Wheeler departs Brixton unexpectedly

Former investment chief Richard Dawson takes over
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The Independent Online

The recent turmoil that has rippled through the real estate market continued on its run yesterday as industrial landlord Brixton Estates unexpectedly replaced chief executive, Tim Wheeler, in a move seen as a gesture to appease investors and a precursor to tapping the markets for money.

The new boss, Peter Dawson, said he would focus on securing financing for the company. The 37-year-old former investment director may be well placed to speak to anxious shareholders and convince them to part with additional cash to help support Brixton.

The company, which specialises in buying, selling and renting out industrial estates, is replacing Mr Wheeler after 24 years as an employee, of which nine as chief executive, as property investors and housebuilders suffer from the property slump. Huge falls in real estate prices have forced some into talks with their lending banks and others into steeply discounted rights issues and asset fire-sales.

Mr Dawson has become chief executive with immediate effect and Mr Wheeler is leaving the company, Brixton said. The company said it undertook the change to have "the most appropriate leadership in place for the long-term future of the company".

The switch comes as property firms scramble to raise funds during a record downturn, with analysts warning shareholders could be running out of cash and appetite to pump new funds into smaller property companies after a slew of recent rights issues.

"We hope to see a shift in strategy in which the company pats itself less on the back and focuses on cash flow and reducing vacancy rather than holding out for the highest estimated rental value," said Osmaan Malik, an analyst at JP Morgan.

At the base of the problem faced by real estate companies such as Brixton is that their borrowings are generally agreed on with banks subject to a clause stipulating a ratio of asset value to debt that should not be breached. Falling asset prices can therefore automatically put a firm in breach of its covenants.

Brixton's share price has lost three-quarters of its value this year on concerns about the strength of its balance sheet, underperforming even the other members in the UK property stocks index, which has fallen 34 per cent.

The company plans to announce its 2008 results on 16 March, and added the chief executive change was not connected to those results.

Brixton said last month that it was mulling a capital boost but could sell assets instead of tapping shareholders. But forced sales of commercial property could depress prices still further.

Fears about Brixton have also been heightened by troubles at its biggest shareholder, the Government of Singapore Investment Corp (GIC), which reportedly lost $33bn last year and owns 10 per cent of Brixton.

Its large rivals Land Securities, British Land and Hammerson have all made cash calls in the past month totalling more than £2bn.