From Crystal Stalls And Bob Marley T-Shirts To A £1.25B Sale: Camden Market Has Come A Long Way
If you visited London as a teenager or in your early 20s in the past 35 years, the chances are you visited the area known as Camden Market: It is the fourth-most-visited tourist attraction in London, with visitors drawn to the collection of stalls selling everything from street food to antiques and bric-a-brac, to healing crystals and T-shirts with Bob Marley smoking a joint on them.
Still, in spite of this popularity, it prompted a double take when React News reported that owner Teddy Sagi had appointed Rothschild to advise on the potential sale of his Camden Market holdings for as much as £1.25B.
Behind the potential sale of the scheme is an incredible real estate tale, involving an area growing from humble beginnings to become one of the most potentially valuable sites in London, via multiple owners. It is a tale that takes in the evolution of London as a city, and encapsulates the past 20 years of the UK capital’s real estate highs and lows.
The area referred to as Camden Market is actually made up of six separate markets, and over the past five years Israeli billionaire Sagi’s LabTech company has bought four of them, as well as surrounding sites and assets.
The original market was set up in 1974 by childhood friends and then-business partners Bill Fulford and Peter Wheeler. In early 1972 they bought what was a run-down timber yard belonging to T.E. Dingwalls, and transformed the site into what is now Camden Lock Market, alongside Regent’s Canal. At first the market only ran on Sundays and had just 16 stalls — today it has almost 300. Singer and famous Camden resident Amy Winehouse worked on a stall there as teenagers.
Sagi has pieced together his Camden estate through multiple deals. In March 2014 he paid £400M for a scheme called Stables Market, which included 700 market stalls, small retail sites and food and beverage outlets, as well as a development site called Hawley Wharf, which would go on to form the most valuable element of the scheme.
He bought Stables Market from a consortium including Israeli investor Bebo Kobo, restaurateur Richard Caring and property company Chelsfield. The JV had wanted to develop Hawley Wharf itself, but borrowed the money to buy the scheme from Anglo Irish Bank. When the bank collapsed into insolvency in 2009 they were forced to sell to repay the loan, in one of London’s highest-profile distressed sales.
Sagi bought the original Camden Lock Market from Brockton Capital in October 2014 for about £70M. Private equity firm Brockton had bought the market from the original founders for £30M in 2012. It was one of the edgier deals undertaken in London in recent years. Brockton had to collect the rent from traders in cash every week, as had been normal practice since its inception in the 1970s.
Understandably a bit wary, the company enquired whether the people collecting the rent had ever been robbed, since at the end of their rounds they would be carrying around £10K in cash. Told that it never happened, Brockton then enquired whether a system was in place to check whether the people collecting the rent weren’t skimming any for themselves. There wasn’t. Suffice to say, today the rent is not collected in cash.
Sagi added to these holdings with deals for other markets, like that on Union Street and Camden Wharf, office buildings like the 65K SF Interchange building, and other individual retail units.
These assets were bundled together with some of Sagi’s technology companies — he made his original fortune on online gambling technology — and in late 2014 the combined business floated as Market Tech Holdings. The initial public offering raised £100M and valued the business at £750M. That valuation increased when the company raised a £900M loan from AIG secured against its investment and development assets.
But its time as a listed company was short-lived — Sagi took the company private again in mid-2017, as it had persistently traded at a discount to its net asset value. That deal valued the company at £895M, although its final set of accounts said its property portfolio was valued at £1.1B.
Those accounts, for the six months to September 2016, also give an insight into what is now potentially up for sale, though the numbers will not be 100% accurate as almost three years have since passed.
Overall, the estate covers 590K SF of existing space over 20 acres, and at that point brought in £35M of rent. That floor space will almost double when Hawley Wharf is built.
Market Tech said the business had an estimated rental value of £84M, giving it an equivalent yield of 5.2%. To justify the higher ERV, Market Tech said its average retail rent was £96/SF, compared to between £260/SF and £1,500/SF for the rest of central London retail. It talked about improving rents through asset management while retaining the unique character of the markets it owned — the tricky balance which owners of beloved schemes such as Camden across the world are facing.
In terms of office rents, prices for the best offices in Camden have almost doubled in the past decade, from £22.50/SF in 2009 to £57.50, albeit that growth has slowed more recently. Its top rents are on a par with the City of London, with occupiers drawn by the hip vibe of the markets and easy access to other parts of London via the Tube.
The Stables Market scheme bought for £400M is the jewel in the crown. The existing scheme totals 222K SF and in 2016 produced rent of £16M a year. About 180K SF of the scheme comprised almost 500 market stalls, while 43K SF is a coworking scheme with 900 desks, operated by Sagi’s Labs brand, which also has a facility in Holborn. In 2016 it was valued at £287M.
The Hawley Wharf development scheme, the site of a former market where there was a major fire in 2008, was in 2016 valued at £310M, but Market Tech said it is expected to be worth more than £600M when it completes, which is scheduled for this autumn. It will comprise 580K SF spanning a new market, including the UK’s biggest farmers market, 150 independent and branded stores, more than 60 new places to eat, 195 apartments and 60K SF of Labs coworking space.
Camden Lock Market in 2016 was valued at £120M, with the 296 units bringing in £5.2M of rent, but an estimated rental value of £14M.
LabTech is also planning on converting one of its existing markets at Buck Street to a shipping container scheme, as well as executing all of the above development and asset management plans.
Of course, there is no guarantee Sagi and LabTech will choose to sell. The fact that Sagi floated and reprivatised Market Tech within the space of three years shows he is willing to change his mind. He also built up a 25% stake in Austrian residential company Conwert with a view to taking it private but decided against a deal and sold his shares just three months later, at a tidy profit.
Whatever he chooses, Sagi has turned the disparate ownership of thousands of market stalls into one of London’s most potentially valuable estates.