Castlestone strategy
by Sean Lask
1. EXCITING, ENGAGING AND STIMULATING WORK
1.1. Leverage existing skills and strengths eg lending, equities
2. Growth topics and Global Megatrends: climate change and sustainable development (green infrastructure, mixed use regeneration, onshore and offshore windfarms, EV charging) affordable housing shortage, growth in single person households and loneliness, growth of cities, growth in AI
2.1. Asset Managing
2.2. HOW? Sectoral and geographical diversification. Sectoral - lending, Urban logistics, warehouses, data centres, healthcare, mixed use regeneration, Life Sciences, wind farms. Geographic - divest from London eg north, global - European/Africa/Middle East
2.3. DIIRECT AND INDIRECT INVESTMENT: Direct - acquiring properties and jv's with partners. Indirect - REITS and equities
3. FUTURE DIRECTION: Maintain existing strategy i.e Asset Managing existing portfolio and Future Growth strategy. C share class can apply to both. Is it a dual strategy or a choice of one or the other ? How much time will H & S allocate ?
3.1. Asset managing existing portfolio. Define what this means - Safeguarding ? Future proofing ? Doing the bare minimum ? SWOT analysis of existing portfolio
3.2. Growth strategy aligned to new C share class to incentivize S & H
4. Setting strategy. Do we need external help ? Non exec Director, Advisory Board, Consultancy advice eg Andrew Baum
5. Sean's history with Castlestone. Joined 1996. Salary until 2021 £80,000 pa. Inadequate compensation. No company car. Pension £6,000 pa. Insignificant bonuses. Generated trading profits excess £1.2m. £386,000 pa current rent roll my deals. 40% of rent roll. Substantial cash built up in the business due to modest compensation which Howard is benefitting from.
5.1. What I have already compromised on ?
5.2. Red line for me. Needs to be a service payment in recognition of past efforts. 20% extra shareholding doesn't wash as it's about cash in hand now and shareholding is theoretical
6. STRENGTHS: Affiordable rents, sustainable locations near transport, good unit size mix
7. WEAKNESSES:Old stock energy inefficient, high capex needed, risk of obsolescence, large proportion above retail
8. THREATS: Renters Rights Bill, EPC minimum 'C" from 2030, more regulation, more competition from PRS, tenants demanding higher standards
9. OPPORTUNITIES: Focus on EPC and ESG, more tenant engagement, net zero certification, bike racks, rebranding as ESG, new initiatives "Warmer Homes" "Low Carbon Accelerators", SMART buildings/flats
10. Inheritance and tax planning
10.1. Incentives to grow company related to share structure and inheritance
10.2. As it currently stands I earn 60%x60% ie 36% of every £1 in value added. Howard earns 60% x 40% of every £1 added
10.3. Discussed improving tax efficiency for us by creating a C share class sitting outside inheritance tax. How to divide up uplift in value of C shares ?
11. Asset managing existing. What does this entail ? SWOT ANALYSIS:
