longer, meaning tenants are less worried about having to leave. Revenues are rising consistently by 30 per cent a year; they hit €20m in 2011, up from €15m in 2010.

The company’s empire now comprises the strangest collection of buildings one could imagine. They include bankrupt bread factories, former convents, an ornate 17th-century cottage built as the official residence of Holland’s dyke maintenance officer (in the very town where the legendary Dutch boy supposedly stuck his finger in a leak), and an abandoned theme park complete with a fairytale pink castle that is now home to a dozen residents and available for business conferences.

Standing in one of Camelot’s properties can feel a bit surreal. At the Central Bureau of Statistics building, we walk past high-modernist sculptures in the central reflecting pool to peek in on his tenants. A sculptress is giving classes. A husband-and-wife start-up is restoring high-end children’s furniture. Two separate, rival groups of model train enthusiasts have constructed vast networks of toy rails.

But Mr Van Gestel says the most exciting part of the business is the nuts and bolts of helping it to expand. “You’re constantly looking for a new structure to introduce,” he says. “We have a telesales department now. We have a new department for database entry . . . We have our own IT department, with software developers in India. Thinking over how I can manage that growth, motivating my employees – that, for me, is the kick. That’s what I like.”

He pauses for a moment. “Which is funny, because it’s just the sort of thing that I didn’t like 20 years ago.”