Murray's property goal

TWO days after pulling off one of the largest property deals of his life, David Murray reflects on how easy it is to spend £120m. He turns to Ian Tudhope, the urbane Aberdonian lawyer who runs the property interests of Murray International, and asks how long it took to buy Plumtree Court, a modern eight-storey block in the City of London.

But before Tudhope can answer, Murray interjects: "Twenty minutes. Ian came to me with a sheet of A4, we sat down and he explained that we had an opportunity to buy a prime site in London. We had a check sheet and we went through it, beginning with what could go wrong, what is the worst-case scenario. Can we live with that? Yes we could. Would the bank back us? Yes they would. So we took it from there, deal done."

This is the way Murray's property arm Premier Property Group does business. In the last two years they have bought and sold more than 650m worth of property, discreetly becoming one of Scotland's biggest players.

Murray's public image is that of the chairman of Rangers FC, a multi-millionaire celebrity whose fabulous wealth has allowed him to invest in vineyards, response handling, a call centre and venture capital. But Murray International Holdings, his metals-to-property group, is one of Scotland's biggest private firms and it is property that is now driving the group.

The group is shortly expected to report profits of 50m on sales of 550m for the year to January 2006 - a big leap for a firm that little over five years ago had a turnover of just 100m. Property is a growing part of the business.

And in fact, it was property that laid the foundations for the 54-year-old's empire - he bought and sold properties for a quick buck at the tender age of 18. In the early 1970s Murray formed his metals business, distributing structural steel. But it wasn't until this took a downturn in the early 1980s, that he diversified into commercial property.

From small beginnings in a market beset by the early 1990s recession, PPG has grown to become an established player in the Scottish and UK markets with interests in retail, office and industrial spaces, and brief inroads into the residential market.

Now the firm owns shopping centres and office buildings throughout the UK from the Princes Mall in Edinburgh - for which Murray paid 37m and is currently revamping at a cost of 12m - to a 50,000sq ft office development in Southampton.

There is a 70m speculative development in Bothwell Street, Glasgow; a 300-acre industrial park in West Yorkshire, and now the small matter of redeveloping Plumtree Court when its present tenant - PricewaterhouseCoopers - leaves in three years' time. Murray maintains it will be finished before the Olympics.

"Imagine trying to get a tradesman in London around that time," he quips. "It will be nigh on impossible."

PPG's net assets have risen more than threefold since January 2000 to 55m. The firm's forthcoming accounts will show that pre-tax profits for the year to January have climbed from 9.1m to 10.2m on turnover up from 43.8m to 51.9m.

The firm is primarily debt-driven. Bank of Scotland is the principal lender and has a lot of equity in PPG's schemes. The relationship between Murray and the bank stretches back 30 years and is core to his business.

His long-time friend Gavin Masterton, a former managing director of the bank, says that he remembered the young David Murray who came into his office in Edinburgh 25 years ago. "I remember his keenness and energy. He was always up for a deal. In the end we tossed a coin for the money. Of course, he won," he said.

Murray also enjoys a fruitful relationship with Peter Cummings, head of corporate banking at BoS, who has funded some of the biggest tycoons in Britain, including Sir Tom Hunter and Sir Philip Green.

"The bank trusts us to deliver," says Murray, "and the bank knows with us there are no surprises. We have been dealing with them on this basis since we started.

"Property is never easy, never easy. But what we have is experience. This is a major Scottish success story. We beat a number of very large plcs for Plumtree Court and the reason we did that is because the banks know us, they trust us and they know we will deliver. To do the whole deal in under a month shows that we have a professional track record and credibility. If we make an offer, it is going to happen."

Last year Murray sold Murray International Metals for 120m to a US private equity group. But he still has another metals division that is worth 250m more than twice the value of MIM.

PPG's headquarters are now in Edinburgh's salubrious Charlotte Square, the firm also has offices in London's West End and Leeds, which last year contributed 3.5m worth of profit to the group.

But Murray complains that it operates in the shadow of Rangers, which accounts for 20% of his time but 99% of the publicity surrounding him. Last season was a watershed for the club, as it made the last 16 in the European Champions League, the first Scottish club to do so. But now he has hinted at selling it.

He has invested so much in Rangers he won't talk about the extent of his commitment. But he knows that pursuing a dream has proved an expensive hobby. The money accrued by the recent European run helped plug some of the deep holes appearing in the club's accounts, but does not provide lasting financial security. Last year he underwrote a 50m rights issue that switched the bulk of Rangers' debt to his holding company. Earlier this year he did a merchandising deal with JJB Sports that effectively wiped out the club's debt. He appointed a new manager, Frenchman Paul Le Guen, whom he hopes will bring more Champions League glory - and further revenue - to Rangers.

His recent revelations about offloading the club he bought in 1988 for 6m prompted another flurry of headlines and a bundle of press cuttings on his desk reveals the degree of interest his comments receive.

"I will sell one day, I can't go on forever," he admits. "Interestingly, the story has flushed out a few [potential buyers] from the woodwork." But it is clear he will only sell the club to someone who can match his ambition and drive.

There are also plans for a supercasino in Scotland, which could go to Ibrox. It is down to a shortlist of two alongside the Millennium Dome in London, but Murray refuses to discuss the project saying merely that it "could go either way".

But it is the more routine deals that drive Murray's business. PPG operates through freshening up property, active management and selling on.

In 2004 it bought King's Reach Tower in London, home of publisher IPC, for 40.5m, refurbished it, then sold it for 49.5m. "You should never get too emotionally attached to a property," says Murray. "Banks want to see some discreet churning."

Later this year PPG will start work on phase one of a five year 50m investment in Normanton, West Yorkshire where Murray says they will build some of Europe's largest distribution sheds.

Chris Macfarlane, partner at property agency King Sturge in Edinburgh, says PPG is in "the top tier" of Scottish property companies. "They are taken seriously in the market and the fact that they are doing business not just in Scotland but down south bodes well for their development.

"The focus has gone back to development rather than trading - they started out as a developer, became trader-investors and now have gone back to their roots."

In many ways it is the speed of the decision-making that is PPG's biggest strength. Deals like Plumtree Court or the Clydesdale Bank Plaza in central Edinburgh - Murray paid 53m for it in January - are largely opportunistic buys.

One of the gems in Murray's property portfolio is 600 prime acres of green belt land by the bypass in the west of Edinburgh, which he says will be developed in time. The long term is something he clearly has his eye on, but does he feel the market is running out of steam?

"The commercial market is like the housing market, it is driven by the amount of cash available. Today cash is more accessible whether it be to an individual or a company. Banks are much more amenable to raise money. This has helped create the UK's dynamic property sector. The deal we have just done in London was not as difficult to put together as it might have been ten years ago."

He gives the impression that his business dealings do not get all the credit they deserve. Holding up a spreadsheet of the last five years accounts he says: "I cannot think of another Scottish private company as big and diverse as ours that has seen such growth from a standing start."

Tudhope takes a more measured view. "There is still a bit to go in this market yet," he says. "But we have a full generation of property players and advisers who have only been involved in the upswing and have not yet experienced a recession. We always make sure we cover the downside because it wasn't a lot of fun in the early 90s. You have to look at the downside because it will happen again."

As Tudhope pontificates on the future, Murray takes a call from an employee - there is a property Murray wants him to check out. Towards the end of the conversation Murray asks how his team are managing. He tells him: "I want you to provide leadership. Remember it's one person, down to two, down to four, they report to you."

This is the Murray way. A small chain of command, experience, a good relationship with the bank - and, of course, the ability to make things happen.