UG Anthology BSP Expo 2020-2021

vision,masterplan,spatialandstrategicdesignprinciplesas partofaproposedurbandesignframeworkforPoplar, TowerHamletsanditsconnectionwithCanaryWharf.Our proposalaimstoassistPoplar’stransformationintoa connected,inclusiveandsustainableneighbourhood.

Theframeworkaimstomendthedisconnectionwithin Poplarphysically,sociallyandeconomically.Withthe developmentoffourkeycharacterareas,theframework promotesasenseofplaceandcommunitywithinPoplar. Whilststrengtheningtheconnectionandsenseof communitywithinPoplar,therewillalsobeafocuson ensuringqualityhousingmeetingthedemandofthe communityandrejuvenatingthelocaleconomyand employmentratethroughstrategicinterventions.

Overall,theframeworkaimstooutlinethestrategyfor enhancingPoplar’svitalitywhilstpreservingthelong standingheritageofPoplar;Itwillencourageactivityand communityengagementwithinPoplarwithafocuson permeability,accessiblepublicspaces,sustainablepractices, retail&culturalactivitiesaswellasensuringthequalityof housingdevelopment.

ExecutiveSummary

ThisreportevaluatestheperformancesofaonemillionpoundsinvestmentintotheLondonStock Exchangeovera12weekperiod.

FTSE100and250indexesshowthattheUKstockmarketwaslargelyinanincreasingtrendinthelast decade.TheUKeconomyisslowlyrecoveringfromthepandemicsignalsastrongrebound.Thisposes theopportunitytoinvestinthestockmarketthathasgreatupliftpotential.

Thisportfolioisconstructedwithawidevarietyofstockstoachievediversification.Amedium-risk strategyistakenwhichincludesstocksofferingstablereturnswhileallowingcapitalappreciationand dividendsreinvestments.

Thereareatotalof22holdingsinitiallyacross8sectors.Threeofthembelongtotherealestatesectors andoneisaREIT.

Theindividualstockselectionrationalesofrealestatestocks,NakedwineandCeresPowerare analysedintermsofvolatility(betavalues),historicalrecords,growthpotentialandmarketdemand.

Abouthalfoftheinitialportfolioissoldoradjustedduringweek6.ReasonsforSavillsreplacementof HenryBootandnewinvestmentsintheminingsectorareexplained.

Despitea2.13%lossatweek6,theportfolioendswithanoverallprofitof2.74%withthevalueof £1,026,238.33attheendofthetradingperiod.Mid-pointadjustmentsaresuccessful.

BarclaysandTIFluidSystemarethebesttwoperformingstockswhilstITMPowerandCeresPowerare theworsttwowhicharesoldduringweek6.

TheperformancesofSavillsandGreatPortlandEstatesarestableingrowth.AlthoughGlobalworthisin adecreasingtrendduringmostofthetradingperiod,thecashofferfromEUpropertygiantsleadstoa substantialgrowthofGlobalworth’ssharepricesinweek12andfinisheswithaprofitof5.97%.

InvestingamillionpoundsinstocksandequitieshaveabetterperformancethaninvestingincashISA andgoldsforthreemonths.

Tableofcontents

1.Introduction3

2.Stockmarketandwidereconomyanalysis3

3.Investmentstrategies

3.1Initialdiversificationapproach4

3.2Individualstockselectionrationale5

3.3Mid-pointadjustments6

4.Performanceofassets

4.1Overallperformance7

4.2Individualstockperformance8

4.3Performanceofrealestatestocks8

5.Alternativeinvestment9

6.Overallreflection9

7.Appendix11

8.Bibliography18

1.Introduction

ThisreportisproducedbyS&CCapital,onbehalfofMegaBucksInvestments.Thisevaluatesthe performancesofaonemillionpoundsinvestmentintotheLondonStockExchangeovera12weekperiod. Theportfolioranfrom22ndJanuary(week0)to16thApril2021(week12),withadjustmentsontheweek commencing1stMarch(week6).

Thisbeginswithanoutlineofdiversificationstrategyandselectionofstocks,thenevaluatesthe performancesofthewidereconomyandindividualstocks.Thisalsocompareswiththeperformanceof alternativeinvestmentandfinisheswiththeperformanceoverview.

2.Stockmarketanalysis

FTSE100and250aretheshareindicesofthetop100andthefollowing250companieslistedonthe LondonStockExchangeintermsoftheirmarketcapitalizationandreflectthetrendsoftheLondonstock market.Figure1and2demonstratethatinthelast10years,theUKstockmarketwasbroadlyinan increasingtrend.COVID-19hasimmenselyaffectedtheglobaleconomyandtheLondonstockmarketwith abigslumpinQ12020,themarketstartedtorecoversinceQ42020despitetheseverallockdowns.InQ1 2021,therapidvaccinerolloutpredictstoenableaswiftreturntonormalityandtheUKeconomysignalsa strongrebound.TheeconomyispredictedtogrowatthefastestratesinceWWII(Partington,2021)which posestheopportunitytoinvestinthestockmarketthatisverylikelytorise.

3.Investmentstrategies

3.1INITIALDIVERSIFICATIONAPPROACH

Thisportfolioispurposelyconstructedtoreducerisksthroughdiversification,i.e.investingacrossvarious sectors,financialinstrumentsandothercategories.Diversificationhelpstomitigateunsystematicrisksand marketuncertainty.Byinvestingstockswithdivergentreturns,thelossesmadefromthefallingstocksoffset thegainsfromtheincreasingones(Berstein,2010).Thisportfoliogenerallyreflectsamediumrisk diversificationstrategythatincludesstocksofferingstablereturnswhileallowingcapitalappreciationand dividendsreinvestment,withanexpectationof5to12%gain,followingthe‘risk-returntrade-off’concept (Anderson,2021;Keity,2017).

Diversificationisachievedthroughinvestinginacross8sectorsand22holdings(figure3).Themarket capitalisationofthestocksrangesfrom£369million(HenryBoot)to62.73billion(BritishAmerican Tobacco).14oftheholdingsarefromFTSE100orFTSE250thataregenerallyconsideredaslowerriskin ordertoofferastableandpredictablereturnthatformthefoundationofthemediumriskapproach.

Meanwhile,investmentsinsmall-capssuchasHenryBoot,GallifordTryHoldingsandSigmarocpotentially seerapidgrowth,thoughriskerwithlittleresearchcoverage(Mitchell,2020).Furthermore,theportfoliois constructedwiththeconsiderationsofbetavalueswhichmeasurestheresponsivenessofastock'spriceto changesintheoverallstockmarket.45%oftheselectedstocksarewithbetavaluesbelow1(appendix2), whichmeanstheyarelessvolatilethantheoverallmarketandhenceallowstablereturns.Incontrast,the stockswithbetavaluesover1aremorevolatileandriskier,butahigherpotentialforgreaterreturnandfits inthemediumriskprofile(Fletche,2020).

Figure3.Sectordiversification(Before)

3.2INDIVIDUALSTOCKSELECTIONRATIONALE

RealEstate

Therearethreeholdingsintherealestatesectorandaccountfor12%oftheportfolio(Figure3).

GlobalworthRealEstateInvestments(aREIT)ischosenasREITshavearelativelylowcorrelationwithother assetsthatmakesthemanexcellentportfoliodiversifiertoreducetheoverallportfolioriskandincrease returns.ItsdiversifiedportfolioacrossEuropefurtherenhancesthediversificationofthisportfolio.Although theothertworealestatecompaniesdonotgenerallydiversifythestockportfolio,therelativelyhigh volatilityandgrowingtrendshavethepotentialstodrivehigherreturns.Thesmall-capHenryBoothada resilientperformanceinspiteofthechallengesofthepandemic,boostedbyitsconstructionandhouse buildingbusinesses(Ford,2021).Althoughitssharepricewasquitevolatile,itsawageneralincreaseand thedecentP/Eratio(32.16)implythegrowthexpectationsfrominvestors.GreatPortlandhitlowinJuly 2020asinfluencedbyits28%lowrenttakeimpactedbythepandemic(Hammond,2020).TheCOVID vaccinerolloutgraduallyswiftstheeconomybacktonormality,henceanexpectationofhighrentcollection andothernewofferingsofofficesandflexiblespacein2021(Courtauld,2020).Itisagoodchancetoinvest inGreatPortlandatalowpriceinJanuary2021.ThesteadyperformanceofGreatPortfolioalsooffers stabilitytotheportfolio.

ConsumerServices

NakedWineisoneofthelargestholdingsinthisportfolio(appendix1).Changingconsumerhabitsand increasingonlineshoppinghaveboostedthesalesgrowthofNakedWinesbyover68%thatexceeds projections.COVID-19isexpectedtoanenduringchangeofthewinedeliverysectorandfurthernormalize onlinealcoholicshopping(Hancocketal.,2021).Alongwiththelowbetavalue(0.48,appendix2),Naked winewouldcontinuetogrowwithlowvolatility.

OilandGas

CeresPowerischosenasithasshownstronggrowthin2020,especiallyaftertheannouncementofthe collaborationwithBoschGrouptothemassproductionofSOFC(solidoxidefuelcell)SystemsinDecember 2020(ShrosbreeandOjeh,2020).AlthoughCeresPowerlookspriceyandrelativelyvolatile(appendix2), analystscommentthattherestillhassignificantpotentialupsidewiththeunstoppabletrendtowardsclean energy.Thesharepricecurrentlystandsatabout1500GBXbutthepossibilityofhittingthehistoricrecord highof2565GBXshouldnotberuledout(Pot,2020).

3.3MID-POINTADJUSTMENTS

Atthemidpoint(week6),IsoldallthelosingsharesexceptAstraZenecaandGlobalworth.Ireducedthe sharenumbersofAstraZenecafrom650to300despiteitsfallingtrendduetoitshighP/Eratio(42.92).

Moreimportantly,AstraZenecaisoneofthedevelopingcompaniesoftheCOVIDvaccinesandhencethe demandforitsproductsarehigh,consequentlyassociatedwithanexpectationofasteadilygrowingtrend tocoversomeofitslossinthefirsthalf.Also,IreducedthesharenumbersofNakedWinesfrom12000to 8000.SharepricesofNakedWinehavegrownfourtimessincetheoutbreakofCOVID-19butitdroppedby 8%inweek5.Therefore,thenumberofsharesisreducedtomitigatetherisksofpossiblecontinuityina significantreductioninshareprices.

AftersellingHenryBoot,IinvestedinSavillsfirsttosustaintheproportionofrealestateequitiesinthe portfolio(figure4)becausepropertyisdeemedmedium-riskandwouldgiveimmediateexposuretothe marketwithouthavingtodirectlyinvestinilliquidassets(BaumandHartzell,2011).Moreover,Savillshave beenmoderatelyrecoveringsinceSeptember2020andispredictedincontinuousdemandforofficesand suburbanhousesasbuyersrushtobeatthestampdutydeadlineinApril(Pickford,2021).Theslightdropof sharepricefrom1168to1080GBXinweek5posestheopportunitytoinvestinarelativelylowpricefor decentreturnsbytheendofthetradingperiod.

Ialsoinvestedinthreeminingcompaniesthatareinthebasicmaterialssectorduetothepositiveoutlook ofrawmaterials.Inmid-February,BHPannouncedarecordhighinterimdividendof$5.1bnasprofitshita seven-yearhighwhileGlencoreresumesitspay-outstoinvestors.TherobustappetiteinChinaand expectedcommoditiesdemandfromothercountriesbecausegovernmentsplanforlargeinfrastructure projectstohelprevivetheeconomyconsequentlymakethebasicmaterialssectorlookingstrongfor investment(Hume,2021).

Figure4.Sectordiversification(After)

Financials:RealEstateSavillsSVS:LSE4000£10.78£43,1204.58%

ConsumerservicesNakedWinesWINE:LSE8000£7.29£58,3206.20%

RoyalDutchShellRDSA:LSE4000£14.55£58,2166.19%

NKRosneft'PAOROSN:LSE10000£5.18£51,7685.50%

HealthcareAstraZenecaAZN:LSE300£77.56£23,2682.47%

Oil&Gas Technology

AVEVAGroupAVV:LSE2000£33.41£66,8207.10%

HalmaHLMA:LSE3000£22.26£66,7807.10%

BasicmaterialsGlencoreGLEN:LSE14000£2.81£39,3404.18%

BHPGroupBHP:LSE2000£21.88£43,7504.65%

AngloAsianMiningAAZ:LSE60000£1.31£78,3008.32% TOTAL£529,68256.29%

4.Performanceofassets

4.1OVERALLPERFORMANCE

Theportfolioperformancewasquitecalmduringthetradingperiodwithoutanymajorgainsnorlossesand finisheswithasmallgainof2.74%(figure5).Thefirsthalfoftheportfoliohada2.13%lossduetoafew decreasingstockswithmorethan10%lossinvalues.Isoldmostofthesestocksatweek6andthe adjustmentshaveappearedtocoverthelossesmade.Dividendsstrengthentheportfolioperformance slightlybutdonotcoverallthelossesmadeinthefirsthalf(appendix11).

Figure5.OverallPortfolioPerformance(%)

4.2INDIVIDUALSTOCKPERFORMANCE

Barclaysistheoutperformingstockwitharemarkablegainof33.97%(appendix5and8).Despitethefallof companyprofitsto£220mfrom£681m,decliningcoronavirus-relatedloanlossprovisionsandstrong investmentbankingperformance,Barclaysannouncedtorestartdividendsanda£700mbuyback programmethatraisetoabout4ppershare(Elder,2021;Morris,2021),henceboostsinvestors’confidence.

TIFluidSystemsisthesecondbestperformingstockwitha29.12%profit(appendix5and8).Movingalong withthefluidtransfermarket,TIFluidSystemsslowlypicksuppaceinvehicleproductioninthesecondhalf of2020(Wood,2021).Meanwhile,similartoBarclays,sharesofTIFluidincreasesafterthedeclarationofan interimdividend(Haill,2021).

ITMPowerandCeresPoweraretheworst-performingstocksthroughoutthetradingperiod(appendix5 and8).2020wasahotyearforalternativeandgreenenergies.Theprospectsofhydrogenintheenergy transitioncausedafivefoldandfourfoldroseinITMandCeresPowerrespectively.However,thesharpdrop inbothstockpricesisattributedtoapullbackfromtherecordhighsinJanuaryandfundamentallytothe fearthatthecompaniescontinuetomakelossesinthefutureastheyinvestheavilytodevelopnew marketabletechnologies(Arrieche,2021;Courtauld,2020;Simon,2020).

4.3PERFORMANCEOFREALESTATESTOCKS

Figure6.Performanceofindividualstock(RealEstate)

ThesharepriceofHenryBootstartstofallsincethebeginningoftheportfolio.Thiscouldbeattributedtoa pullbackfromthesharpincreaseintheweekbeforethisportfoliostarts,whichwascausedbythe company’sreportofsignificantlevelsofcashgenerationduring2020(Ford,2021).Thebuy-inpriceisthus toohighandgeneratesalossof9.09%inweek5,allofitsstocksweresoldouttoavoidanyfurtherslump andisreplacedbySavills,amorestablestockwithpositivesalesvolumesinthefirsttwomonthsof2021. SavillssuccessfullyincoveringthelossmadebyHenryBoot(13.47%shareprofits)attributedtoits continuoushighsalesvolumes.Therushfornewhomespurchasesbeforethenewstampduty implementationinAprilisprovedtopositivelyboostconsumers’confidenceinSavills(Pickford,2021).

GreatPortlandisinanincreasingtrendthroughoutthetradingperiodwithanotableincreaseinshare pricesbetweenweek3to5.GreatPortlandhitalowrentcollectioninfluencedbythepandemiclastyear, buttheopeningofLondonlockdowninFebruaryandvaccineprogrammesupportimprovedrent collection,greaterlettingactivityandincreasedenquirylevelsonavailablespace(Hammond,2021),which markhigherconsumerandbusinessconfidence,thispositiveoutlooktoGreatPortlandperformanceinthe remaining2021.

AlthoughGlobalworthgeneratesanegativereturninthefirsthalfoftheportfoliocausedbynegative revaluationsofassets,itsverydiversifiedportfolioacrossCentralandEasternEuroperemainsbeneficialto ourportfolio.The€1.57bncashofferfromEUpropertygiantsleadstosubstantialgrowthinweek12and endswithaprofitof5.97%(Turner,2021).

5.Alternativeinvestment

IfonemillionisinvestedinacashISAfor2months,itwouldseeastablereturnof0.45%(appendix12)that isbelowtheprofitsofinvestinginthestockmarket.Thisisbecausethemarketisrecoveringfromthe pandemicandbecomingcertain.

GoldpricesarefallingsinceJanuaryandhitaneight-monthlowinMarchduetosignsofaglobaleconomic recoveryandrisingbondyieldsdenttheappealofthepreciousmetal(Sanderson,2021).Investingamillion poundsinthegoldmarketwouldresultina5.7%loss(appendix13).

6.OverallReflection

Inconclusion,thelossesgeneratedinthefirsthalfcouldattributetoaratherhighbuy-instockprice, especiallyinthegreenenergysectorthathaveseensignificantgrowthalreadyin2020.Also,duetoCOVID19,demandforproductssuchastobaccoandgrocerieshaverisenhencetheirstocks(e.g.BritishAmerican Tobacco,ImperialBrands)wereover-valued.Apullbackfromthehighrecordshassubsequentlyresulted. Moreover,rapidvaccinerolloutandlooserlockdownrestrictionsleadtotherecoveryoftheeconomy.This

allowsrealestatecompaniestocollectrentandresumegreaterlettingactivities.Themid-termadjustments aresuccessfulincoveringfirst-halflossesandevenfinishwitha2.74%profit.Dividendsreinvestmenthave alsoplayedaroleinmakingaprofit.Althoughamediumriskapproachwastakenandfailedtomeetthe targetof5-12%profits,diversificationacrosssectors,marketcapitalisation,volatilitylevelshelptomitigate anylossesandtheportfolionicelyendswithaprofit.

Wordcount:2136

Financials:Real Estate

NameCodeNumberHeldPrice

HenryBootBOOT:LSE10000£2.86£28,6002.86%

GreatPortlandEstatesGPOR:LSE7000£6.26£43,8204.39%

GlobalworthRealEstateInvestmentsGWI:LSE4000£6.32£25,2722.53%

Financials:BanksBarclaysBARC:LSE35000£1.42£49,7284.98%

StandardChatrteredSTAN:LSE10000£4.60£45,9704.60% £193,39019.35%

Sectortotal

ConsumerservicesNakedWinesWINE:LSE12000£7.29£87,4808.75%

TescoTSCO:LSE12000£2.42£29,0082.90%

MarksandSpencerGroupMKS:LSE28000£1.43£40,1104.01% £156,59815.67%

Sectortotal

ConsumergoodsBritishAmericanTobaccoBATS:LSE1500£27.47£41,1984.12%

ImperialBrandsIMB:LSE6000£16.55£99,2709.93%

TIFluidSystemsTIFS:LSE13000£2.36£30,7263.07% £171,19317.13%

Sectortotal

HealthcareErgomedERGO:LSE4000£9.90£39,6003.96%

OxfordBioMedicaOXB:LSE8000£9.53£76,2337.63%

AstraZenecaAZN:LSE650£77.56£50,4145.04% £166,24716.64%

Oil&GasCeresPowerHoldingsCWR:LSE5800£15.00£86,9718.70%

ITMPowerITM:LSE4000£6.76£27,0402.71% £114,01111.41%

IndustrialsBalfourBeattyBBY:LSE12000£2.81£33,6723.37%

GallifordTryHoldingsGFRD:LSE20000£1.31£26,1342.62%

SigmarocSRC:LSE40000£0.65£25,8802.59% £85,6868.57%

TechnologyAvastAVST:LSE5000£5.26£26,2752.63% £26,2752.63%

UtilitiesSSESSE:LSE3000£15.52£46,5454.66%

NationalGridNG.:LSE4500£8.75£39,3663.94% £85,9118.60% £999,310100.00%

NameMarketCapitalBetaFTSE100 or250

AstraZeneca99.02bn0.5732FTSE100

Avast4.94bn-FTSE100

BalfourBeatty2.15bn1.03FTSE250

Barclays30.92bn1.49FTSE100

BritishAmericanTobacco62.73bn1.13FTSE100

CeresPowerHoldings2.44bn1.126

Ergomed 550.87m0.3143

GallifordTryHoldings 138.82m1.21

GlobalworthRealEstateInvestments1.43bn1.1283

GreatPortlandEstates 1.77bn0.7408FTSE250

HenryBoot 368.99m1.2467

ImperialBrands 14.07bn0.9894FTSE100

ITMPower2.74bn1.3208

MarksandSpencerGroup3.09bn1.88FTSE250

NakedWines649.67m0.4794

NationalGrid32.08bn0.2928FTSE100

OxfordBioMedica914.70m0.553FTSE250

Savills 1.69bn1.2272

Sigmaroc 231.35m1.971

SSE 15.58bn0.6007FTSE100

StandardChartered 15.25bn1.327FTSE100

Tesco 17.21bn0.7109FTSE100

TIFluidSystems 1.61bn1.56FTSE250

Financials:Real Estate

StandardChatrteredSTAN:LSE10000£4.60£45,9704.89%

Sectortotal

ConsumerservicesNakedWinesWINE:LSE8000£7.29£58,3206.20%

MarksandSpencerGroupMKS:LSE28000£1.43£40,1104.26% £98,43010.46%

Sectortotal

ConsumergoodsTIFluidSystemsTIFS:LSE13000£2.36£30,7263.27% £30,7263.27%

Sectortotal

HealthcareErgomedERGO:LSE4000£9.90£39,6004.21%

OxfordBioMedicaOXB:LSE8000£9.53£76,2338.10%

AstraZenecaAZN:LSE300£77.56£23,2682.47% £139,10114.78%

Oil&GasRoyalDutchShellRDSA:LSE4000£14.55£58,2166.19% (originallyinUSD)NKRosneft'PAOROSN:LSE10000£5.18£51,7685.50% £109,98411.69%

Sectortotal

IndustrialsBalfourBeattyBBY:LSE12000£2.81£33,6723.58%

GallifordTryHoldingsGFRD:LSE20000£1.31£26,1342.78% £59,8066.36%

Sectortotal Sectortotal

TechnologyAVEVAGroupAVV:LSE2000£33.41£66,8207.10%

HalmaHLMA:LSE3000£22.26£66,7807.10% £133,60014.20%

Sectortotal

BasicmaterialsGlencoreGLEN:LSE14000£2.81£39,3404.18%

BHPGroupBHP:LSE2000£21.88£43,7504.65%

AngloAsianMiningAAZ:LSE60000£1.31£78,3008.32% £161,39017.15% £940,946100.00%

Sectortotal TOTAL

DateTotal%change

22/01/2021£999,3100.000%

29/01/2021£963,029-3.631%

05/02/2021£998,508-0.080%

12/02/2021£1,003,5290.422%

19/02/2021£993,675-0.564%

26/02/2021£981,194-1.813%

05/03/2021£978,046-2.128%

12/03/2021£1,010,4591.116%

19/03/2021£988,751-1.057%

26/03/2021£992,589-0.673%

02/04/2021£995,635-0.368%

09/04/2021£1,023,0982.380%

16/04/2021£1,026,7322.744%

Appendix5Performancerankingofindividualstock

Name 05/03/202112/03/202119/03/202126/03/202102/04/202109/04/202116/04/2021

AngloAsianMining£79,500£85,800£90,600£86,250£84,600£85,800£76,800

AstraZeneca£20,574£20,853£21,330£21,924£21,516£22,044£22,140

Avast-------

AVEVAGroup£66,820£68,480£68,980£68,510£70,080£75,880£76,180

BalfourBeatty£35,040£34,800£35,760£36,240£35,832£37,512£37,728 Barclays£60,422£63,599£64,303£63,810£64,796£66,199£66,620

BHPGroup £43,890£43,590£41,210£41,800£41,360£43,590£44,790

BritishAmericanTobacco-------

CeresPowerHoldings-------

Ergomed£47,600£49,600£48,000£47,480£46,800£44,400£42,800

GallifordTryHoldings£27,800£27,131£25,465£25,550£25,900£26,280£25,517

Glencore £39,620£40,635£39,480£39,333£39,991£41,258£42,280

GlobalworthRealEstate£24,289£24,016£21,014£21,014£22,087£21,926£26,781

GreatPortlandEstates£47,880£48,230£48,454£48,132£48,230£48,650£48,790

Halma £66,990£68,760£67,320£71,130£73,140£76,980£76,890

HenryBoo-------

ImperialBrands-------

ITMPower-------

MarksandSpencer£40,726£44,268£43,442£42,952£42,672£44,128£43,820

NakedWines£55,760£54,320£55,840£58,712£60,560£63,760£63,920

NationalGrid-------

NKRosneft'PAO£53,237£55,886£53,784£54,763£52,790£50,832£52,200

OxfordBioMedica£80,000£82,560£75,200£75,680£76,160£80,960£84,320

RoyalDutchShell£58,216£63,344£59,856£57,840£56,488£56,664£56,512

Savills £43,120£46,200£44,920£46,000£46,560£47,880£48,930

StandardChatrtered£50,578£49,646£49,697£50,436£49,656£50,460£50,041

NakedWinesPLC

TescoPLC

MarksandSpencerGroupPLCBritishAmericanTobaccoPLC

ImperialBrandsPLC

Barclays

TIFluidSystemsPLC

StandardChatrtered

Date

ErgomedPLC OxfordBioMedicaPLCAstraZenecaPLC

CeresPowerHoldingsPLCITMPowerPLC RoyalDutchShellPLC

NKRosneft'PAO BalfourBeattyPLC GallifordTryHoldingsPLC

SigmarocPLC

Avast AVEVAGroupPL HalmaPLC

SSEPLC NationalGridPLCGlencorePLC

BHPGroupPLC AngloAsianMiningPLC

DateNumberof shares Dividends(GBX)Amount(GBP)

AstraZeneca25/02/2021£662.74£7,010.00£46,458.07

Barclays25/02/2021£35,215.33£162.54£57,239.00

GallifordTryHoldings11/03/2021£20,171.65£139.82£28,204.00

GlobalworthRealEstateInvestments04/03/2021£4,089.22£598.87£24,488.93

ImperialBrands18/02/2021£6,202.72£1,421.00£88,140.65

Savills 08/04/2021£4,057.24£1,188.00£48,200.01

StandardChatrtered04/03/2021£10,129.78£497.00£50,345.01

Tesco15/02/2021£14,501.17£244.35£35,433.61

TIFluidSystems04/02/2021£13,290.31£266.50£35,418.68

Total amount£413,927.95 -pricepaid(£399,640.69)

Total dividends received £14,287.26

PORTFOLIO PERFORMANCE REPORT

1.ExecutiveSummary

ThefollowingisaportfolioperformancereportcreatedbyDarkRockInvestments(DRI)forclient Megabuckstooutlinea£1millioninvestmentportfolio.Investmentisafundamentalmechanismusedto createreturnsbutcomeswithinherentrisksparticularlyfortheinexperienced.DRIaimstoachievea6% portfoliogrowthforitsclientbyinvestingintheLondonStockExchange.Currentmarketanalysisindicates asignificantdeflationoftheeconomyandstockmarketduetotheCovid-19Pandemicwhichcouldpresent opportunelowbuy-inforstrongstocks.

DRIutilisestwostrategiesthroughoutthe12-weektradingperiod,wheretheinitialstrategyislow-risk focusingondefensiveandincomestocksandthefinalstrategyfocusesonvalueandcyclicalstockswith higherrisks.

Ultimately,DRIhasmanagedtocomeupwithaportfoliowhichhas26stocksacross12industries, generatingaround6.3%increaseintheoriginalportfoliovalue,wheretheinitialinvestmentvalueof £997,495increasedto£1,053,339.80.Theresultsindicatedthatinvestmentinthestockexchangewas comparativelystrongerthanotheralternativessuchasinvestinginanISA-withthehighestcashISAfixed rateat0.45%likelycausedbytheCovid-19economy.

Finally,DRIfindsthatpressuresandloweconomicactivityfromthePandemichadimpactedvarious industries,wheremanystockswereundervaluedandprovidedexcellentvaluestocks.Furthermore,cyclical stockswhichfollowedthebusinesscycleandeconomicpressuresalsoreactedpredictablytotheeasingof pandemicfearsandrestrictions.REITsandpropertyinvestmentcompaniesalsoperformedstronglywith healthygainsinvalueasretaillocationsbeginopening.

2.Introduction

2.1Background

ThefollowingreportisaportfolioperformancereportcreatedbyDarkRockInvestments(DRI)toreflectthe £1millioncapitalallocatedfromMegabucksInvestments.Withthegrowthofeconomiesandmarkets, investmenthasbecomeafundamentalmechanismingeneratinggreaterwealth.Investmentisseenasan actionorprocessofinvestingmoneyorresourcesintosomethingthataimsforreturnsorprofit(Pikeetal., 2012).Whiletheidealaimofanyinvestmentistomaximisereturnwithminimalfinancialoutlay,thenature investing,sometimeshavingtocompromise,othertimesgamblingforhigh-risk,high-returnscenarios.DRI isaprivateinvestmentcompanythatendeavourstoofferinvestmentadviceandportfoliosthroughits expertiseandexperience.

DRIhaschosentoinvestthe£1millioncapitalintoentitiesontheLondonStockExchange(LSE).Astock marketisaplatformwherevariousentitiestransactconstantly,andtheLSE,basedintheCityofLondon,is oneoftheoldeststockexchangesglobally,tradingaroundamarketvalueof£3.81trillionincompany sharesduring2020(Chen,2021a).DRIaimstomakea6%gainwithinthe12-weeks(2021January22April26)tradingperiodgivenbyMegabucks.Theclienthasalsorequestedaninvestmentintothereal estatesectorandatleastsevenothersectors,amaximumof40%investmentvalueinanyonesectorand 20%inanyoneequity,andaminimumof£25kinvestmentforindividualstocks.Theanalysisisalso dividedbetweenaninitialandfinalportfoliobecauseanadjustmentperiodbetweenweekfiveandsixfor buy/sellofstockoccurred.Duringthe12weeksoftrading,alldividendswerereinvestedbackintothestock asshares,andDRIconsiderednotaximplicationsduringthereports.

2.2MarketOverview

Covid-19andeconomicuncertainty

Theeconomicoutlookhasbeenuncertaininrecenttimes,whereanearinghaltofglobaleconomiesdueto theCovid-19pandemicanddeterioratingtradepolicieshassubstantiallyimpactedeconomicactivities (Verity,2020).TheUKeconomyhasseenseveredownturnsthroughout2020,wherea20.4%shrinkofthe economywasreportedinApril2020(ONS,2020).Hencethereiscertainfearsininvestmentsandalow investorconfidencewhichcontributetolowergrowthandrates.

TheFinancialTimesStockExchange100Index(FTSE)

TheFTSE100isashareindexof100companiesontheLSEwiththehighestmarketcapitalisationrate (Barry,2015).TheselargecompaniesintheFTSE100arekeyindicatorsregardingthestockmarket situationandinvestorconfidencefortheLSEandeconomyandactasabenchmarkforinvestors(Cunniffe, 2020).

(source:GoogleFinance,2021)

Asshownbyfigure1,theFTSE100indexhadasignificantdeclineon20March2020,whichwasaround thestartofthePandemicintheUK.Thereactionon20March2020reflectsthatinvestorswereextremely nervousandpessimisticregardingthemarket,devastatingvariousFTSE100sharevalues.Thesignificant downturnalsocreatesanopportunitytocreateenterFTSE100companiesintheLSEatasignificantlylower pricethanitwouldhavebeenduringastrongeconomiccycle.

3.Strategy

3.1Overallapproach

ModernPortfolioTheory(MPT)anddiversification

Whiletheclienthasprovidedsomeguidelinesfortheinvestment,DRIalsohasadoptedastronger diversificationstrategywhichinvolvesinvestingintoatleasttensectorswithnosectorbeingmorethan30% oftheentireportfolioandnoentitycontainingmorethan25%oftheinvestment.Furthermore,DRIwill focusonachievingagoodmixofdifferenttypesofstockssuchasdefensiveandgrowthstocks.DRIintends toimplementanMPTfocusedonminimisingriskandincreasingdiversificationforacertainlevelofgrowth tocreateefficientportfolios(Markowitz,2008).WhileMPTdoesnotconsiderdownsiderisks,itstheories willacttodiversifyandreducevarianceinaportfolio.SpecificcalculationsfortheMPTarenotrepresented inthereportandonlythemaintheoriesofdiversification.

P/eratiosanddividendyields

P/eratioswereusedtodeterminethevalueandinvestorconfidenceofcertainstocksandwereparticularly relevantforidentifyinggrowthstocks.Dividendyieldswereprimarilyusedtoidentifyincomestocksand defensivestocksaswellaspertaintohowhealthytheentitieswereinoperations.RefertoappendixfigureG onmoreinformationregardingp/eratiosanddividendyields.

Figure1:FTSE100IndexChart

Propertystocks

DRIviewsindirectpropertyinvestmentasprofitableandsmart,providinggreaterdiversificationwithless hassleinimmediatemanagement(Nareit,2021).Particularlyforthestockmarket,DRIaimstoinvestinUK REITsandpotentiallyotherinvestmenttrustswhichdealwithinfrastructureandrealestate.DRIexpects thatthisapproachwilladdstablegains,consistentgrowth,andfurtherdiversificationtotheportfolio.

3.2Initialstrategy

Beyondtheoverallapproachcarriedthroughouttheentire12-weektradingperiod,theinitialstrategyand thefinalstrategyhaddifferences.Theinitialstrategycoversweekonetofiveandfocusedonbuyingstable andgrowth-orientedstocks.RefertoappendixfigureHregardingwhyDRIspecificallychoseeachinitial stockandappendixfigureBforinformationoninitialstocks.

Lowriskandgrowth-oriented

Asidefromdiversifyingtolowerrisk,theinitialstrategyinvolvesinvestingintodefensiveandincome stocksasalow-riskstrategybecausethesestocksofferstableincomeandgrowthasFTSE100orwellestablishedcompanies.IncomestockswithhighdividendyieldslikeHICLorGSKwereinvestedintowhile defensivestocksfromtheFTSE100likeUnileverwerealsopurchased.Withtheexpectedoverallgrowthof theeconomyandmarket,thestrategywasdeemedtobeasteadytactic.Additionalgrowthstockswhich wereriskierwouldaddtostrongergrowthlikeAstraZenecawithahighp/eratio.Afewvalueandcyclical stockswerealsoinvestedintotoprovideshort-termgrowthtotheportfoliosuchasthetravelsectorwith Trainline. (refertoappendixfigureBonspecificstocks)

Figure2:InitialPortfoliobyIndustry

3.3Finalstrategy

Theinitialstrategylefttheportfolioatalossof£25,360.01,whichindicatedthatthestrategywasnot effective.Therewasdownsiderisk,whichwasrealisedandnotconsideredbytheMPTstrategy.Tomitigate theloss,areflectionoftheinitialtradingperiodwasconductedtoinformthefinaltradingstrategy.DRI decidedtoselloffasignificantportionoftheportfolio(evenstockswithgains)todiversifyfurther.No stockwascompletelysold-offbecauseDRIexpectedoverallmarketgrowthfrompandemicrecovery. AppendixfigureAprovidesdetailedcalculationsonthebuy/sellactionsduringtheadjustmentperiod.

Diversificationforriskierapproach

Duetothesuccessfulperformanceofvalueandcyclicalstocksintheinitialtrading,DRIdecidedtotakea riskierapproachtobringtheportfoliobacktoaprofitbyinvestinginmorevalue,cyclical,andsome speculativestocks,suchasHammersonwhichhadlostsignificantvalueduetocovid-19devastatingmany ofitsretailassets(Powell,2021).Subsequently,tooffsettheriskierapproach,DRIaimedtodiversifythe finalportfolioassets,wherethefinalportfoliohad26entitiesacross12sectors.Finally,DRIkeptallstocks below60kinholdingvaluetospreadouttheinvestment.DRIalsonotedgrowthintheretailgrocery (Newman,2021c)andfinancialserviceindustry(Newman,2021b),influencingdecisionsonvariousstocks.

(refertoappendixfigureConspecificstocks)

Figure3:FinalPortfoliobyIndustry

4.Tradingperiod

4.1Initialtrading

£1,000,000.00

£995,000.00

£990,000.00

£985,000.00

£980,000.00

£975,000.00

£970,000.00

£965,000.00

£960,000.00

£955,000.00

Figure4:InitialPortfolioAggregatePerformance

-Poorperformancefromdefensive,income,andgrowthstockswithacombinedlossof£41,888.02in value.

-Thoughthestocksinvestedinlowrisks,itislikelythatdiversificationwasstilllackingassome stockswhichwereheavilyinvestedinto(i.e.,AZN150k)droppedwhichwasdetrimentaltothe portfolio.

-Valueandcyclicalstockssurprisinglyofferedthestrongestgainswithacombinedgainof £16,528.01

-Thepharmaceuticalstocks,whichmadeupover25%oftheportfoliomixhadthegreatestlosses whereAZNlost£9,560.00andGSKlost£12,365.00invalue.

-AstraZenecahasarathervolatilesharepriceasthecompanyishighlypublicisedduetoitbeingthe UKvaccinemanufacturermeaningalotofpublicattentionwherevariousinformationisreleased regardingitsactionsandtheeffectivenessofitsvaccineagainstotherinternationalalternatives (Gatlin,2021).

-Unileverreleased2020annualresultsduringthistradingperiodwithanoperatingmargindecrease of0.4%,operatingprofitsdown4.6%,andsalesdown2.4%whichcontributedtothedeclineofits stock(Head,2021)

-FurtheranalysisofGSKshowsithasbeenona10-yearlowregardingsharepriceandisdecliningas therearerumoursofasplitforthecompany .Thecompanystilloffersvery competitivedividendyields.

-AsidefromthecyclicalandvaluestocksonlyCREIprovidedastronggaininvalueindicatingthe strengthofREITs.

-RefertoappendixfigureEforindividualstockvaluesduringinitialtradingperiod.

4.2Finaltrading

FinalPortfolioAggregatePerformance

Figure5:FinalPortfolioAggregatePerformance

-InvestinginvalueandcyclicalstockswereasuccesswithonlyLSEGlosingvalue.Allthevalueand cyclicalstockstogethergained£63,427.5invalue.

-Thefinancesectoryieldedgoodresultswhichmatchedexpectations,withallfinancialsectorsstocks producingagainof£11,924.5.

-TherecoveryofthefinancesectoralsoaffecteddefensivestockslikeTSCOorSBRYwhichhad largestakesinfinancialservices.

-TheREITsinvestedofferedacombinedvaluegainof£32,000.6

oHammersonexceededexpectationsasavaluestockandgenerated£21,870.00inadditional value.

oHammersonnon-executivedirectorpurchased£3.3millioninsharesinAugust2020atalow valuepotentiallypromptingthestronggrowthseenrecently(Powell,2020).

-Speculativestocksdidnotoffergreatresultsandwaslikelyinvestedintotooearly.

oTheinvestmentinRolls-Roycewastooearlyasthecompanywasstillwaitingforthe recoveryofairlinesforitsupkeepandsaleofengines,publishedannualreportsforecast furtherlossesthroughout2021(Karunaratne,2021b).Rolls-Roycewasalsopreventedfrom sellingitsBergenEnginestoTMHbyNorwayovernationalsecurityconcerns(Karunaratne, 2021a).

oAsglobalprivateequityfirmsraisedinvestmentintolocallyabandonedoilresourcesPremier OilwasexpectedtoriseinvaluefollowingadealwithChrysaorbutendedupinareverse takeoverwhichdecreasedthesharevaluesignificantlymakingitoneofthebiggestlosses (Thomas,2021;RNS,2021).

-RefertoappendixfigureFforindividualstockvaluesduringfinaltradingperiod.

5.Results

£1,060,000.00

£1,040,000.00

£1,020,000.00

£1,000,000.00

£980,000.00

£960,000.00

£940,000.00

£920,000.00

OverallPortfolioAggregatePerformance

(refertoappendixfigureEandFforspecificstockvalues)

Figure6:OverallPortfolioAggregatePerformance

PortfolioFinalValues(Gains/losses)

GlaxosmithklinePLC

SSEPLC

UnileverPLC

PremierOilPLC

AstrazenecaPLC

GBGroupPLC

LondonStockExchangeGroupPLC

Rolls-RoyceHoldingsPLC

Marston'sPLC

BPPLC

TescoPLC

StandardCharteredPLC

WMMorrisonSupermarketsPLC

HSBCHoldingsPLC

LloydsBankingGroupPLC

RoyalMailPLC

HICLInfrastructurePLCOrd

SageGroupPLC

JSainsburyPLC

BarclaysPLC

AugmentumFintechPLC

CustodianREITPLC

BTGroup

TrainlinePLC

MarshallMotorHoldingsPLC

HammersonPLC

(basedonstockrankingsinappendixfigureD)

Figure7:PortfolioFinalValues

5.2Alternativeinvestments

IndividualSavingsAccount(ISA)

AnISAaccountisatypeofsavingsaccountintheUKwhichallowsinvestorstosaveacertainamountof capitalwithaninterestrateandofferstax-freeinterestpayments.TherearefourmaintypesofISAsanda differentCashISAsonthemarketwillbeusedtocompareagainststockexchangeinvestment.

Findings:

-Bothmethodsofinvestmenthaveadvantagesanddisadvantages.

-Stockmarketoffersmoreopportunitiesforsignificantgrowthandgains,wherethe0.45%rateis incomparabletotheover6%achieved.

-However,ISAareasaferalternativewithlesshassleinresearch,tax,andmanagement.

-ISAsarealsoprotectedundertheFSCSupto£85,000insured,whilestockmarkettradingis

-Whilesignificantgainscanhappensocansignificantlossesinthestockmarket,whileISAsoffera stablegrowth.

-UKgovernmentbondratesarealsoconsiderablylowduetotheeconomicclimatewithsimilar

6.Conclusions

6.1Reflections

Thereportpresentsimplicationsonapproachingandmitigatinginvestmentriskswiththeresultsofthis portfoliohavingjustified,toanextent,theimportanceandutilityofMPTanddiversification.DRIturnedthe portfolioatalossofover£25kintheinitialtradingweekstoanover£60kgainportfoliobydoublingthe numberofsectorsinvested.Thesuccessofcyclicalandvaluestocksindicatedtheimpactandopportunities createdbythePandemicontheeconomy.Inparticular,theportfoliohassubstantiallybenefitedfromthe indirectpropertymarketperformance.TheinvestmentintoREITsandinvestmentcompanieswithproperty assets,suchasHMSOorCREI,yieldedconsistentandsignificantgains.

6.2Outlookandfuture

DRIstrivestomeetclientexpectationsanddemands,creatingauniqueandprofitableinvestmentportfolio foritscustomers.Thefinalportfoliohasslightlysurpassedtheoriginalaimofa6%gainwithinthe12-week tradingperiodandassetallocationconditionsgivenbytheclient.DRIwillalsoreiteratethatitsfindingsare limitedto12-weeksofliveandhistoricaldata,mainlyfromFinancialTimes.Thereportalsolacksdetailed calculationsoncorrelationorvarianceforMPTandpresentsamainlytheoreticalperspective.Ultimately,as muchasonecangainfromstockmarkettradingandinvestments,socanoneloseasmuch.

Wordcount:2198

FigureA:Buy/sellmidtradingadjustmentperiodcalculations

Transactiondetails Mar-01

FigureB:Initialportfolio

FigureC:Finalportfolio

FigureD:StockRanking

6AugmentumFintechPLC

7BarclaysPLC

8JSainsburyPLC

9SageGroupPLC

10HICLInfrastructurePLCOrd

11RoyalMailPLC

12LloydsBankingGroupPLC

13HSBCHoldingsPLC

14WMMorrisonSupermarketsPLC

15StandardCharteredPLC

16TescoPLC

17BPPLC

18Marston'sPLC

19Rolls-RoyceHoldingsPLC

20LondonStockExchangeGroupPLC

21GBGroupPLC

22AstrazenecaPLC

23PremierOilPLC

24UnileverPLC

25SSEPLC

26GlaxosmithklinePLC

FigureE:Initialtradingperiodvalues

FigureF:Finaltradingperiodvalues

BT.A50,540.0056,580.0054,900.0058,140.0059,220.0062,580.0061,400.0061,740.00

CREI70,365.2177,482.0074,166.5471,578.4074,409.1874,813.5876,997.3377,239.97 GBG31,752.0028,728.0029,520.0030,420.0030,996.0031,374.0032,796.0031,806.00 GSK57,372.0052,206.0052,911.6054,440.0054,482.4053,659.2057,306.3558,470.19 HMSO49,410.0059,634.0062,838.0063,018.0059,292.0060,876.0067,284.0071,280.00 HICL66,800.0065,680.0065,040.0066,720.0064,000.0066,000.0068,443.9869,334.96

HSBA34,595.0037,196.0036,414.0036,622.2535,929.5036,737.0037,179.0036,333.25 SBRY30,982.0032,158.0033,082.0034,272.0034,342.0033,404.0034,384.0034,818.00 LLOY29,257.5030,056.2530,907.5030,768.7531,691.2532,077.5032,441.2532,595.00 LSEG32,496.0032,496.0030,416.0028,872.0028,432.0028,936.0029,912.0030,800.00 MMH24,700.0027,550.0029,450.0029,450.0031,350.0032,870.0033,440.0033,345.00 MARS26,740.0027,370.0026,782.0025,984.0027,874.0027,664.0028,084.0027,020.00 HBR28,010.0030,680.0031,150.0026,690.0026,000.0020,640.0019,500.0019,300.00 RR.26,052.0026,052.0027,564.0028,080.0025,488.0026,140.8026,851.0025,094.00 RMG25,362.4025,362.4028,100.0029,131.0029,886.8027,176.8028,056.0028,705.60 SGE28,450.0029,530.0029,540.0029,330.0030,350.0031,250.0032,610.0032,200.00 SSE50,490.0043,246.0045,573.0046,596.0047,734.5048,081.0050,869.5049,186.50 STAN30,080.0031,955.2031,366.4031,398.4032,000.0031,372.8031,840.0031,616.00 TSCO30,024.0030,240.0030,213.0030,874.5030,861.0030,773.2531,644.0031,299.75 TRN25,500.0028,548.0028,920.0027,420.0028,164.0028,440.0028,476.0028,464.00 ULVR44,990.4040,077.3040,685.0041,222.4542,182.0841,426.6043,089.5643,433.78 MRW30,492.0031,671.0031,761.0032,445.0032,661.0032,661.0032,886.0032,481.00

P/eRatiosarethesharepriceoverearningspershareandreflectsthevalueofacompanyanditsshares.P/e ratiosalsoindicatethevalueofthestockformoneyandtakesintoaccountallearnings(exceptfuture earnings).Ahighp/eratiowouldthusrepresentthatthestockisquitepopular,andinvestorsareconfidentin itsearnings(thoughitmaybeovervalued)whilealowp/eratiomaybeevidenceofthestockalreadybeing attherightpricemeaninglowerrisk,oritcouldshowcompanyproblemsbecauseinvestorsarepessimistic aboutitsvalue(Levis,1989).However,onestocksp/eratioscannotberealisticallycomparedtoanother stocksandp/eratioscanalsobemeaninglesstostocksforcompanieslikeinvestmentfundsbecauseitisthe NetAssetsplusdividendreturns(TotalReturn)thatarethemaindriversofperformanceinaninvestment fund.

Dividendyieldsrepresentallthedividendsforthepastyearandisthenear-termcashreturnfromastock. Alternatively,itcanbeunderstoodasanindicationtohowmuchacompanypaysoutindividendseachyear relativetoitsstockpriceannually(Levis,1989).Higherdividendyieldsindicatelessgrowthbutcanoffer greaterreturnsinincomeduringtheshort-termandisknownasvaluestock.Anextremelyhighyieldcould alsoindicatethatdividendswillfallwhichpertaintopotentialcompanyproblems.Lowerdividendyields maybeasignofcompaniesgrowingatafasterrate,becauseitisinvestingitsprofitsintoitself,knownas growthstock.Agooddividendyieldusuallydependsonthespecificmarketconditionsbutgenerallyayield of2%to6%isideal.Dividendyieldsasacalculatedratecanbecomparedacrossstocks.

SSE

Initialperception

FigureG:BriefexplanationofP/eratiosanddividendyieldsforstocks

FigureH:Briefinitialstockselectionjustifications

SSEisanelectricalutilitycompanyintheFTSE100whichwasidentifiedasadefensivestock. Additionally,thestockhasahealthy5.38%annualdividendyieldwhichcouldalsomakeitagoodincome stockanditsrecentstronginvestmentsintogreenenergymightalsoaidinthegrowthofitsvalue.

SSEPLC

SSEPLC

Hindsightanalysis

Thestockperformedpoorlyduringthetradingperiodandisoneofthebiggestlosersintheportfoliowitha finallossof£10,135.50.Reflectingonthesituation,itwaslikelythatthestockwasoriginallyovervaluedas investorssurgedtopurchase.

CustodianREIT

Anincomestockwithhighdividendyieldsat5.03%Custodianisexpectedtooffergoodreturnsasareal estateinvestmenttrust.Additionally,thecompanyrecentlyexperiencedasignificantdropinvalueatthe startof2020likelyduetothepandemicandmanyinvestorscashingoutwhichmeansthestockislikely undervaluedandwillgrow.

CustodianREIT

CustodianREIT

Hindsightanalysis

Unilever

Thestockperformedasexpectedwithagooddividendreturnduringthetradingperiodandastrongvalue growthof£10,130.60.Asexplainedinthepropertymarketsection,REITsyieldcompetitivetotalreturns andgoodcapitalappreciationwhichcontributetoitsstronggrowth.Thedropinvaluebeforepurchasewas alsoagreatenteringperiodforthisstockasitclimbsbacktoitsformervalue.

Week1

Week1

Asaconsumer-goodretailconglomerateitwasseenasadefensivestock.Furthermore,apotentialreturnto subsidisedretailandincentivisedconsumptionafterthepandemicwasalsopredictedwhichwouldraisethe valueofthestock,whichwasfallingatthetimeofpurchase.

UnileverPLC

UnileverPLC

Hindsightanalysis

Thestockperformedpoorlyduringthetradingperiodandwasoneofthebiggestlosersintheportfoliowith afinallossof£8,864.62.Inhindsight,Unileverisanexpensivedefensivestockwithactuallyverylacking figures.Moreresearchshouldhavebeenconductedintotheconsumer-goodretailmarketastherewere bettercompetitorstoinvest.

MarshallMotorHoldings

MMHisanautomobileretailcompanywhichsellsnewandusedvehicles.Identifiedasavaluestock,MMH hasbeenonastrongclimbsinceitslowestdropinApril2020.AnotherdropfromJanuary9wasalso identifiedwhichprovidedagreatopportunitytobuyatalowerprice.Thereisariskthatthestockcontinues todrop,butitisbelievedthatthestockisquiteundervaluedsofar.Furthermore,duetothepandemicitis expectedmorecarownerswillbelookingtosellofftheirusedcarsasopposedtobuyingmorenewcars.

Hindsightanalysis

Thestockhadastrongperformanceandwasoneofthetopwinnersfortheportfoliowithatotalgainof £14,495.00.Theoriginalpredictionthatitwasanundervaluedvaluestockwascorrectasthestock continuedtoexhibitstronggrowth,climbingbacktoitsaveragevalue.Growthcontinuestobestrongas MMHpostsits2020fullreport,dividendsareexpectedtobeheldbacktoreinvestintothecompanygrowth andunderlyingprofitisdownhistoricallybutisstillinthegreen.MMHassetsalsogrewinvaluein2020 overthepreviousyearandisexpectedtocontinue.

Trainline

Thecompanyisatravelcompanywhichprovidesanindependentcoachandtraintravelplatformmainly sellingtickets.Thestockisidentifiedasacyclicalstockwhereitsvaluerevolvesaroundprimetimetotravel throughouttheyear.Itcanalsobeconsideredavaluestockasitslikelyundervaluedrightnowduetothe pandemicandwithtravelrestrictionsandlockdownssoontobelifteditwillsoonbeexpectedtogrow.

MarshallMotor HoldingsPLC

TrainlinePLC

Hindsightanalysis

Thestockperformedverywellwiththeexpectedstronggrowthasavaluestock.Asoneofthebiggest winnersthefinalgainwas£11,388.00.Whilethestockhasgrownitwouldnothavebeenagoodlong-term investmentasitisacyclicalstockwhichreliesontheeconomy.

AstraZeneca

AstheCovid-19vaccinemanufacturerfortheUK,AstraZenecawasexpectedtobeagrowthstockwith abovemarketgrowthrate.Furthermore,asapharmaceuticalstockitwasalsoexpectedtobeastablestock, hencethedecisiontohaveitasoneoftheheavierinvestments.

AstraZenecaPLC

AstrazenecaPLC

Hindsightanalysis

Thestockperformedverypoorlyandinhindsightthebuy-intimingwasatatimewherethestockwas significantlyovervalued.Asoneofthebiggestlosersthestocklost£7,385.20andthiswasonlymitigatedby notcompletelysellingthestockduringthemid-adjustmentperiod.Ifitwassoldcompletelythelosswould havebeenover£10k.

GlaxoSmithKline

Apharmaceuticalcompanywhichdealtwithhealthcare,vaccineresearch,andothermedicalactivities,it wasfeltthatduetothecurrentpandemicsituationthestockwouldbeastrongpurchase.Furthermore,GSK isareputablecompanywithastablehistoryforgooddividendyields(at5.96%)makingitagoodincome stock.

GlaxoSmithKlinePLC

Hindsightanalysis

Aswiththeotherpharmaceuticalstocksthetimingforpurchasewasbadaspharmaceuticalstockswereall quiteovervaluedatthetimeduetothepandemic.OncethingsstartedeasingthevalueplummetedandGSK wasthebiggestloserfortheportfoliowithalossof£11,267.41whichwouldhavebeenmore(over12k)ifit wascompletelysoldinthemid-adjustmentperiod.

BP

AsanotableoilandgascompanyintheFTSE100,BPwasidentifiedasadefensivestock.Itswellestablishedandlongstandingshowedthecompanyasastableinvestment.Whileoilhasbeensignificantly impactedbygeneralclimateconcernsandthelackoftravelduetoCovid-19,itispredictedthatBPwill offergoodgrowth.Thecompanyalsooffershistoricallystrongdividendyieldswithitscurrentdividend yieldat6.87%,whichshowsitsdedicationtoshareholders.

BPPLC

BPPLC

Hindsightanalysis

Thestockperformedfine,withasmallpercentageofgrowthwhichisexpectedformorestable,established, defensivestocks.Thecompanywithgooddividendyieldsisagoodsourceofincomebutthereisconcern overitsmountingdebtandpoorfinancialperformanceinthecovid-19yearevenwithitsattractivedividend yields(Hamer,2020).

HSBCHoldings

Asanotablebankingandfinancialservicecompanyitwasidentifiedasacyclicalstockthoughitcouldalso beavaluestockwithitsarrayofassets.Sincethecompanyisaffectedbythebusinesscycleandwiththe pressuresofthepandemicitislikelythatthecompanyisatadownturnandispredictedtoexperiencea periodofrecoverysoononcetheeconomybecomesrevitalisedafterlockdownandthepandemic.

Week1 value Week2 value Week3 value Week4 value Week5 value

HSBCHoldingsPLC

Hindsightanalysis

Thestockperformedaveragewithagainof£3,179.00invalue.Thestockhascomparativelylowdividend yieldswhichisacceptableasabank.Growthisstillexpectedtoclimbsinceitssignificantdropin20192020duetovariouseconomicuncertaintiesandthepandemic.

AugmentumFintech

Anewinvestmentcompanyfoundedin2018whichprimarilyinvestsinfintech.Thecompanyhasseen stronggrowthsincethemiddleof2020,categorisingitasagrowthstock.Asignificantamountofits portfolioinvestmentshasmaturedsuchasDextwhichwassoldtoHgfor£10.5millionwithaninitial investmentof£7.5million().Whiletherehavebeennodividends,thisinvestmentisseenmoreasarisky venturetograspontoagrowthstock.Furthermore,withfinancialtechnologyandgeneraltechnology becomingmorerelevantandcriticaltothemarket,thisisaveryforward-lookinginvestment.

Hindsightanalysis

Thestockperformedquitewellwithafinalgainof£6,006.00invalue.Thestockwilllikelystillcontinueto growandappearstobeanunderratedstockwhichisnotwell-known.Itscontinualreinvestmentintoitself (hencenodividends)iscommonfornewercompaniesandwithitsinvestmentsalreadymaturing,the companyhascompetentmanagementandfocus.

GBGroup

Adigitalsoftwareprovidercompany,GBGroupwasexpectedtoprofitfromthepandemicduetoits technicalserviceswhichcouldhelpvariouscompaniesconductremoteworking.Identifiedasagrowth stock,theentityhasahighp/eratio(77.75)potentiallymakingitovervaluedbutwiththeshortdurationof thetradingitcouldyieldprofitableresults

AugmentumFintechPLC

AugmentumFintechPLC

Hindsightanalysis

Thestockperformedpoorlywithafinallossof£3,906.00invalue.Thecompanyisalreadyatanall-time peakinitsstockvaluesobuyingwasalwaysriskyasexplainedbefore.Itshighp/eratioindicatedthatthe stockcouldhavebeenovervaluedandunlikeAugmentumFintech,thevaluedropped.

HICLInfrastructure

AninfrastructureinvestmentcompanywhichhasseenstronggrowthsinceitsIPO,HICLisidentifiedasan incomestockwithitshealthydividendyieldat4.88%.Aninvestmentcompanyisalsoalower-risk investmentastheassetsforthecompanyisalsohighlydiversifiedacrosssixcountriesandeightsectors.

HICLInfrastructurePLC

HICLInfrastructurePLC

Hindsightanalysis

Thestockhadanaverageperformancewithatotalvaluegainof£3,494.96.Overall,aninvestmentcompany stockwilloffercomparativelystableincomeandgrowththoughdonotexpectittohaveanyexplosive growthorgains.

FigureI:Brieffinalstockselectionjustifications

Barclays

Amajorbank,Barclayswasidentifiedasacyclicalstockwhichisaffectedbythebusinesscycleand economicsituations.DuetothesuccessofHSBCHoldingsandariseineconomicactivitywiththe pandemiceasingitispredictedthatfinancialinstitutionslikebankswillexperienceaperiodofgrowth whichisidealforthisshort-termportfolio.

£28,000.00

Hindsightanalysis

Thestockperformedquitewellwithafinalgainof£5,568.00.Asreflectedbyallthefinanceentities invested,thesecyclicalstocksareataperiodofgrowthduetoagradualcontinuanceofeconomicactivity afterthepandemic.

BTGroup

Identifiedasadefensivestockbecauseitisacommunicationsutility-typeservicecompanywhichhasa valuableinfrastructurenetwork.WhileBThasaxeddividendsuntil2022toreinvestintothecompany infrastructure,thelowp/eratiocanindicatethatthecompanyiscurrentlyundervaluedandwithitshistorical standingthereispotentialforgrowth.

BTGroup

Hindsightanalysis

WhilethefinancialanddividendsituationwithBTgroupisnotidealforincomegeneration,itsreinvestment intoitselfhasledtostronggrowthinthestockvalue.BTwasoneofthebiggestwinnersoftheportfolio withafinalgainof£11,200.00invalue.

Hammerson

HammersonPLC

Hindsightanalysis

Thestockperformedextremelywell,andtheexpectedincreasewasaccurate.Thestockwasthebiggest winnerwithatotalvaluegainof£21,870asHammersontriestorecoverbacktoitspreviousvalue.

JSainsbury

Categorisedasadefensivestock,JSainsburyisasupermarketretailerandalsohasinterestsinfinancial servicesandpropertyinvestments.Itsstronghistoricalandrecentdeclineinthepandemicmadethelow buy-inquitedesirable.Thefinalportfoliostrategyalsoinvolvedinvestingintomultiplesupermarket retailersduetoretailerstakingastronghitbythepandemicmakingitaprimetimetobuy-inlowforgreater value.Thereisalsosomerestructuringongoingwithitsdirectorateandoperationswhichcouldpresent opportunitiesorrisks.

JSainsburyPLC

Hindsightanalysis

Thestockperformedwellwithatotalvaluegainof£3,836.00andwhilethedividendyieldsarelowthereis stillalotofpotentialforthecompanysinceitisstillfarfromitsprevioushighestworth.

LloydsBankingGroup

Acyclicalstock,Lloydsisalongafewotherfinancialinstitutionsinvestedinthisfinalstrategytocapture thegrowthofthefinancialindustryaftertheeconomypracticallyhaltedduetothepandemic.Lloydshas experiencedasignificantcrashinitsworthin2020andisexpectedtogrowastheeconomygradually recovers.

LloydsBankingGroupPLC

Hindsightanalysis

Asexpected,thestockhasperformedwell,gainingatotalvalueof£3,337.50indicatingthatthereis potentiallyaperiodofeconomicrecoveringcomingaspandemicrestrictionsareendingoreased.

LondonStockExchangeGroup

Avaluestock,theLSEGroupisaglobalfinancialmarketsinfrastructureprovider.ThesharesofLSEgroup wereveryexpensiveandtherewasasignificantdropinMarchwhichpresentedavaluestockopportunity. Thep/eratioofthestockisalsoquitehighat64.96whichcouldindicateitisovervaluedbutitalsoindicates investorsbeexpectingmorereturns.

LondonStockExchange GroupPLC

Hindsightanalysis

Unfortunately,itmaytakemoretimetoseeifitthep/eratiopaysout,butthestocksoverallperformance duringtheshorttradingperiodwaspoorwithatotallossof£1,696.00invalue.Adeeperanalysisofthe stockindicatesthatthestockhasbeenonastronggrowthstreakbutperhapsthestockhasreachedan unhealthyovervaluationandisnowdecliningtoreachastablemarketworth.

assetssuchasbeerbrands,foodanddrinksindustry,packaginganddistributionofbeers,breweries, propertieslikepubs,andgamingmachines.Thespeculationisthatwiththeeaseincovid-19restrictions moreentertainmentandconsumptionwilloccurwhichwillfacilitategrowthinthevalueofthestock.

Marston'sPLC

Hindsightanalysis

Thestockperformedmodestlywithonlyafinalvaluegainof£280.00.Takingacloserinspectiononthe performance,itisclearthatthestockstillhaswaystogotorisebacktoitsoriginalaveragevaluebeforethe pandemic.However,itisalsoclearthatthetimingontheinvestmentwastoolateandthepricewasalready quitehighforavaluestock.

PremierOil

Anindependentoilandgascompanywithvariousoperationsacrossglobe.Thecompanyisaspeculative stocksinceonthesurfaceitsfinancialsandmountingdebtmakesthecompanyappearasapoorinvestment. However,thereareindicationsofadealtotakeplacewithChrysaorLimited,aprivate-equitybacked independentoilcompany,whichcouldprovetobeagamechangerforthestock(Thomas,2021).

PremierOilPLC

Hindsightanalysis

Unfortunately,themergerbetweenPremierOilandChrysaorLimitedintoHarbourEnergyPLCtankedthe stockvaluecreatingatotalvaluelossof£8,710.00-thespeculationdidnotpayoff.UponreflectionHarbour Energywouldbeafantasticstocktobuy-inaroundnow.Privateequitybackedventuresintooilandgasis risingintheUKwithanincreasefrom8%to20%in2020,creatingaprofitablestockventure.While HarbourEnergystartedquitelowascomparedtoPremieroilpreviously,ithasbeenshowingstrongsignsof growth.

Rolls-Royceholdings

Anotherspeculativestockwhichwithitsrecentchangestomanagementanddirectorateisexpectedtogain growth.Thecompanyisanengineeringcompanythatfocusesoncreatingpropulsionsystemsinthe aerospaceindustryandhasinterestsintheautomobileindustry,anddefenceindustry.Withthegradual easingofpandemicrestrictionsandmoretravelling,thecompanyshouldalsobeablemakemoresales.

RollsRoyceHoldingsPLC

Hindsightanalysis

Unfortunately,thespeculationwasnotverysuccessfulasthestockperformedpoorlywithatotallossof £958.00invalue.Thestockislikelytocontinuetodeclineasfinancialsrevealthatthecompanyis strugglingwitha£4billionlossin2020andwouldtakeevenlongertorecover.Thestockwouldhavebeen bettertopurchaseperhapsinanotheryearwhenairlinesbecomemoreactiveonceagain.

RoyalMail

Aparceldeliveryandlogisticscompany,thisstockdidnotparticularlyfitintoanytypeofstockperfectly. Duetothepandemic,thereisaparcelboomasretailersrelyononlineshopping.Thep/eratioforRoyal Mailisquitehighat226.16,meaninginvestorsareexpectinghighreturns.However,royalmailoriginated asagovernment-ownedcompanywhichprivatised,andthesegovernment-ownedcompaniesaregenerally veryinefficientandcostly,sothereisrisk.

RoyalMailPLC

Hindsightanalysis

Fortunately,thegrowthstockcontinuedgrowingandyieldedatotalvaluegrowthby£3,343.20.Investor confidenceisextremelyhigh(bullish)forthestockwhereevenwithitsslumpingprofitsin2020thestock valueisstillindicatingstronggrowthandvalueincreases.

StandardChartered

Anotherbankandfinancialservicesinstitutionwhichhasdecreasedinvalueduetothepandemic.Likeother financeentitiesthestockiscyclicalandverydependentonthebusinesscycle.Theexpectationisthat incentivesandeconomicactivitieswhichwerehaltedwillresumeorrecoveraftereasingonpandemic restrictions.

£32,500.00

StandardCharteredPLC

£30,500.00

£30,000.00

£29,500.00

£29,000.00

Hindsightanalysis

Thestockperformedwellwithatotalvaluegainof£1,536.00.Asexpected,thefinanceindustryismaking recoveryfromtheeasingofcovid-19andpandemicrestrictions.Thestockislikelytocontinuegrowingasit isstillfarfromitspreviousaveragevalue.

Tesco

Asupermarketretailerwithinterestsinfinancialservicesidentifiedasadefensivestockbecauseitsmain businessisanecessitygood.Tescoalsohasahealthydividendyieldat4.49%andastrongp/eratioat23.68 whichindicatesinvestorconfidenceingrowthandgains.

TescoPLC

Hindsightanalysis

Th indicatesahealthyperformanceeventhroughoutthepandemic,wheregovernmentreliefsandsalesduring lockdownoffsetpandemiccosts().

WMMorrisonSupermarkets

Anothersupermarketretailerwhichsolelyfocusesonretailsupermarketstores.Thestockhasagood dividendyieldof3.99%.Awell-roundedreportbyNewman()indicatesthatMorrisonandthebroader grocerysectorisinabullishcase.MorrisonhasagoodrelationshipwithAmazonwhichisboostingits onlinesalesandhasbeenprovingtobecriticalduringthepandemic.Additionally,unlikeTescoor Sainsbury,Morrisonismorestablebecauseitdoesnotinvolveincyclicalindustrieslikefinance.

Hindsightanalysis

Thestockperformedwellwithavaluegainof£1,989.00intotalandisexpectedtostillbeagoodbuy headingintofurtherinto2021.However,preliminaryfinanceaccountsforMorrisonwerenotallpositive withanincreasednetdebt.Butitshouldbeexpectedwiththeincurredcostsofoperatingthroughoutthe pandemic.Stillthegrocerysectorisexpectedtoexperienceaperiodofbullishgrowth.

TABLESANDFIGURES

Figure1.FTSE100Indexweekly%change

Figure2.Equitiesbyindex

Figure3.Portfoliovalue

Figure4:FTSE100and250comparison

Table1.Sectorsandequities

Table2:Bestandworstperformingsectors,weeks1-6

Table3:Top3gainersandlosers,weeks1-6

Table4:Sectorsandequitesfollowingmid-termchanges

Table5:Bestandworstperformingsectors,weeks7-12

Table6:Winnersandlosers,endofterm

Table7:RealEstateEquities

EXECUTIVESUMMARY

Theportfoliowasbuiltonalow-riskstrategyachievedthroughdiversificationover 10sectorsand30equities.

Thefinalvalueoftheportfoliowas£1,049,391.10,representingaprofitof4.9% over12weeks.

Thisfollowedalossof2.3%atthemid-pointoftheinvestmentterm.

Aturnaroundwasachievedthroughstreamliningtheportfolio,byretainingonly high-performingstocks.

Thebest-performingsectoroverallwasRetailgaining18.28%.

Theworst-performingsectoroverallwasRealEstategaining1.97%

TheequitythatmadethegreatestprofitwasSecureTrustPLC,aUKretailbank, whichgained31.18%

TheequitywhichgainedleastwasLok’nStoreGroup,whichmadealossof-9.3%.

INTRODUCTION

ThisreportoutlinesthekeyoutcomesofaninvestmentprojectundertakeninJanuary2021 byBasyaMarkovitsonbehalfofMegaBucksInvestments.MegaBuckswishedtoinvest £1,000,000insharesontheLondonStockExchange(LSE)overa12-weekperiod.

Thesharevalueswouldbetrackedfor6weeks,atwhichpointchangescouldbemade throughthesellingoffofsomestocks,usingtheproceedstoinvestinothers.Nofurther changescouldthenbemadeuntiltheendoftheprojecttime-span.

ThetrusteesofMegaBucksInvestmentsspecifiedchoosingaminimumof8sectorstoinvest in,oneofwhichwastobetheRealEstatesector.Additionally,noindividualsectorcould beallocatedmorethan40%oftheinvestmentvalue,andnosingleequitymorethan20%. Aminimumof£25,000wastobeinvestedinanyindividualstock.

ECONOMICBACKDROP

TheFTSE100startedtheyearwitha6%rally,liftedbyvaccinehopes(Alabi2021),andthe generalglobalstocksupliftaccompanyingtheexpectationofalargefiscalstimulusinthe USfollowingtheDemocraticelectionvictory.However,theFTSE100thenrevertedtopre2021levelsasthesecond-waveofCovid-19puttheUKintolockdown.Duringtheperiod22 Jan–16Apr,theFTSE100bothgainedandfellintermittently,butmadeanoverallgainof 324points(Yahoofinance).

IntermsofGDPandunemployment,theUKeconomyfaredbetterthanearlierpredictions, withtheOBRnowexpectingtheUKeconomytoregainitspre-pandemicsizeinthethird quarterof2022,sixmonthsearlierthanpredictedinNovember2020(Strauss2021).This madeforacautiouslyoptimisticeconomicclimateforUKlistedcompanies.

Figure1.FTSE100Indexweekly%change

STRATEGY

Diversification

Theportfoliorepresentedahighlevelofdiversificationwith30differentequitiesacross10 sectors.

Table1.Sectorsandequities

SectorCompanySectorCompany

Aerospaceand Defence Chemring House,LeisureandPersonal Goods Berkeley

AvonRubber Burberry

Cohort FoodandBeverages CocaCola

Bacanora

Mining

Banking

Lithium RealEstate Assura

AngloAmericanBigYellow

Antofagasta Civitas

Barclays GreatPortland

Lloyds

LoknStorGroup

SecureTrustTechSoftwareandServicesOxfordMetrics

Standard

Chartered

Retailers

Computacentre

Next Telecommunications TelePlus

JDSports Vodafone

Halfords PharmaceuticalsandBiotechAstraZeneca

Sainsbury's Abcam

Ocado AlliancePharm

ASOS

70/30riskratio

Inacautiousapproach,70%ofstockswerechosenfromtheFTSEs100and250,including manyhouseholdnamessuchasNext,Sainsbury’s,CocaColaandBurberry.TheFTSE100is moreheavilyweightedtowards‘value’stockswhicharetraditionallyconsideredtobea saferinvestment(Rovnick,2021).However,whereasblue-chipstocksaremorelikelyto holdtheirvalue,theytendnottogainvalueveryrapidly.Withthisismind,theremaining 30%ofstockswereselectedfromtheAlternativeInvestmentMarket(AIM)inthehopethat thesewouldachievemoresignificantgains,bearinginmindtheshorttime-spanofthe investment.

OUTCOMES

Thetotalportfoliovalueonthe16thofAprilwas£1,049,391.10representinganoverallprofit of4.9%.However,asisevidentinthechartbelow,thereisaclearchangeindirection followingthemid-termpoint.Thiswillbeexpandeduponlater.

Theportfolioofstocksbroughtagreaterreturnthaniftheequivalentsumwouldhavebeen investedinanISA.TheWhich?consumerwebsiteofferscomparisonratesforcashISAsfrom variousproviders(seeAppendix2),andtheAERonmostofthemisbetween0.4%-1.0%.

Figure2.Equitiesbyindex

Figure3.Portfoliovalue

Theequivalentquarterlyratewouldbeafractionofthe4.9%returnachievedbythis portfolio.

Theportfolioalsoout-performedtheFTSEs100and250overtheequivalentperiodascan beseeninthechartbelow.

WEEKS1–6

Onthe5thofMarch,thevalueoftheportfoliowas£977,279.32,representingalossof2.3%. (SeeAppendix1)

Firsthalfwinnersandlosers:

Sectors

Table2:Bestandworstperformingsectors,weeks1-6

ThebestperformerbysomemarginwastheFinancialsector,withanoverallprofitinall fourbankschosen.TheworstperformingsectorwasAerospaceandDefence,withTechand Pharmaceuticalsnotfarbehind.

Figure4:FTSE100and250comparison

Equities

Table3:Top3gainersandlosers,weeks1-6

Winnersgain/lossLosersgain/loss

Barclays18.49%BacanoraLithium-37.69%

Antofagasta12.11%Ocado-21.94%

AngloAmerican9.20%AvonRubber-15.82%

Analysis

Barclays’overalloutlookwasimprovedbyitsinvestmentarmwhichperformedwellthis quarterinitscapitalmarketsandadvisorydivision,comparingfavourablewithUSand Europeanrivals.Togetherwithanexpectationoffurtherloansandconsumerspendingas theUKeconomyopensup,thisisthelikelycauseoftheirsharepricegain(Morris2021).

AntofagastawhichownscopperminesinChileisbenefittingmorethanotherproducersfrom China’sincreaseddemandforthemetal.ThisisbecauseChilehashadabetterpandemic thanitsSouthAmericanneighbours,witharapidvaccinerollout(FT2020).

Similarly,AngloAmericanisalsobenefittingfromtheincreasedpriceofcommodities,whilst alsobeingoneofthefewminerstodiversifyintodifferentminerals(Hume,2021).

BacanoraLithiumwasincludedintheportfolioasaratherriskierproposition,inthehope thatdemandforrenewablebatterieswoulddriveitssharepriceup.However,thisclearly didnotmaterialise.However,asimilargambleinthesecondhalfonPensanayieldedbetter resultsasdiscussedlaterinthisreport.

AvonRubber’sslumplookslikebeingatemporaryset-backasithassincerecoveredsharply withpandemic-boostedordersforitsarmyandmedicalequipment(Elder2021).

Ocado,agrocers,hasrestyleditselfasatechnologycompany.Althoughitsretailsalesdid wellin2020,itmadelossesonthesalesofitswarehousingsoftware,thusthedragonits shareprice(AlmeidaandPowell2021).

MID-TERMCHANGES

Followingthelack-lustreresultsofthefirstsixweeks,itseemedexpedienttotrimthe portfoliobyjettisoningthepoorly-performingstocksthatwereimpedingtheoverall performanceoftheportfolio.Intotal,11equitiesweresold(seeAppendix3).These includedtwowholesectors–AerospaceandDefence,andTechnologySoftwareandServices. Thesalevalueof£412,418.40wasreinvestedinthebest-performingoftheremainingstocks, plusanadditionaltwonewstocks.(seeAppendix4).

Additionstotheportfolio

EasyJet

WiththevaccinerolloutintheUKshowingsignsofsuccess,andcautiousoptimismthatlongawaitedforeignholidayswouldbepossibleinthesummer,Easyjetseemedagoodbet.

PensanaRareEarths

Electriccarsandothergreentechnologiesrequireinputsfrom‘old-economy’sectorof mineralsandmetals.Withmanygovernmentspledgingzero-carbonemissionsby2050, thereislikelytobeanever-increasingdemandforthis.However,manymineralsharesare alreadyhighlyprices(Andrews,RinVanderWeyer).Pensanaisunusualinthatitis potentiallyEurope’sfirstindigenoussourceoftheraremineralusedinmagnetsforpower generation,andarelativelynewadditiontotheLSE.(VanderWeyer2021).

Table4:Sectorsandequitesfollowingmid-termchanges

AngloAmerican

Banking

Retailers

House,LeisureandPersonal Goods Burberry

AntofagastaFoodandBeverages CocaCola

Pensana RealEstate BigYellow

Barclays Civitas

Lloyds GreatPortland

SecureTrust LoknStorGroup Standard

Chartered Telecommunications Vodaphone

Halfords Travel Easyjet

ASOS PharmaceuticalsandBiotechAlliancePharm

WEEKS7-12

Secondhalfwinnersandlosers

Sectors

Table5:Bestandworstperformingsectors,weeks7-12

Ascanbeseenfromtheabovetable,theRetailsectorwithintheportfolioisnowthehighest performing.Thisisduetothemid-termcullwhichreducedthestockswithinthesector fromsixtotwo–oneofwhichwasASOSwhichgainedinsharepricefollowingtheacquisition oftheTopshopandArcadiabrandsinFebruary(Eley2021).Bankingremainsthestrongest sectorperformerwithintheportfolio.Bycontrast,RealEstatehasnowsunktothebottom oftheleaguetable–thoughstillnotmakingaloss.Thisrepresentsafallfromitsrankof thirdinthefirsthalfoftheinvestmentperiod,suggestingthatpropertycanactasaballast, performingrelativelywellindownturnsbutnotperformingbrilliantlyintheupswings. Equities

Table6:Winnersandlosers,endofterm

Winnersgain/lossLosersgain/loss

SecureTrust31.18%LoknStorGroup-9.30%

Halfords29.98%EasyJet2.01%

Pensana18.57%GreatPortland4.68%

Itisinterestingtonotethatofeventhethreeworst-performingstocks,onlyonemadea loss–Lok’nStore.

SecureTrustisasmallbutestablishedUKretailbank,whichiswellfundedandcapitalised (LSE2021).

Halfordsbenefittedfromthecyclingcrazeinthepandemic,withsaleshigherthanexpected (Barnes,2021)

TheacquisitionofPensanawasanassettotheportfolio,performingverystrongly,and compensatingfortheearliergambleonBacanoraLithium.

Lok’nStoreGroupwastheleastwell-performingoftheremainingRealEstateassets. Althoughitssharepricehasbeenfairlysteadyoverthepastsixmonths(YahooFinance),in theperiodofthisinvestmentithasseenasmallbutsteadydecline.

EasyJet,incommonwiththerestoftheairlineindustry,hassufferedgreatlyduetothe pandemic.Hopesforreopeningofforeigntravelhaveraisedthestock,buttherearestill greatlossestorecoup(Georgiadis2021).

GreatPortlandEstatehasfeltthepressureasacommerciallandlordfromtheclosureof businessesduringlockdown(Hammond2020).Consideringthis,ithasstillprovidedadecent return.

TheRealEstateSector

Thiswasanimportantfocusarea,astheaimoftheprojectwastocomparerealestate investmentvehiclesonthestockmarkettootherinvestments.Theequitieschosenareall REITs,apartfromone.However,theyeachspecialiseinadifferentareaoftheproperty marketascanbeseeninthetablebelow.

RealEstateEquities

CompanyTypeIndexlisted£Invested Mid-term gain/loss Final gain/loss

Assura HealthcareREITFTSE250£37,250.00-1.07%n/a

BigYellowStorageREITFTSE250£33,570.00-1.97%6.43%

Civitas SocialcareREITFTSE250£26,400.002.41%6.08%

GreatPortlandOfficeREITFTSE250£31,480.008.64%4.68%

LoknStorSelfstorageAIMA.S.£51,600.00-2.33%-9.30%

Atthemid-term,allpropertystockswereretainedapartfromAssura,whichperformed leastwell.

CONCLUSION

Overall,theportfoliohasachievedarespectablereturn.However,thestrategyof diversificationatthebeginningdidnotpreventlosses,perhapsbecauseofthegeneral backgroundofdecliningstockprices,butmainlybecauseoftheunwiseselectionofstocks.

Themid-termopportunitytochangewasusefulinthatitallowedtheexperienceofthefirst fewweekstobeapplied.Thisisaformofwhatisknownas‘back-testing’,inwhichitis assumedthatstockswhichperformedwellhistoricallywillcontinuetodoso.Thismethod seemstohaveworked,allowingasignificantturnaroundtotheportfolio.However,itis importanttorememberthatthiswillnotalwaysnecessarilybethecase,andthereforethe approachmustbesupplementedwithcloseresearchintothestocksandsectorsinvestedin.

WordCount:1920

Table7:RealEstateEquities

APPENDIX 1.

Name29-Jan-2105-Feb-2112-Feb-2119-Feb-2126-Feb-2105-Mar-21 Chemring£29,650.00£29,500.00£29,150.00£27,950.00£27,700.00£25,900.00 AvonRubber£31,000.00£31,500.00£31,376.91£30,421.53£28,209.05£28,200.00 Cohort£30,950.00£31,100.00£31,300.00£28,650.00£29,400.00£30,200.00 BacanoraLithium£26,800.00£23,100.00£22,500.00£21,900.00£20,997.50£20,250.00 AngloAmerican£36,210.00£37,260.00£39,945.00£43,050.00£41,587.50£43,702.50 Antofagasta£28,600.00£29,630.00£30,660.00£36,760.00£35,650.00£34,520.00 Barclays£26,708.00£29,444.00£29,180.00£30,728.00£32,113.95£34,316.00 Lloyds£26,400.00£29,600.00£29,680.00£30,552.00£31,200.00£32,060.00 SecureTrust£26,400.00£26,400.00£27,900.00£28,410.00£28,980.00£28,950.00 StandardChartered£44,400.00£44,830.00£46,290.00£49,250.00£46,210.00£49,930.00 Next£38,650.00£39,610.00£38,390.00£38,350.00£37,800.00£37,000.00 JDSports£23,157.00£26,436.00£24,930.20£26,350.00£25,742.40£24,204.80 Halfords£27,250.00£29,250.00£26,750.00£26,850.00£28,950.00£31,500.00 Sainsbury's£29,328.00£28,308.00£27,492.00£27,708.00£27,144.00£27,564.00 Ocado£27,770.00£28,080.00£26,200.00£25,590.00£22,000.00£20,880.00 ASOS£26,844.00£29,400.00£31,800.00£34,632.00£33,600.00£30,984.00 Berkeley£33,512.00£34,824.00£34,424.00£34,720.00£32,424.00£34,440.00

Burberry£25,777.50£26,467.50£26,820.00£27,592.50£27,232.50£27,975.00

CocaCola£25,523.40£26,679.80£28,025.00£27,435.00£26,408.40£27,600.20

Assura£36,250.00£37,100.00£36,100.00£37,100.00£37,250.00£36,850.00 BigYellow£33,180.00£34,380.00£33,510.00£34,410.00£34,050.00£32,910.00

Civitas£26,950.00£27,250.00£27,228.94£27,482.00£27,178.33£27,037.50

GreatPortland£32,620.00£33,170.00£32,360.00£32,810.00£33,920.00£34,200.00

LoknStorGroup£54,800.00£53,200.00£51,600.00£50,400.00£50,000.00£50,400.00 OxfordMetrics£27,150.00£27,150.00£27,000.00£27,150.00£27,300.00£27,600.00 Computacentre£25,872.00£25,278.00£24,838.00£24,244.00£22,946.00£23,914.00 TelePlus£26,080.00£26,040.00£24,840.00£24,960.00£23,560.00£25,000.00 Vodaphone£44,879.98£48,201.76£48,144.24£47,152.00£43,866.19£44,779.32 AstraZeneca£29,964.00£29,100.00£29,884.00£28,904.00£28,316.09£27,432.00 Abcam£24,870.00£24,495.00£25,590.00£25,545.00£25,440.00£22,980.00 AlliancePharm£34,640.00£35,200.00£34,880.00£33,600.00£34,280.00£34,000.00 £962,185.88£981,984.06£978,788.29£990,656.03£971,455.91£977,279.32

3.Stockssoldatmid-term EquityReturn

BacanoraLithium-37.69%

Ocado-21.94%

AvonRubber-15.82%

Chemring-14.52%

Computacentre-11.41%

AstraZeneca-10.35%

Abcam-9.88%

Next-9.29%

TelePlus-7.82%

Sainsbury's-6.24%

JDSports-6.18%

Berkeley-3.17%

Cohort-2.58%

OxfordMetrics-1.08%

Assura-1.07%

4.Stocksretainedandnewstocks

Name07-Mar-21

AngloAmerican£87,405.00

Antofagasta£69,040.00

Pensana£28,700.00

Barclays£102,948.00

Lloyds£72,135.00

SecureTrust£28,950.00

StandardChartered£49,930.00

Halfords£31,500.00

ASOS£82,624.00

Burberry£27,975.00

CocaCola£27,600.20

BigYellow£32,910.00

Civitas£80,437.50

GreatPortland£102,600.00

LoknStorGroup£50,400.00

Vodaphone£44,779.32

Easyjet£23,321.62

AlliancePharm£34,000.00

3.

3.1

3.2

3.3

3.4

3.5

3.6

4.5

4.6

4.7

4.8

4.9

4.18

4.19

4.20

4.21

4.22

6.

SectorNameFTSECategory#shares

Utilities

RealEstate

Retail

Transport

Pharmaceuticals

Oil&Gas

Banks

Investment Companies

Others

held MarketValue (GBX) P/E Ratio %of portfolio

NationalGridFTSE1003,0002,627,400.0016.582.67%

BarrattFTSE1004,0002,772,800.0019.792.82%

BerkeleyGroupFTSE1008003,561,600.0014.133.62%

BritishLandFTSE1006,0002,640,000.0015.642.68%

DerwentFTSE2508002,512,000.0034.302.55%

ShaftesburyFTSE2505,0002,625,000.0063.842.67%

SavillsFTSE2502,5002,657,500.0020.722.70%

ASOSN/A7003,351,600.0041.633.40%

JustEatFTSE1001,0008,550,000.00N/A8.68%

M&SFTSE25020,0002,861,000.009.462.91%

MorrisonsFTSE25014,0002,615,200.0030.472.66%

NextFTSE1005003,957,000.0036.054.02%

OcadoFTSE1001,0002,690,000.00N/A2.73%

RoyalMailFTSE2507,0002,914,800.0025.432.96%

EasyjetFTSE2503,5002,732,100.00N/A2.77%

IAGFTSE10017,0002,577,200.00N/A2.62%

NationalExpressFTSE25010,0002,562,000.00N/A2.60%

AstrazenecaFTSE1001,0007,777,000.0043.657.90%

GSKFTSE1002,0002,760,400.0011.632.80%

BPFTSE1009,0002,610,000.00N/A2.65%

ShellFTSE1002,0002,840,000.00N/A2.88%

HSBCFTSE1006,2002,525,570.0030.362.56%

VirginMoneyFTSE25020,0002,669,000.00N/A2.71%

JPMorganAmerican InvestmentTrustFTSE2504,5002,668,500.005.932.71%

JPMorganEmerging MarketInvestment Trust FTSE25020,0002,830,000.0053.302.87%

SchroderAsiaPacific

FundFTSE2506,0003,996,000.007.394.06%

SchroderOrientalFTSE25010,0002,760,000.00N/A2.80%

SupermarketIncome REITN/A25,0002,662,500.0011.612.70%

G4SFTSE25010,0002,595,000.00N/A2.64%

TalktalkFTSE25030,0002,934,000.00N/A2.98%

PolypipeFTSE2505,0002,645,000.0042.152.69%

Numberofsharessold

Total:3,000

Marketvalueofsharessold

Total:15,328,000GBX

Numberofadditionalsharesbought

Total:36,000

Marketvalueofadditionalsharesbought

Total:15,032,000GBX

JustEat:1,000shares

Ocado:1,000shares

Astrazeneca:1,000shares

JustEat:6,382,000.00GBX

Ocado:2,088,000.00GBX

Astrazeneca:6,858,000.00GBX

BritishLand:5,000shares

Shaftesbury:4,000shares

easyJet:2,500shares

IAG:10,000shares

NationalExpress:10,000shares

Polypipe:4,500shares

BritishLand:2,535,000GBX

Shaftesbury:2,524,000GBX

easyJet:2,439,500GBX

IAG:2,039,000GBX

NationalExpress:2,934,000GBX

Polypipe:2,560,500GBX

StockName

Percentagechangeinmarketvaluewithrespectto 22ndJan(Week0)

VirginMoney +43.58%

IAG +42.59%

Easyjet +33.96%

BP +17.42%

NationalExpress +17.27%

Shell +15.72%

HSBC +14.33%

BritishLand +12.99%

Shaftesbury +12.78%

RoyalMail +11.94%

Barratt +11.68%

Polypipe +10.70%

ASOS +8.85%

Derwent +4.79%

BerkeleyGroup +2.77%

M&S +2.76%

SchroderOriental +2.63%

Savills +2.37%

JPMorganAmericanInvestmentTrust+1.23%

SupermarketIncomeREIT+0.47%

SchroderAsiaPacificFund-0.80%

Talktalk -0.92% -1.95%

JPMorganEmergingMarketInvestmentTrust-2.07%

NationalGrid -2.59%

Next -4.27%

G4S -6.77%

GSK -8.40%

Astrazeneca -8.45%

JustEat -23.77%

Ocado -24.81%

SectorNameFTSECategory#shares held MarketValue(GBX)P/ERatio%ofportfolio

Utilities

NationalGridFTSE1003,0002,484,000.0016.582.52%

BarrattFTSE1004,0002,853,600.0019.792.90%

BerkeleyGroupFTSE1008003,444,000.0014.133.50%

BritishLandFTSE10011,0005,577,000.0015.645.66%

RealEstate

Retail

Transport

Pharmaceuticals

Oil&Gas

Banks

Investment Companies

DerwentFTSE2508002,659,200.0034.302.70%

ShaftesburyFTSE2509,0005,679,000.0063.845.77%

SavillsFTSE2502,5002,695,000.0020.722.74%

ASOSN/A7003,614,800.0041.633.67%

JustEatFTSE1000N/AN/AN/A

M&SFTSE25020,0002,909,000.009.462.95%

MorrisonsFTSE25014,0002,463,300.0030.472.50%

NextFTSE1005003,700,000.0036.053.76%

OcadoFTSE1000N/AN/AN/A

RoyalMailFTSE2507,0003,170,300.0025.433.22%

EasyjetFTSE2506,0005,854,800.00N/A5.94%

IAGFTSE10027,0005,505,300.00N/A5.59%

NationalExpressFTSE25020,0005,868,000.00N/A5.96%

AstrazenecaFTSE1000N/A43.65N/A

GSKFTSE1002,0002,486,000.0011.632.52%

BPFTSE1009,0002,869,200.00N/A2.91%

ShellFTSE1002,0003,096,800.00N/A3.14%

HSBCFTSE1006,2002,713,120.0030.362.75%

VirginMoneyFTSE25020,0003,723,000.00N/A3.78%

JPMorganAmerican

InvestmentTrustFTSE2504,5002,601,000.005.932.64%

JPMorganEmerging MarketInvestmentTrustFTSE25020,0002,644,000.0053.302.68%

SchroderAsiaPacific

FundFTSE2506,0003,732,000.007.393.79%

SchroderOrientalFTSE25010,0002,730,000.00N/A2.77%

SupermarketIncome

REITN/A25,0002,687,500.0011.612.73%

G4SFTSE25010,0002,425,000.00N/A2.46%

Others

TalktalkFTSE25030,0002,910,000.00N/A2.95%

PolypipeFTSE2509,5005,405,500.0042.155.49%

StockName

Percentagechangeinmarketvaluewithrespectto 5thMar(Week6)

RoyalMail +13.18%

Savills +11.87%

JPMorganAmericanInvestmentTrust +11.25%

Next +10.86%

Barratt +9.90%

NationalGrid +8.97%

GSK +8.32%

NationalExpress +7.70%

SchroderOriental +7.69%

M&S +7.60%

BerkeleyGroup +7.08%

VirginMoney +4.22%

ASOS +4.07%

SupermarketIncomeREIT+3.72%

SchroderAsiaPacificFund+3.05%

JPMorganEmergingMarketInvestmentTrust+2.87%

Morrisons +2.56%

Polypipe +2.46%

IAG +2.13%

Easyjet +2.01%

BritishLand +1.70%

Shaftesbury +1.43%

Derwent +1.08%

G4S +0.91%

Talktalk ±0.00%

HSBC -2.32%

BP -4.97%

Shell -8.76%

Northfields“ABrighter Future”

ACAssetManagement

2020 Shopping Centre Management Report

Contents

1. Executive Summary (Page 3)

2. Introduction (Page 4)

3. Lease Schedule as of October 2020 (Page 5)

4.SWOT Analysis (Page 6)

5. Existing Tenants Requirements (Page 7)

6.Strategies and Suggestions (Page 8)

7. Bibliography (Page 12)

Tables and Figures

Table 1- Lease Schedule (Page 5)

Table 2- SWOT Analysis (Page 6)

Figure 1- Redecoration and Refurbishment (Page 8)

Figure 2- Retail Merchandising Units(Page 9)

Figure 3- Standalone Digital Advertising(Page 9)

Figure 4- Diversification of Use (Page 10)

1. Executive Summary

 Town centre retail has been on the decline for a number of years and COVID-19 has added to these woes with increasing vacancy rates.

 Northfields is well located and current vacancy levels are better than elsewhere in the town centre.

 A major concern for the centre is that all leases come to an end by May 2023.

 A number of important anchor tenants have expressed a desire to stay in the centre although some with a reduced representation.

 Following SWOT analysis, strategies have been identified including general investment for the future in refurbishment, diversification of uses within the centre, commercialisation of underused space and up to date targeted marketing to allow Northfields to secure a brighter future.

 Critical to this is the commitment of tenants to new long term leases and if this cannot be secured due to current market conditions a longer term strategy of development has been identified.

2. Introduction

2.1 Background

This report has been prepared by AC Asset Management on behalf of ZYX Insurance Co. in respect of Northfields Shopping Centre, Sotherton. The report covers the management of the subject property for a 5 year period from 1st Dec 2020 and has been prepared with due regard to published best practice guidelines by professional bodies in in UK.

2.2 The Property

Built in the 1980’s Northfields Shopping Centre is now in need of major redecoration/minor refurbishment to ensure it fulfils the current needs of retailers and consumers alike. Currently well let with only 4.6% vacancy levels. The centre has close proximity to the town centre and its strong mix of tenants with FRI leases provide a positive opportunity for asset management over the next 5 years. However all leases come to an end in the next 5 years so it is vital that an active management initiative strategy is implemented as soon as possible to maximise potential.

2.3 COVID 19 Effects and Retail Sector in General

National and local lockdowns have had a major effect on town centres where non-essential shops have had to close for periods, coupled with consumers own fears of risk of infection meaning that footfall has dropped up to 95% in the first UK lockdown (ONS,2020). This has slowly increased but with a new lockdown through November it is likely that more shops will close and vacancy rates rise.These factors are on the back of major changes in town centres due to changes in consumers shopping habits and the online revolution, ‘Pre-pandemic trends will be exacerbated, accelerated by stark trading conditions in the post-lockdown period’, (EGI, 2020).

Since the Spring lockdown there has been a high incidence of non-payment of rent and unfortunately a number of retailers have announced ‘compulsory voluntary administrations’ (CVAs). ‘The full impact of the collapse on the UK high street is therefore yet to be seen’, (Savills, 2019). There is a push for Landlords and Tenants to work together to ensure that town centres survive as retail centres with suggestions of turnover rents and much more co-operation/share of expenditure (Cushman and Wakefield, 2020).

The proposals outlined in this report therefore become even more important to overcome the problems caused by the pandemic, drive footfall and enhance the centre.

3. Lease Schedule as at Oct 2022

Table 1:

4. SWOT Analysis

To help consider the centre’s future the SWOT analysis below has been undertaken.

Table 2:

5. Existing Tenant’s

Requirements

Sainsbury’s – Request to reduce their current unit size from 13,000 sq ft to 6,500 sq ft. Sainsbury’s is an anchor tenant and will generate a high footfall even with a much reduced unit. Therefore recommend agreement to its request on the basis of a new long term lease of 15 years. Sainsbury’s has announced a recent restructuring, (BBC,2020), and current rent equates to only £7.70 /sq ft. so a push to £10/sq ft is more fitting with the market rates.

Curry’s – With a unit of 1200 sqft and a strong covenant, Currys is once again an important anchor to the centre and its request for a new 15 year lease should be welcomed even at a below market rent of £100,000.

Gap – On the basis of its wish to expand, the adjoining vacant unit no.5 could be offered so that a combined unit of 1750 sqft is achieved. Rent on the existing unit equates to £100/ft ITZA and market rent on the vacant unit is £110/ft ITZA but, with the market as it is, suggest £105/ft ITZA overall. This should be on the basis of a new 15 year lease. Note that Gap has announced a review of its European operation which could include closure of stores in the UK (BBC, 2020)

Town Toys – The request to terminate its Lease should be ignored as there are less than 3 months to run on it. The unit should be marketed as soon as possible at the assessed market rent of £21,000 which only equates to £75/ft ITZA

TK Maxx – This is a basement unit and it has requested to install a mezzanine to create an additional 10,000 sq ft of space. TK Maxx are an important anchor tenant to the scheme and are unusual in being happy to trade at basement level. Other than a potential gym use, this area is likely to prove difficult to relet. Therefore all appropriate steps should be made to accommodate this request and discussions should commence to suggest a lease extension/new lease to assist the tenant in justifying the costs involved. The existing lease ends in 2024 and a 5/10 year extension would seem appropriate.

Jewellers –The discussions with the jeweller’s suggest that a small unit such as unit 11 of 640sqft which will become vacant in Jan. 2021 should be offered on a short term lease with the ability to terminate by both parties to allow flexibility for a new trader.

Claire’s Accessories – The lease on unit 15 expired in Oct 2021 so clarification on the legal position of the lease is required. It is advised that a new lease should be offered at the market rent of £77,000pa but expect to achieve £75,000. The lease to be for a minimum of 10 years, but initially ask for 15 years.

6. Strategies and Suggestions

6.1General

All the existing leases come to an end by Jan 2024 so there is a real need to secure new long term commitment from all existing tenants. If key anchors such as Sainsburys, Currys and TK Maxx can be secured on new longer term leases, this will assist in giving confidence to other retailers to take on new commitments within the centre.

6.2RedecorationandRefurbishment

The existing centre has been allowed to decline in recent years and a comprehensive redecoration is required. Whilst the FRI leases provide for all such costs to be recouped based on a service charge in relation to the area occupied by the tenants to assist in tenant retention and long term investment, it is recommended that the Landlord contributes towards the costs involved and looks not just to redecoration but also improvement. Refurbishment has been shown to have a positive effect on footfall and customer perception, (Chebal, 2014).

Recommended:-

 Comprehensive repainting of all internal and external paintwork in neutral colours.

 All lighting replaced and upgraded to modern standards throughout common areas.

 All street furniture replaced in colour scheme to match redecoration to include new planting in common areas and signage.

 Sustainability aspects where possible and cost effect to be introduced such as solar panels to the roof, rainwater harvesting and recycling facilities.

6.3CommercialisationOpportunities

Reletting of vacant units generates rental income, payment of rates and potential service charge cover, but the common areas in the centre may also be used to generate income. Retail Merchandising Units (RMUs) are an important strategy in shopping centres. Within Northfields, these could be let on short term licences to small retailers/start-ups.

Figure 1- Redecoration and Refurbishment (Mclaren, 2019)

Figure 2- Retail Merchandising Units (Capreg, 2019)

Interactive devices can now provide access to further income and add to the customers and retailers experience. The introduction of free Wi-fi, shopping apps with promotions and offers can provide targeted advertising to customers and increase footfall whilst giving retailers valuable information on customers attitudes and these provisions are recommended. There is a move to standalone digital advertising boards also.

6.4Diversificationof Uses

Recent changes to the Use Classes Order, mean that the change of use from retail to other uses now in new Class E are allowed, without planning permission being required. Therefore, vacant units may now be used as restaurants, cafes, gyms or a creche amongst other things, with no permission needed.

We recommend exploring marketing empty units for uses such as these.F and B units assist in linger time and a creche can have a similar effect with parents having a more ‘leisurely shop’ whilst childcare is taken care of. The gym use can also add to footfall and can be complimentary to the creche and F and B. The other favourable point with gym operators is that they will take first floor or basement units. Finally, change of use to medical type functions may be feasible.

Figure 3- Standalone Digital Advertising (Allsee,2020)

6.5ComprehensiveRedevelopment

The major concern with the centre is the fact that all current leases end within the next 5 years. The strategies outlined above provide appropriate and sensible advice and should initially be pursued. However the structural changes in retailing and the more recent effects of COVID 19 mean that retailers may no longer wish to remain in the Northfields Centre. On this basis there is a potential for a full redevelopment for alternative uses. The property is well located in the town centre in the commuter belt of south east England. Redevelopment for a high block for the private rented sector may be a possible alternative. John Lewis Partnership is already taking steps to this aim at some of its existing stores, (Property Investor Today,2020).This proposal should only be pursued once the clear intensions of existing tenants is established during the course of 2021.

Bibliography

Allsee, 2020. Android Advertising Displays. https://www.allsee-tech.com/digital-signage-products/ledslimline-digital-signage-advertising-displays-standalone-plug-and-play.html

BBC, 2020. GAP considers closing all UK stores. Available at: https://www.bbc.co.uk/news/business54635810

BBC,2020. Sainsbury’s to cut 3500 jobs and close 420 Argos stores. Available at: https://www.bbc.co.uk/news/business-54818644

Capreg, 2019. Retail Merchandising Units. https://capreg.com/commercial-info/retail-merchandising-units/

Figure 4- Diversification of Use (Completely Retail, 2019)

1.ExecutiveSummary

1.1ThisReportispreparedbyGenesis Genesis Trustworth Trustworth from2021to2026.

1.2DataanalysisnotesthatNorthfieldshasaratherhighunitvacancyrate,whichgiventheongoing pandemic .Meanwhile,sinceNorthfieldscurrentlyhasa somewhatskewedtenantmix,thereisaneedtoimproveitsvarietyintermsofshoptypesandF&B offeringsinordertoenhancecustomerexperience.Thoughthemajorityofleaseshave12+monthsof ULT,effortshouldbemadetoactivelyengageinleaserenewalnegotiationsandseekoutnew prospectivetenantsgiventhecurrenteconomicdownturn.

1.3Asthepandemiccontinuestoprogress,thehighestshort-termpriorityistomaintainCOVID-secureat Northfields.Aseriesofpreventivemeasureshavebeenproposedandarestronglyrecommendedto beadoptedatonce.Meanwhile,initiativessuchasintroducinginterimusesforidleunitsandmore F&B/essentialretailtenantsarealsoexploredtomitigatethemid-/long-termeconomicimpactsof COVID.

1.4 ddressits currentspaceunderutilisationweakness,whicharefurtherexploredinSection4.Amajorproperty renovationisalsorecommendedgivenNorthfieldslong-runninghistory.

1.5Aconceptsketch,aswellasadetailedleasescheduleandanactionplanforpropertymanagement

2.Introduction

ReportBackground

2.1 GenesisPropertyManagement Genesis Trustworth Trustworth

2.2ThisReportpresentsanalysesonvacancyrate,tenantmix,remainingleasetermsetc.,andprovides strategicmanagementrecommendationsforconsiderationandimplementation,inorder tonavigatethroughthedifficultandchallengingcircumstancesthedeclineofhighstreetretailandthe on-goingcoronavirusoutbreakhaveposed.

PropertyOverview

2.3ThePropertyisclassifiedasaneighbourhoodshoppingcentre,primarilyaimedatservingthelocal populationofSoutherton,typicallywithina15(ICSC,n.d.).

Table1:KeyDevelopmentParametersoftheProperty PropertyAddress NorthfieldsShoppingCentre,HighStreet, Southerton

YearBuilt 1985(35yearstodate)

PlanningUseClass

A(1/3)(priortochangeinuseclassorders)

E(from1Sep2020)

45,270sq.ft

17

3.DataAnalysis

VacancyRate

3.1Therearecurrently3vacantunitsintheProperty,equatingtoa17.6%vacancyrate.Thisfigureis significantlyhigherthanthoseacrossSoutherton,SouthEastEnglandandtheUK.

Table2:Comparisonofretailvacancyrates(Source:BritishRetailConsortium,2020)

NorthfieldsShoppingCentre17.6%

Southerton~6%

SouthEastEngland(Q22020)~10.6%

UKNationalAverage(Q22020)~12.4%

3.2Thegeneraldeclineofhighstreetsoverthepasthalf-decade(Ashford,2019),exacerbatedbytheongoingpandemic,willundoubtedlyhaveshort-/mid-termknock-oneffectsontheretailsector,likely resultinginanevenhighervacancyrateduetoplummetingdemandforretailspaceand/orexisting tenantsnotwishingtorenewtheirleases(Jahshan,2020).

TenantAnalysis

3.3Apartfromthe3currentlyvacantunits,existingtenantsatNorthfieldsrepresent8differentsectors (Figure1).IntermsofGLA,thePropertyhasahighproportionofdepartmentandhousehold thetotalarea(Figure2).

Figure1:DistributionofNorthfieldstenantsbyshopcategory

3.4Thoughahealthytenantdiversityissomewhatpresent,itsquiteheavilyskewednaturetowardsthe fashionandgeneralretailsectors(takingup4unitseach)showsthatthereisstillopportunitytofurther enhancetenantmixtoenrichcustomerexperienceatNorthfields(Hamzah,2015).

Figure2:DistributionofNorthfieldstenantsbyGLAtake-up

Figure3:DistributionofNorthfieldtenantsbyULT

3.5

Unit#8)hasoptedtocontractout.TheremainingmajorityhaveULTlastingforaminimumofoneyear orlonger(Figure3),withthelongestULTlastingfor43months(~3.6years).

3.6Whilethiscanbeconsideredagoodindicationofsteadyshort-termrentalincome(IPD,2013),it mightbechallengingtoseeknewreplacingtenantsifthecurrenttenantsnolongerwishtorenew theirleases(asexpressedbyGap,TownToys).

STRENGTHS

PrimelocalitybeinginproximitytotheSouthertonhighstreet

Long-runninghistoryestablishingprominentmarketpresence,reputationandcustomerloyalty

Well-knownhighstreetbrandsascurrenttenants

WEAKNESSES

Highvacancyrate

Skewedtenantmixtowardsfashionandgeneralretailsectors

Widerangeoftenantconcerns/needstobedulyaddressed

Lackofappealtovisitorsduetopropertywearandtearovertheyears

UnderutilisationofidlespacethroughoutNorthfields

OPPORTUNITIES

Enhancetenantmixanddiversityinretailoffering

Introducenewcommercialisationinitiativestobetterutilisecurrentlyidlespace

Embraceemergingtrendsofinnovativedigitaladvertising

THREATS

Government-imposedcoronaviruslockdown/socialdistancingrestrictionsresultinginclosure ofallbutessentialshops

Long-termeconomicimpactofthepandemicaffectingdemandandtake-upofretailspaceand ultimatelyrisingvacancyrate

Generaldeclineofhighstreetretailperformance

4.Recommendations

MaintainingCOVID-secure

4.1Inresponsetotheongoingpandemic,Northfieldsshalltakethefollowingactionsatoncetomaintain COVID-secure,whichwouldhelpbuildpublicconfidencewhentheyvisitthepremises(Gregory,2020).

RiskAssessmentsidentifyingareas/activitiespronetovirustransmission

Strengthenedcleaningregime,withdailydeep-cleaningscheduledaftercloseofbusinesswith antiviraldisinfectantsprays

Requireallvisitorsandstafftowearfacecoveringsindoorunlesseating/drinking

Facilitatesocialdistancingby2mfloormarkings

Complimentaryantibacterialhandwashkiosks -in

Source:GoogleImages

PositioningStrategy

4.2Inthenext5years,Northfieldsshall

TenantManagement

Landlord-TenantCommunication

4.3Monthlyface-to-facemeetingswithindividualtenantsshallbescheduledtofacilitateclearandefficient landlord-tenantcommunication.Thisistoensurethatanyissues/concernscanbeflaggedanddealt withappropriatelyattheearliest.

4.4Regularsurveysandotherformsofinformalcorrespondencewillalsobeusedtogatherfeedbackon propertymanagementissues.

Figure5:ExamplesofCOVIDpreventivemeasurestakenatWestfieldStratfordCity,London

LeaseRenewals

4.5Negotiationtalkswithcurrenttenantsregardingleaserenewalsshouldcommenceatleast9months beforethecontractedenddatetoallowenoughtimetoforthelandlordandtenant(s)toreachan agreementandavoidperiodsofunitvacancybetweenleases.Currenttenantswillbegivenpriorityif thereismorethanonepartyintendingtorentthesameunit.

Gaprequesttoexercisebreakclausetoexpandtolargerpremises

4.6

forwardforitsconsideration: 4.9)

2.Takinguponeofthethreecurrentlyvacantunits(dependingonpropertylayout)with5%rent discount(SeeSection4.26)

3.Long-termRMUleasewith10%rentdiscount(SeeSection4.23)

4.7However,astherearealreadyotherleadinginternationalfast-fashionbrandspresentatNorthfields (H&M,Zara),thenegativeimpactoftheworse-casescenariooflosingGapasatenantisnotvital.

TownToysrequestforleasesurrenderduetohighrent

4.8Sinceitsleaseisduetoexpiresoon(Jan2021),negotiationtalksshouldcommenceassoonas possible.Acknowledgingthegapbetweenthecurrentpassingandmarketrents,anexclusiverent freezecanbeofferedforthenextRentReview(due2026)inabidtoretainthetenant.

Sainrequesttohalveitsfloorspacebutretainhighstreetentrance

4.9 can whilstaccommodating tenant.

Currys15-yearleaserenewalstartingat£100,000

4.10SinceCurrysistheonlyelectronicstenantatNorthfieldsandthatitisconsideringotherunitsat competingproperties,effortshouldbemadetoretainCurrysforanotherleaseterm.

4.11Passingrentof£110,000willbeproposedinitiallyatnegotiationtalks,whileanywherebetween £100,000and£105,000(marketrent)isacceptable.

TKMaxxrequesttoalteritspremisestoincludeanewmezzaninefloor

4.12 -maintained. Thereisnoin- uest,subjecttodetaildesign.Anadditional mezzaninefloorcouldsignificantlyboostsalesforthetenantandgeneralfootfallatNorthfields.

4.13ARentReviewwillbescheduledtodeterminetheagreedappropriatelevelofunitpassingrentwiththe mezzaninefloorincluded.

4.14However,asthisalterationisnotpartofthePropertyRenovation(SeeSection4.20),thetenantwill havetofundtheconstructionthemselves.

TenantMix

4.15SinceF&Bandconvenienceshopsareoftenthemostpopulardestinationsinshoppingcentres(Clark, 2019),Northfieldsshouldexpanditstenantmixbyintroducingmorerelatedshopssincethereis currentlyonlyoneF&Bandconvenienceretailtenantrespectively.Exclusiveconcessions(e.g. extendedrent-freeperiods)canbeofferedasextraincentives.

4.16Moreover,intheunfortunateeventofanotherCOVIDlockdown,allbutessentialshopswillbeasked ofNorthfields,continuingtoattractaminimal,nonethelesscriticalamountofvisitors.

FinancialManagement

4.17Asthelargestsinglesourceofrevenue,itisessentialthatpassingrentlevelsatNorthfieldsareupto dateandatleastcomparableto,ifnothigherthanthemarketrent.

4.18ThoughallleaseshaveUORRscheduledevery5years,whichwouldensureasteadygrowthinpassing rent,anoptimalbalanceshouldbestruckbetweenproposinghigherpassingrentsforgreaterprofitand retainingchainanchortenants,tobeevaluatedonacase-by-casebasis.

4.19SinceallleasesatNorthfieldsareunderFRIterms,aservicecharge(apportionedbyGLA)shallbe leviedtorecoveranycostsofrepairingandinsuranceincurred.Theexactrateistobeconfirmedand agreedwithalltenantsbutwillcomplywithanyprevailinglegalrequirements/industrybestpractice (RICS,2018).

MajorRenovation

4.20 -runninghistory,itisinevitablethatcustomerexperienceatNorthfieldshas beennegativelyimpactedbyitswearandtear.Toavoidfurtherdecay/anysafetyrisks,itisopportune nowforNorthfieldstoundergomajorrenovation,suchthatuponcompletion,itcanre-emergepostpandemicasaprominentlandmarkofSoutherton.Arefreshedlookcannotonlyattractoldandnew visitorsalike,effectivelyincreasingfootfall(Taylor&Rawlinson,2010),butcanalsoserveasan incentiveforprospectivetenantstorentatamodernisedpremiumshoppingcentre.

4.21Proposedrenovationwilloccurinphasestominimisedisruptiontonormalbusinessoperations.

RegularRefurbishments

4.22Regularrefurbishmentswillbecarriedouttoensureshopsandtheoverallenvironmentarewellmaintainedandpresentableforvisitors.

NewCommercialisationInitiatives

4.23AsrevealedintheSWOTAnalysis,thereisanunderutilisationofspaceatNorthfields.Inresponse, RMUscanbeintroducedonatrialbasisfornew(e.g.localjewelleroriginallyintendingtorentaunit) andexistingtenantstoexpandtheircustomerreachtothepassageways.RMUswitheye-catching designsareexpectedtoattractmorevisitorsthantraditionalstorefronts,therebyincreasingcustomer dwelltimeandlikelihoodtospend.

Figure6:Anexampleofeye-catchingRMUsatFashionShow,LasVegas,US

Source:GoogleImages

AtriumasEventSpace

4.24 acetobeusedasaneventspace.Themeddecorations andlargescalecelebrationsduringmajorfestivities(e.g.Christmasholidays,ChineseNewYear),when riseinfootfall(especiallyfamilies)isexpected,caneffectivelyincreasedwelltimewithinthepremises, aswellasconsumerdesireandwillingnesstospend(Sitetal.,2008).

4.25Theatriumcanalsobeavailableforrentalbytenantsforsalespromotionorlocalcommunitygroups (atadiscountedrate)forcommunityperformances/exhibitions.

Figure7:ChineseNewYearCelebrations/PerformancesatBrentCrossShoppingCentre,London

InterimUsesforcurrentlyvacantunits

4.26Interimuses(e.g.temporaryfactoryoutlets,storeextensions)forcurrentlyvacantunitscanbe introducedtoreduceshort-termvacancyrate.Suchflexiblearrangementallowstenantstomeettheir differentbusinessneeds,whileincreasingrentalincomeforTrustworth(JLL,2018).

Source:BrentCrossShoppingCentre,LondonChineseCommunityCentre

4.27Shorterleasetermswithlaxerleaseconditionswilllikelyattractprospectivetenantsmoreeffectively, especiallyunderthecurrenteconomicdowntown,astheywouldnothavetocommittoatypical10/15yeartermwhilstnonethelessbenefittingfromtheprimelocationoftheProperty.

Source:AlamyStockPhotos

ExploringinnovativeAdvertisingOpportunities

4.28Giventhatadvertisingatthepointoftradingcanboostsalesbyupto30%(ICSC,2014),itiscrucial thatNorthfieldscapitalisesontheadvertisementopportunitiestoachieveefficaciousmarketingwhilst generatingadditionalrevenue.

4.29Apartfromthetraditionalmeansofadvertisements(e.g.posters,billboards),newdigitaladvertising strategies(e.g.multimediaLEDscreens,augmented/virtualreality)canbeintroducedfortenantsto useinnovativewaystoestablishbrandpresenceandenrichcustomerexperienceatNorthfields(May, 2018).

LoyaltyProgramme

4.30Anewloyaltyprogramme,wherepointsandcashbackrewardscanbeearnedandredeemedby (Doroticetal.,2012).Discountsofferedbyindividualtenants,aswellasNorthfields-widepromotions canalsobecompiledwithintheprogr shoppingexperience.

4.31

-toleadingshoppingcentre.

Figure8:AtemporaryfactoryoutletshopinNorthLondon

Figure9:ExamplesofAugmented/VirtualRealityadvertising

Source:GoogleImages

5.Appendix

AppendixATentativePropertyLayoutConceptSketch

RealEstateCaseStudy: TheShard

IndividualAssignment

ByClaudiaZheng

BPLN0099RealEstateDevelopment

ModuleCoordinator:DanielleSanderson

Jan2021

Contents

INTROUDCTION

•TheSite

•LandTransformation

ACTORS&INTERACTIONS

•AgencyRole-basedModel

•Functions,Phases&InteractionModel

INPUTS&OUTPUTS

•ElementsoftheDevelopmentProcessModel

PESTELANALYSIS

DEVELOPMENTIMPACTS

CONCLUSION

BIBLIOGRAPHY

Introduction

TheSite

TheShard,thetallestandoneofthemosticonic skyscrapersintheUK,standsabovetheLondon BridgeRailwayStationontheRiverThames’South Bank.Thebuildingis1,016feetinheightwith95 stories,72ofwhich(over111,000squaremeters) arehabitable(TheShard,2020).Designedby theItalianarchitectRenzoPiano,thisspire-like pyramidalstructureechoeswiththeformerLondon Mayor’surbanvisionofencouragingsustainable high-densitydevelopmentatLondon’smajor transportnodes(Jones,2011).

Bornwiththevisionof‘VerticalCity’,TheShard compromisesamixofusescoherently:withthe bottomlargefloorplatesforofficespaceandretail stores;ahotelaccommodationandrestaurantsin themiddle;privateresidencesandpublicviewing gallerieslocatedatthetop(TheShard,2020).By 2020,mostofthelowerfloorspacesareoccupied andwell-usedbyover12,500people,yetallten exclusiveluxuryapartmentshaveremainedvacant (Neate,2017).

ThehistoryoftheSharddatesbackto1999when thedeveloperIrvineSellardecidedtoredevelop SouthwarkTowers.TheShard’sinitialinceptionwas createdinBerlinin2000,followedbyeightyearsof lengthyplanning,fundraisingandpre-demolition process.Coreconstructionbeganin2009,andthe Shardwasinauguratedin2012.

Figure1

TheShard’sverticalspaceuseplan (Clarence-Smith,2017)

LandTransformation

ThesiteoftheShardwaspreviouslyoccupiedbySouthwarkTowers–a25-storeyoffice complexastheLondonofficeofPricewaterhouseCoopers(PwC)–between1970and2007 (TheShard,2020).By2007,SellarPropertyGroupacquiredthebuildingundera£196million dealwithPwCandinitiateditsdemolitioninthesameyear(SE1,2006).Constructionofthe Shardtookplacein2009,rightafterthedemolitioncompleted.

SouthwarkTowers (Serrano,2011)

TheShard (TheShard,2020)

TheinaugurationoftheShardin2012markedthesitetransformationfromasingle-function officebuildingtoamixed-usevibrantcommunity.Inbroadterms,theShardwascritical inconvertingSouthwarktoacorebusinesshubbyencouragingfurtherdevelopmentand contributingtothe£1billionofLondonBridgeStationredevelopment(LBQLtd,2014).

AspartoftheLondonBridgeBusinessImprovementDistrict(BID),theShardnotonlyattracts investment,itsdominatingheightandslopingglassfacadesalsodrawabout2.3million visitorsannually,makingthesiteoneofthetop-sellingtouristattractionsinLondon(TLB, 2020).

Figure2

Figure3

Figure4:ThenewLondonBridgeStation (Hodgson,2018)

Figure5:TheLondonBridgeBusiness ImprovementDistrict(TLB,2020)

Actors&Interactions

Giventhecomplexityofrealestatedevelopment,relationsandinteractionsbetweenall individualsandorganisationsinvolvedinanystageofthedevelopmentprocessarecrucial tounderstanding.ThissectionintentstoanalysetheactorsparticipatedintheShardproject horizontallyandverticallythroughthefollowingtwomodels.

AgencyRole-basedModel

AdamsandTiesdell’s(2013)AgencyRole-basedModelispresentedbelow,aimingtooffer aclearsenseofsocialintegrationandconflictionbetweenactorswithinfiveinputmarkets (materials,labour,land,political&finance)andtwooutputmarkets(investmentproperty& occupier).

ConstructionTeams

Engineers:Arup|LerchBates|WSPGroup|RobertBird IschebeckTitan|ConnellMottMacDonald

BuildingContractors:Mace Consultants:DavidBonnett|DEGWPLC|GordonIngram

ScottWilson|SeymourPierce|TheRiseGroupLLC RickabyThompson

Developers

SellarPropertyGroup LondonBridgeQuarter

EnvironmentGroups

NorthSouthwark EnvironmentTrust| BREEAM

LocalCommunities

Thepublic

SpecialistReviewers

CABE

RoyalParks Foundation

HistoricEngland St.Paul’sCathedral

SupplyDirection

Markets

ProductSuppliers

LandedInterests

Landowners

StateofQatar

ProjectManagers

Turner&Townsend

Architects

RenzoPiano AdamsonAssociates BroadwayMalyon

LondonConcrete|KONE

CoxGomyl|CorusSteel

ReefAssociates|Alimak

Scheldebouw|PeikkoUK

SikaServices|DowCorning Severfield-RowenPLC

SouthwarkCouncil

Anti-developmentLobbyists

PoliticalInterests

FinancialInterests

CustomerInterests

Real Estate Development

BPLN0099

Functions, Phases & Interaction Model

De Magalhães’s (1999) Function, Phases & Interaction Model is applied below to reflect the links connecting the actors at vario us stages in the development process of the Shard. These include contracts of land acquisition, mediation, construction, promotion and consumption, and the statutory support and intervention.

Previous

Sellar Property GroupSellar Property Group (5%) The State of Qatar (95%)

Peachey PropertyCorporation Ltd

Ownership

Qatari Consortium

CLS Holdings plc|CB Limited

Sellar Property Group

Qatari Investors

Credit Suisse|Kaupthing Singer Nationwide Building Society Friedlander|London Bridge Quarter Ltd

CLS Holdings plc|CB Limited

Lendlease|CB Richard Ellis FPD Savills|Knight Frank LLP Real Estate Management Ltd Office & Retail tenants Restaurant owners Shangri-La hotel Long-term residents | Visitors

Renzo Piano Building Workshop|Turner & Townsend|Mace Arup|Lerch Bates|WSP Group|Robert Bird Group Ischebeck Titan|Connell Mott MacDonald|Consultants

Renzo Piano Adamson AssociatesBroadway Malyon PricewaterhouseCoopers (PwC)CABE|Royal Parks Foundation|Historic England|St. Paul’s Cathedral Mayor of London|Southwark Borough Council|The public

It is worth mentioning that the above two models are not thorough enough respectively: Agency Role-based Model provides a comprehensive list of development agents but is empirical and oversimplified on their relationships, while Function, Phases & Interaction Model focus more on actors’ links through activities arranged in chronological order. However, combining the two models can cover the analysis of actors from multiple perspectives.

1. Owner-useragreement2. Mediating land purchase3. Sale of property

4. Provision of credit for occupational lease purchase5. Provision of fund for construction6.Owner-promotercontract7.Building/servicecontract8. Concession of planning permission & licenses9. Supervision of development

Inputs&Outputs

Simplisticmodelsoftenneglectbroaderforcesthatshapethedevelopmentprocess. Yet,Healey’s(1994)ElementsoftheDevelopmentProcessModelprovidesarather comprehensivewayofanalysisbycombiningtheinput-outputdetailsandalistofimportant eventsthatmattertodevelopmenttransformation.IntheShardcase,forinstance,thenexus ofrolesandfactorsweredominatedbyproductionconsiderations,inwhichfinanceplayeda vitalrole.The2008financialcrisisimposedconsiderablethreatontheviabilityandphasingof theShard,thusthestructuralshiftofinvestorsin2008-09mustbeidentified.

RolesinProduction

Labour

-ProjectManager:Turner&Townsend

-MainArchitect:RenzoPianoBuildingWorkshop

-AssociateArchitect:AdamsonAssociates|BroadwayMalyon

-PrimaryContractor:Mace

-Engineer

Structural:WSPGroup

Facade:ConnellMottMacDonald

FireProtection&MEP:Arup

VerticalTransportation:LerchBates

ConcreteWork:RobertBirdGroup|IschebeckTitan

-Agent

Site:Lendlease

Land

-Landowner:StateofQatar|SellarPropertyGroup

-OccupationalLeaseHolder:PricewaterhouseCoopers(until2007)

Capital

-PrimaryCapital:SellarPropertyGroup

-WithdrawnCapital:CLSHoldingsplc|CBLimited

-AdditionalCapital1:CreditSuisse|NationwideBuildingSociety KaupthingSinger|Friedlander

-AdditionalCapital2:StateofQatar

RealEstate:CBRichardEllisLtd|FPDSavills|KnightFrankLLP PropertyManagement:RealEstateManagement(UK)Limited

-Consultant:DavidBonnettAssociates|DEGWPLC|GordonIngram|ScottWilson SeymourPierceLtd|TheRiseGroup|RickabyThompsonAssociates

FactorsofProduction(Input)DevelopmentProcessEventsFactorsofConsumption(Output)

Land

-OriginalSouthwarkTowers siteon32LondonBridgeStreet

Labour

-Project&stakeholder managementbydevelopers

-Planninganddesignofthe Shardbyarchitects

-Demolitionandconstruction workbyengineers&constructionteam

-Marketingandconsultation byleasingagents

Capital

-£196millionoccupational leasepurchase -£435millioncontractcost

1.IdentificationofDevelopmentOpportunities

-LondonMayor’swhitepaperencouraging high-risedevelopmentattransporthubs(1999)

2.LandAssembly

-IrvineSellaracquiredSouthwarkTowersfrom PwC(1999)

3.ProjectPlanning

-RenzoPiano’sarchitecturaldesign(2000) -Projectteamorganisation(2000-2006)

4.SiteClearance

-OccupationalleasepurchasefromPwC(2007)

-DemolitionofSouthwarkTowers(2007-2009)

5.AcquisitionofFinance

-Occupationalleasepurchasefinancing (2006-2007)

-Constructionfinancingafterthefinancialcrisis (2008-2009)

6.OrganisationofConstruction

-Buildingconstructionperiod(2009-2013)

7.OrganisationofInfrastructure

-LondonBridgeStationredevelopment (2009-2012)

8.Marketing&ManagingtheEndProduct -Markettradingactivities(sales&rent)(from 2012)

RolesinConsumption

PropertyRights

-27levelsofofficespaces

-3levelsofrestaurantareas

-19levelsofhotelresidences

-13levelsofluxuryapartments

-1retailarcade(connectingLondonBridge)

-5levelsofviewinggalleries

Symbolic&AestheticValues

-AsastrikinglandmarkofLondon

-Asatouristattraction

-RedefiningLondon’sskyline

WiderImpacts

-StimulateSouthwarkasacorebusinessdistrict

-LeadtoLondonBridgeStationredevelopment

-Encouragecity-widecommercialinvestment Profits

-Rentsfromallbuildingtenants

-Incomefromviewinggalleryentryticketssales -Luxuryapartmentsales(potential)

JobsCreated

-Over3000workersfrom60countriesduring construction

-Indirectjobs(12,500)createdthrough inbuildingcommercialactivities

DemandforRelatedGoods&Services

-Inbuildingconstructionmaterials

-Surroundingtransportservices

MaterialValues

-32officetenants|9retailers(theretailarcade)|3restaurants|Shangri-LaHotel|Luxuryapartmenttenants&potentialresidents|Visitors PropertyRights

-StateofQatar|SellarPropertyGroup|Propertyinvestors

GuardianofEnvironmentalQuality

-EnvironmentGroup:NorthSouthwarkEnvironmentTrust|BREEAM

-SpecialistReviewer:CABE|RoyalParksFoundation|HistoricEngland

PESTELAnalysis

ThefollowingsectionfocusesonfactorsthatshapetheShardthroughoutitstimelinebased onthePESTELmodel.

•TheofficialwhitepaperANewDealforTransport:BetterforEveryonewaspublishedin 1998,encouragingthedevelopmentoftallbuildingsadjacenttotransporthubs(DfT, 1998).

•TheShardisexemplaryregardingthe2004LondonPlan,asitembodiedtheregional strategyfromthreedimensions:increasedensity,encouragemixed-use,andimprove connectivity(Appert,2011).

Political Economic

•The2008GreatRecessionhittheShardprojectprocessduetothe£1.4billioncredit withdrawnbyCreditSuisseinSeptember.ThedirectcausewasthecollapseoftheUS financialservicesfirmLehmanBrothers(Appert,2011).

•Qatar'ssovereignwealthfundsteppedininthesameyear,financedtheShardfullyand becamethemajorshareholder(95%).Thiswasamilestonemarkingtherevivalofthe project(Sellar,2015).

Sociocultural

•TheShard’sadjacentneighbourhoodLondonBridgeishistoricallyacentreofcommerce, anditsartandmusicculturealsoownaglobalreputation(LBQLtd,2014).Thevibrantand diversenatureoftheareahadcontributedtotheShard’ssuccess.

•TheShard’slocationisculturallydisadvantagedintherealestatemarketbecausewealthy buyersarenotinterestedinlivingontheriversouth.Alltenluxuryresidencesonlevel53-65 haveremainedunsoldnowadays(Neate,2017).

Technological

•TheinitialdesignfortheShardbyRenzoPianowasaround400meters.Itwasarguedto beaesthetically“coldandimpenetrable”andtechnicallyinadvisable(Sellar,2015),thusthe designercutitto306meters.

•Theinnovative‘top-down’techniqueallowedtheconstructionofthesurroundingtowerto becarriedoutbeforecompletingthebasement.Thissavedfourmonthsoftheconstruction period(WSP,2012).

•Preciousarchaeologicaltreasuresweredetectedunderneaththesitesurface.Thedesign ofthefoundation,includingthelocationsofthepiledbasement,wascarefullyconsidered (Sellar,2015).

Environmental

•ToguaranteetheShard’ssustainability,95%ofthetower’sconstructionmaterialsare recyclable,andthedouble-skinglassexteriordesignalsocreatesaventilatedcavitythat canreduceinnerheatgain(JLL,2018).

Legal

•TheformerDeputyPrimeMinisterlegallyapprovedtheplanningapplicationin2003,which allowedconstructiontoproceedsmoothly.

•In2008,theinjectionofnewinvestment(fromQatar)meantthelegaltransformationofthe landowners.Sincethen,anyproject-relateddecisionwasnolongerunderthecomplete controlofthedevelopers.

DevelopmentImpacts

TheoutsizedinfluenceoftheShardontheareaandbeyondhasenduredfromitsconstruction periodtotoday.Thoseimpactsaresummarisedbelowaccordingtotheirpositiveness.

Positive

•AlandmarkofLondon

AsoneofLondon’sbest-knowntowers,theShardplayedauniqueroleinredefiningthecity’s skyline(WSP,2012).TheprojectalsowitnessedasolidfriendshipbetweentheUKandQatar (TheShard,2020).

•Amodelofsustainablearchitecture

•Aworld-renownedtouristattraction

TheShardreceivedan“Excellent”ratingfromtheBREEAMEnvironmentalAssessmentasit requires30%lessenergythannormalskyscrapers,and95%ofitsconstructionmaterialsare recyclable(JLL,2018).Itssustainablestructurehasbeenreferencedbylaterbuildings(e.g. thePlace). TouristfootfalltotheareahasgrowndramaticallysincetheinaugurationoftheShard–with around1millionvisitorsinitsfirstyear(LBQLtd,2014).TheLondonBridgeneighbourhood hasalsoexperiencedatourism“Renaissance”duetoitsadjacentlocation,thuslocalculture isbetterprotectedandspread(e.g.visualarts&food).

•RisingfinancialconfidenceofSouthwark

TheShardiscriticalin“maintainingmomentumintheSouthBankregeneration”(JLL,2018).It hasofferedSouthwarkboroughtremendousconfidenceandpurpose.Anincreasingnumber ofdevelopers/investorsareattractedtothearea,includingGreatPortlandEstatesand Almacantar(JLL,2017).

•Improvingregionaltransportconnectivity

TheShardhasledtothe£1billionLondonBridgeStationexpansionindirectly.Taking advantagefromthe1998Parliamentarywhitepaper,theShardandtheStationtogetherhave ledtoexpansiveregionalconnectionsandlesscommutingtime.

Negative

•Shadow,windandnoiseproblems

This306m-highskyscraperisarguedtobeoutofproportiontothesurroundings(Jones, 2011).Problemssuchasvisualdisturbance,coldmicroclimatesandnoisepollutioninthe nearbyplaceareneglectedattheplanningstage–theShard’srelationtotheskywaswellthought,however,itlacksconsiderationforpassers-byandadjacentenvironment(BBC, 2012).

•Increasinggentrification

RapidregenerationofSouthwarkhasaccompaniedbyunwantedgentrification.Thesoaring rentscausedbymoneyinflowhavedriventhelocallow-incomersawayfromthearea.The presenceoftheShardhadundoubtedlyacceleratedthisgentrificationprocess,especially whenthecompulsorycontributionfromdeveloperswasusedforstationredevelopmentrather thanaffordablehousing(Jenkins,2012).

Conclusion

TheShardiswidelyacknowledgedasarewardingarchitecture,landmarkandbusiness hub.Apartfromtheskyscraper’sstandoutheightandfacade,itssuccessrestsonthree foundations:strongpolicysupportthroughthe1998whitepaper,smoothcoordination betweenallroles,andinfalliblefinancialsupportdespitetheGreetRecession.Althoughitis hardtodenytherewasanelementofluck(Sellar,2015),theShard’sdevelopmentprocess –fromtheinitialfar-sightedplanningtothepost-constructionmanagement–islearnablefor deliveringsustainablerealestateprojecthereafter.

Meanwhile,noprojectisperfect–theShard’stenluxuryresidentialapartmentsthatremain unsold(Neate,2017)hasproveditsfailureinjudgingthehousingneedsoftargetbuyers.Its indirectcontributiontowardstherapidgentrificationofSouthwarkBoroughisalsoaworrying fact.Therefore,continuousmanagementandmonitoringoftheShardanditssurroundings areessential.

Introduction

NexttoLondonBridgestationontheSouthBankofThamesriver,standsthetallesttowerin WesternEurope(figure1)(LBQLtd,2015a).ThetowerisnamedtheShard,duetoits resemblancetoashardofglass(figure2).TheShardisa309.6meterstallmixed-use development(LBQLtd,2015a),envisionedasa"verticalcity"(para.1)incorporatingluxury apartments,retailspace,officespace,hotels,restaurantsandpublicgalleries(LBQLtd, 2015b).Itcontains25floorsofofficespace,13floorsofluxuryapartmentflats(WSPGlobal Inc.,n.d.),andShangri-Lahotelonfloors33to53(Phillips,n.d.).

TheShardwasdevelopedbySellarPropertyGroup,ledbythefounderIrvineSellar.The glassarchitecturewasdesignedbyRenzoPiano,anItalianstarchitect(LBQLtd,2015b).A majorityofthefundingforconstructionwassecuredfromaconsortiumofQatariinvestors (LBQLtd,2015b),allowingthedevelopmenttosurvivetheglobalfinancialcrisisin2008.It wascompletedin2012,after11yearswhenthefirstplanningapplicationwassubmittedin March2001(figure4)(Phillips,n.d.).

Figure1.LocationoftheShard

Beforeredevelopment

ThesiteoftheShardusedtobeanofficedevelopmentconstructedinthe1970scalledthe SouthwarkTowers(figure3),occupiedbyPricewaterhouseCoopers(PwC)(LBQLtd, 2015b).TheSellarPropertyGrouppurchasedthedevelopmentinNovember1998at£40 million,asaninvestmentratherthanforredevelopment(Sellar,2015).SouthwarkTowers had18,580m2 infloorareaand24storeysinheight(Sellar,2015).

Figure2.TheoutlookoftheShard(Dewhurst,n.d.)

Whenawhitepaperpromotinghigh-densityschemesaroundtransporthubswaspublishedin

1999(figure4)(LBQLtd,2015b),SellarPropertyGroupdecidedtoredevelopthesite.

Figure3.SouthwarkTower(Compton,2004)

Figure4.Timelineofdevelopment

Actorsinvolvedinthedevelopment

Figure5isanagencymodeladaptedfromfunctions,phasesandinteractionsinthe developmentprocessmodelbyDeMagalhaes(1999),indicatingtheprimaryactorswhotook partinthedevelopmentprocessandhowtheyinteractedwitheachother.

Beforethemediationforthedevelopmentstarted,thesitewasoccupiedbyPwC,withthe NetworkRail Infrastructurebeingthefreeholdowner(RadiusDataExchange,n.d.).Aspart ofthemediationprocess,SellarPropertyGroupwithCLSHoldingsplcandCNLtd.(on behalfofthe Halabifamilytrust)purchasedtheleaseholdfromPwC,acquiringSouthwark

Figure5.Agencymodeladaptedfromfunctions,phasesandinteractionsinthedevelopment processmodelbyDeMagalhaes(1999)

Towerfordemolitionanddevelopment(LondonSE1,2006).Thecreditforthepurchasewas providedbyNationwide BuildingSocietyandKaupthingSinger&Friedlander(LondonSE1, 2006).Oncethesitewasacquired,CGMSLtd.andDavisLangdonLLPprovided consultationworkforthedevelopers aspromoters, toreceiveplanningpermissionfrom SouthwarkCouncil,MayorofLondonandDeputyPrimeMinister.

Oncethe applicationreceivedpermission,equityfundwassetupbyfourQatariinvestors, QInvest,QatarNationalBank,QatarIslamicBankandBarwaRealEstate (Thomas,2008).

Theypurchased20%stakesofequityeach,buyingoutthepreviouspartnersofSellar PropertyGroup,CLSHoldingsplcandCNLtd(Halabifamilytrust)(Thomas,2008).The Consortiumalsoprovidedcreditfor constructiontothepromoters,includingArupandWSP InternationalLtd.,carryingoutconsultationworkfordesignandengineering(RadiusData Exchange,n.d.).AgentsKnightFrankLLPandCushman&Wakefieldworkedonthesaleof thespaces(RadiusData Exchange,n.d.).MaceLtd.wasassignedtobetheleading contractor,collaborating withothercontractorsincludingChorusgroupLtd.,BovisLand LeaseLtd.andStend FoundationsLtd.(RadiusDataExchange,n.d.)(WSPGlobalInc.,n.d.). Southwarkcouncilworkedcloselywiththepromotersthroughouttheconstructionprocessin managingandcontrollingthedevelopment,aswellasallocatingsection106funding(Shard ofGlassSection106ProjectBoard,2012).

Oncethedevelopmentwascompleted,theStateofQataracquired95%oftheownership,and theremaining5%isownedbySellarPropertyGroup(Neate,2012).CompaniessuchasDuff &PhelpsandShangri-lahotelgraduallymovedintothedevelopment,establishingowneruseragreementswiththeowners(LBQLtd,2015b).

Factorsshapingthedevelopmentprocessandoutcome

Thefactorsthatshapedthedevelopmentprocessandoutcomeoftheshard iscategorisedinto political,economic,social,technological,environmentalandlegalfactors(figure6).

Thekeyeventsanddecisionsmadethroughouttheprocessandthecurrentformof developmentareanalysedwithregardstofactorsthataffectedeachturningpointinthe developmentprocess(figures7aand7b).

Figure6.Overviewofthefactorsshapingthedevelopmentprocess

Realisation of the development

TheMayorofLondonatthetime,KenLivingston,encouragedhigh-densitytower developments(Harris,2008),whichhelpedtheShardreceivepermissiontobedeveloped. Thewhitepaperpromotinghigh-densitydevelopmentsaroundtransporthubswasalsoakey componentinconceivingtheideaofaverticalcitydevelopment.Moreover, JohnPrescott, DeputyPrimeMinisteratthetimeunderscoredthequalityofthearchitecturaldesignasthe keyfactoringrantingpermissionforthedevelopment(Weaver,2003a).Furthermore,the fundingsecuredfromQatariinvestorswaspivotal inrealisingtheconstructionoftheShard.

Change in investors and securing funding

CreditSuissewaswillingtofinancethe entireconstruction,atotalcostof£1.4billionatthe time(Sellar,2015).However,theywereunabletofinalisetheinvestmentduetotheglobal

Figure7a.Factorsshapingkeyeventsandoutcomeofthedevelopment

economiccrisis(Phillips,n.d.).FourQatariinvestorsreplacedCreditSuisseandagreedto take80%oftheequity,whichwasthenboughtbytheCentralBankofQatar(Phillips,n.d.).

IrvineSellarstated,"thiswasevenbetterthanluck—itwasamiracle"(p.140),stressingthe reducedpressureinleasingquicklyorloweringtherent(Sellar,2015).Thiswaspossibledue totherisingfinancialpowerofMiddleEasterncountrieswhichoftenuseforeigninvestment toexpandtheirpresenceinternationally(Phillips,n.d.).Moreover,thedistinctivearchitecture andthevisionoftheschemeattractedtheQatariinvestors(Phillips,n.d.).

Delays in development due to opposition

AlthoughthedevelopmentschemegainedsupportfromboththePrimeMinisterandMayor ofLondonatthetime,theShardmetoppositionfromheritagegroupssuchasEnglish heritageandSt.Paul'sCathedral,andalsofromtheUKCommissionforArchitectureandthe BuiltEnvironment(CABE)(Sellar,2015).Theyarguedthatthenewdevelopmentwill underminetheviewsofSt.Paul'sCathedralandTowerofLondon (Weaver,2003b),resulting inanextensiveplanningprocesswhichalsocoincidedwiththeglobaleconomiccrisis(LBQ Ltd,2015b).

Avoiding dangers of delays and higher costs

AsthesiteislocatednexttoLondonBridgestationusedby120,000peopleperday,itwas essentialtonotinterferewithtransportactivitieswhilstcarryingoutconstructionworks (Sellar,2015).Furthermore,thearchaeologicalassetsthatexistundergroundofthesiteposed anobstacleintheconstructionprocessofthebasementfloors(Sellar,2015).Toavoid constructiondelays,BuildingInformationManagement(BIM)softwarewasused,toredesign plantrooms.Asaresult,onebasementlevelwasreduced,minimisingthearchaeologicaldig required(Sellar,2015).Moreover,atop-downconstructionmethodwasdeployedforthe first timeintheUK,whichsavedfourmonthsofconstructiontime(LBQLtd,2015b).The methodallowedthefirst 23storeysoftheconcretecoreandthetowerstructuretobebuilt simultaneouslywiththebasementexcavation(LBQLtd,2015b).

Figure7b.Factorsshapingkeyeventsandoutcomeofthedevelopment

Architectural design

Theriversidelocationofthesiteinspiredthearchitect,RenzoPiano,inagreeingtodesignthe Shard(LBQLtd,2015b).Thespire,whichisasteelstructureof66metersinheightand500 tonnesinweight,waspre-assembledtominimisetherisksofworkingatan immenseheight nexttoabusytransporthub(LBQLtd,2015b).Moreover,therisingdemandinsustainable buildingsintheareaisreflectedinthepublicationof Sustainable design and construction by Southwarkcouncilin2009,whichcontainsasectiondedicatedtoenergyuse(Southwark Council,2009).TheSharddemands30%lessenergythanthetypicaltowerbuildingand95% ofitsconstructionmaterialwererecycledmaterials(JonesLangLaSalle IPInc.,2018).The Shardsubsequentlyreceivedaratingof'Excellence'fromBREEAMsustainability assessment(Sellar,2015).Additionally,theevacuationroutesofthedevelopmentwere designedcarefully,consideringtherelativelyrecentmemoryofthe9/11incidentinthe UnitedStatesatthetime(Phillips,n.d.).

Inputsandoutputsofthedevelopment

Theimpactsofthedevelopmentprojectareexaminedusinginput-outputmodelsfigure8a8b and8c,adaptedfromHealey(1992).Thedevelopmentprocessisbrokendownintothree stages:mediation,developmentandconsumption,allowingforadiscussion ofinputsand outputsateverystage.

Mediation

£196millionwasinvestedfromNationwideBuildingSocietyandKaupthingSinger& Friedlander,forthepurchaseoftheoccupationalleasefromPwCatSouthwarkTowers (LondonSE1,2006).Furthermore,planningconsultantsassistedintheapplicationprocess, includingahigh-profilepublicinquiryinresponsetooppositionsfromvariousheritage groups(LBQLtd,2015b).Anotherkeyinputwas thearchitecturaldesignbyRenzoPiano whoreplacedthedesignputforwardbyBroadwayMalyan(Moore,2011),whichwasnoted asoneofthemainreasons"forabuildingthissizetobeacceptable"(Weaver,2003b).These inputsleadtothepositiveoutcomeofthedevelopmentsitetobepurchasedandforplanning permissiontobegranted.Onenegativeoutcomeatthisstagewasthereductioninheight from390metresto310metersfollowingpublicinquiry(Emporis,n.d.)asthisreducedthe potentialrentalincomeandeconomicbenefittolocalareas.

Development

Oneofthepositiveoutcomesofthedevelopmentistheprovisionof597,000ft2ofoffice spaceintheShard,whichcanhaveupto4,622officeworkers(12m2/person)(ShardofGlass Section106ProjectBoard,2012).Furthermore,theShardcreated580non-officejobswhich offeredmorewidelyaccessibleemploymentopportunities,jobsespeciallyinthehospitality andservicesectorssuchaspublicviewingplatformstaffandestatemanagement.(Shardof GlassSection106ProjectBoard,2012).Anotherpositiveoutputofthedevelopmentisthe sustainabledesignofthebuilding(JonesLangLaSalleIPInc.,2018).Moreover,theShard hascontributedtotheregenerationoftheLondonBridgearea,byprovidingfundsfor regenerationprojectsatLondonBridgestation(£25million)andStThomasStreet(£2.2 million)(ShardofGlassSection106ProjectBoard,2012).Onenegativeoutcomewasthe delayindevelopmentduetothefinancialcrisis,requiringmoretimeandresourceinsecuring fundsforconstruction.

Figure8a.Input-OutputmodelofthemediationstageadaptedfromHealy(1992)'s"A consolidatedmodelofthedevelopmentprocess"(p.37)

Consumption

TheShardhasbeencontributingtothelocaleconomybykickstartingtheregenerationofthe areaandreframingtheareaasavibrantbusinessdistrict(JonesLangLaSalleIPInc.,2018). Moreover,£5millionofthesection106fundswerededicatedtotheShardSouthwark VocationalProgramme(SSVP),aprogrammeprovidedatSouthwarkcollegeforlocal residentstoreceivetrainingtoaccessemploymentopportunitiesattheShard(LondonSE1, 2011).TheShardhasfurthercontributedtotheemploymentoflocalresidentsbypartnering withGoodPeople,asocialenterprisespecialisinginprovidingCorporateSocial Responsibilityprogrammes(LBQLtd,2016).Throughthispartnership,447previously unemployedlocalresidentswereabletofindemploymentinthethreeyearsfrom2013to 2016(LBQLtd,2016).DespitethepositiveimpactstheShardhashadincreatingjob opportunitiesforlocalresidents,ithasfailedtoprovideaffordableaccommodation.The developmentonlyprovides10luxuryapartmentswhichremainempty(Schacter,2017).

Figure8b.Input-Outputmodelofthedevelopmentstage

Conclusion:Impactsofthedevelopment

ByusingdifferentmodelsinunderstandingtheextensivedevelopmentprocessoftheShard, itisrevealedthatthedevelopmentwasmadepossiblethroughglobalflowsofcapitaland transnationalcollaborationofactors,aswellasinnovativetechnologicaltoolsfor construction.

ThesuccessfulcompletionoftheShardhasfuelledthemovementtowardsbuildingmore mixed-useandhigh-densitybuildingsaroundtransporthubs,whichpromotesamore sustainableformofurbandevelopmentindensifyingCentralLondon.Moreover,the innovativetechnologiesusedforthedesignengineeringandconstructionoftheShardsetan exampleforfutureconstructionofskyscrapersinLondonandtheUK.Furthermore,the developmentprovidesemploymentopportunitiesandjobtrainingprogrammeswhichserve previouslyunemployedlocalresidents.Despitesuchpositiveimpacts,theSharddidnot

Figure8c.Input-Outputmodeloftheconsumptionstage

contributetoincreasingthenumberof affordablehomesforthelocalcommunity.Moreover, thoughasignificantportionofthesection106fundingwasusedfortheSSVP,majorityof thefundingwereallocatedtoregenerationprojects aroundLondonBridge,callinginto questionwhetherthefundingforincreasingemploymentintheareawassufficient.Although therearesuchconcernsassociatedwiththeShard,thepositiveimpactithashadonthelocal economyiswithoutquestion.Theambitiousdevelopmenthasdemonstratedadistinguished qualityforfutureskyscrapersinLondontofollow.

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Introduction

30 St Mary Axe, known famously as The Gherkin, is a commercial skyscraper in London UK, situated in the City of London. Designed by architects Foster and Partners and constructed by Skanska Construction, the building has become an iconic feature in London’s skyline.

The building has over 500,000 sq. ft with 41 floors and up to 180 metres in height, featuring offices and retail units. Currently managed by CBRE, the building was wholly purchased by the Safragroup in 2014 for £700 million (CBRE, 2013). Concerning the broader London context, the building acts to attract large corporations, businesses and instigate more significant commercial activities benefitting the City and Greater London (Lane, 2004).

Development of the site has led to controversy and acclaim as The Gherkin opens up the City of London to contemporary tallbuildings and helps rebrand the City as a centre for innovation, investment, and quality business activities (Charney, 2007).

Brief history

Site beforehand

The Gherkin was builton the former site for the Baltic Exchange building and the Chamber of Shipping, which was the headquarters of a global marketplace for soft commodities and contracts for shipping freights. The Baltic Exchange had been on the site since its construction in 1903 and was a Grade II listed building.

In 1992, the Provisional IRA detonated a bomb near the Exchange which caused extensive damage to the historic buildings and surrounding structures. The Baltic Exchange bombing occurred right after the general election re-elected John Major form the conservative party as prime minister.

After extensive surveying, English Heritage had deemed that recovering the site was financially unviable and opted to sell the land to Trafalgar House plc under the agreement that the firm develops the site preserving remaining original façades. The buildingwas severely damaged, and the façade was partially destroyed.

Leading up to final development

In 1996 Trafalgar House and Foster and Partners submitted plans for the London Millennium Tower but was dropped due to objections claiming the plan as being completely ‘out-of-scale’ for the area (Glaister, 2020). The 368-metre-tall building with 1.5 million sq. ft of mixed-use space created concern that it could disrupt flight paths for Heathrow and London City Airports as well as look grossly out-ofplace in the City of London district.

Trafalgar

UK

to ineffective leadership and unsustainable investment practices had been acquired by Kværner Construction in 1996 (Ipsen, 1996). 30 St Mary Axe was then negotiated and sold to Swiss Reinsurance in 1997, underthe agreement that Kværner Construction would receive the main construction contract when Swiss Re begins developing the site. Swiss Re again turns to Foster and Partners, allowing Lord Norman Foster to challenge the site once again, submitting schemes, designs, and planning applications in 1999.

Figure 4: Visualisation of the proposed London Millennium Tower (source: Mansfield, 2015)

House, on the brink of bankruptcy and suffering heavy losses

due

Figure 5: Early sketches by Norman Foster on the design of 30 St Mary Axe (source: Mutuli, 2020)

In 2000, the City of London Corporation appealed to deputy prime minister John Prescott to expedite the planning permission for The Gherkin. While the committee was intent on approving the scheme (Maclister and Clark, 2000), there were worries of delays and further reviews as the UK Government had grounds fora judicial review due to the planning application not explicitly containing an environmental impact assessment which is required under EU law (AJ, 2020). Withinthat year John Prescott granted planning permission for The Gherkin (BBC, 2000).

During the construction, in 2000, Kværner Construction was acquired by Skanska which continued the remaining development and building works (Skanska, 2000).

The Gherkin completed construction and building in December 2003 and officially opened in April 2004 welcoming Swiss Re as its first tenant (AJ, 2020).

Figure 6: Model of the Gherkin in London skyline (source: BBC, 2000)

Figure 7: The Gherkin finally on site and the final site plan (source: Bengani, 2015)

Actors Involved

(source: AJ, 2020; SkyscraperNews, 2016)

There are various actors in the development of The Gherkin, with different interests, stakes, and gains. The adapted models below explore the interactions of actors and other relevant stakeholders using frameworks previously developed.

The adapted Drewetts (1973) model in figure 8 explains the significant dynamics of the development, its central importance and role in connecting the other various actors. During The Gherkin development, the developer Swiss Re was also the owner, financer, and end-user, which gave Swiss Re significant decision-making power and interest towards the building and development, which is accuratelydepicted by Drewett’s (1973) model focusing on the developer.

As Gore and Nicholson (1991) explain, a potential limitation for the model is that the model is more restricted to land converted from rural to private residential use than commercial use. The model is also lacking in time references and does not consider the timing ofevents. Nevertheless,Drewett (1973) still argued the centrality of developers which is relevant to the development.

Figure 8: Adapted Drewett (1973) model showcasing the actors in development of 30 St Mary Axe, refer to appendix figure A for original model (source: Healey, 1991)

Using Bryant et al., (1982) model, there is a further exploration of the actors' dynamic connections, looking beyond the primary actors from Drewetts (1973) model and looks at external actors, factors, and effects which further detail the interactions and inputs of the actors. Healey (1992) further explains that Bryant et al. (1982) recognised additional actors involved or relevant in the development process, considering more external factors.

A potential shortcoming of using thismodel is that the original modelwas used for land passing from non-urban to urban use (Bryant et al., 1982). However, the adapted model considers a holistic range ofactors involved and indicates primary and secondary actors realistically reflecting The Gherkin's development. Furthermore, Swiss Re is still placed in a central position in actors' interactions, which accurately depicts Swiss Re as the central figure and the contractors' significance within the development.

Figure 9: Adapted Bryant et al’s., (1982) model showcasing the secondary and main actors in development of The Gherkin, refer to appendix figure B for original model (source: Healey, 1991)

Development process

Event-sequence models will act to organise and visualise the development process (Healey, 1992). There are varying theories and models, each with different focuses, scopes, and significances. The models used are alladapted to fit with The Gherkin's development and may not utilise all elements in a model that is not applicable.Figure 10 looks more at the overarching events, which created the development, while figure 11 looks more in-depth towards the details of the development transpiring.

The following event-sequence model utilises key elements from Goodchild and Munton (1985) model to provide a more comprehensive and accurate depiction of the development process for The Gherkin. As Healey (1991) explains, the Goodchild and Munton (1985) model is dynamic, not limited to only one approach for any site, recognising that each actor's roles can vary significantly depending on the development, and distinguishes crucial stages that the development must pass. Goodchild and Munton (1985) identify three key roles (developer, planner, and landowner) and two fundamental processes (identification and initiation), depicting inputs and outputs of a development process through the roles and actions of the actors.

Figure 10: Adapted model of Goodchild and Munton (1985) with time dimension (source: Healey, 1991)

Figure 11 shows an adapted model of Punter (1985) which depicts a more detailed sequence of events in the development process for The Gherkin. Gore and Nicholson (1991) indicated that the Punter (1985) model is a linear modelling of events specifically for office developments. The Gherkin as a mainly office

Figure 11: Adapted model of Punter (1985) to describe the events of the development process, refer to appendix figure C for original model (source: Gore and Nicholson, 1991)

development is thus more accurately depicted through this model than a more general model such as Ratcliffe (1978). The Punter (1985) model focuses on the planning application and feasibility process of the development, providing alternatives and the possibility of events occurring in parallel or sequence. However, a limitation as Gore and Nicholson (1991) explains is that explicit tracing of various inputs may lead to a model challenging to follow and incomprehensible, causing a trade-off between clarity and depth of information.

PESTEL Analysis

The highest impact indicated through the PESTEL table and figure 12 are the political, legal, and environmentalaspects which draw explicit guidelines the development must adhere. Medium impact elements such as the economic factor present a recovering and suitable economic climate for Swiss Re to conduct the development, i.e., a maturing of circumstances and indicating an attractive and profitable market. Lower impact factors such as demographic growth, market trends, or new technologies have less effect due to its general passive nature or uncertainty in its applicability.

Figure 12: Impact of PESTEL factors diagram

Impacts of the development

Positive impacts

Enhancing space and usage

The Gherkin enhances the previously damaged and unused space at 30 St Mary Axe. The development provides more office and retailspace to boost further commercial and business activities in London. More stimulation and provision of quality space will benefit the economy, the workforce, raising well-being and standards of living, and promoting innovation and business (Bengani, 2015). Moreover, with more mixed-use, the role and purpose of The Gherkin become further enhanced, allowing for the more significant generation of value for the space (Allen, 2014b).

Rebranding of the City, London, and its cityscape

Eventually becoming a famous landmark, Peter Wyne Rees argued that The Gherkin has opened up the public opinion about having tallbuildings in the City (Mutuli, 2020). Associated with the London skyline, the unique design has become a new icon and rebrands the City as a place of innovation, business, and activity (Jones, 2004). The Gherkin helps refresh London's skyline and physically show that London is still willing to compete and flexible enough to stay modern, proving itself as a hub of finance, investment, and entrepreneurship(Massey, 2013).

Figure 13: enhanced office spaces, improving workspaces and quality of space (source: The Workplace Company, 2020; The City, 2020)

Sustainable innovations

The Gherkin utilises a steel diagrid network, free from columns, allowing the building to reduce wind load, incorporate a natural cooling system by drawing outside air through panels in the façade, and utilise more natural lighting (Bengani, 2015). Through the use of shafts to create natural ventilation and assistance for air conditioning and capturing an abundance of naturallighting, The Gherkin reduces electricity consumption and costs (Hilson Moran, 2020). Furthermore, The Gherkin utilises recycled or recyclable materials in its construction, such as its 24,000 exterior glass panels (Bengani, 2015).

Negative impacts

Loss of heritage

There was significant outcry from architecture conservationist groups and the Baltic Exchange when the City of London Corporation was considering The Gherkin's proposal (Arts, 1999). Richard Pollard, Secretary of SAVE British Heritage, said: "We are not convinced that sufficient efforts have been made to restore the Baltic Exchange building. This is a case of genuine national importance" (West, 2000). The Baltic exchange as a Grade II listed building isa building of particularly importance beyond particular interest. Many critics and conservationists argue that the heritage, culture, and history of the Baltic Exchange and other buildings on that site have been completely replaced by The Gherkin (West, 2000).

Controversial architecture and build

Figure 14: The Gherkin’s unique architecture and innovative design allowing for effective use of natural air from outside (sources: Mutuli, 2020; Archinomy, 2011).

The building was the second tallest building in London at its opening. It was met with many controversies during its time because it was ground-breaking to have such a contemporary and oddly shaped building in the very historical, proper, and old City of London financial district (West, 2000). Conservationists, traditionists, and critics argued that the building ruins the area’s historical essence and “desacralise” the nearby St Paul’s Cathedral (Sandhu, 2006). Prince Charles further criticised the building as ’a giant glass shaggy ink cap’, claiming that skyscrapers are utilitarian and commercial, fulfilling no communal purpose (Gibbons, 2006; Spring, 2008). Other critics like Léon Krier see the Gherkin as a “sexual aberration”, proliferating catastrophic hubris symbols (Hetherington, 2006).

Conclusion

The Gherkin has become an instantly recognisable landmark that makes up London’s skyline and is a must-see tourist spot that has changed British public perception on skyscrapers and modernarchitecture (Allen, 2014a). Truly an iconic symbol for London’s cityscape, The Gherkin is currently owned by the Safra Group and is reported by EGI to be once again looking for new owners (Hatcher, 2017).

Under the opportunities and pressures created by PESTEL factors and the devastation of the site beforehand, the 30 St Mary Axe scheme was able to take a bold, creative, and innovative approach to rebrand the City and modern developments. Notably through political and economic climates, The Gherkin, further cements London’s commitment to capitalistic values, remaining competitive, and relevant. Though once a controversial and hotly debated building, The Gherkin has demonstrated a high standard in development through its time, which will impact future high-rise commercial developments in London and the UK.

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Appendix

Figure A: Drewett’s model of decision agents in the land development process (Healey, 1991)

Figure B: Bryant et al’s., model on agents in urban fringe land markets (Healey, 1991)

Figure C: Punter’s (1985) development process: speculative offices (Goreand Nicholson, 1991)