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Born 7 March 1960 Educated King Henry VIII Grammar School, Coventry; BSc (Hons) Estate Management, Bristol Polytechnic; Became MRICS in 1982 1977-79 Cartwright Holt estate agent (now Brian Holt), Coventry 1982-1986 Rugby Securities 1986 Founder director of Chelsfield; director responsible for property acquisitions and disposals 1993 Chelsfield becomes a public company May 2003 Elliott Bernerd and a management team including Phillips, Robin Butler and Nigel Hugill announce their intention to take the company private May 2004 The £900m MBO goes through, with backing from Bank of Scotland and investors including the Reuben brothers. Chelsfield’s £500m investment portfolio to be sold off July 2004 Phillips buys 50% stake in Regal House – Twickenham’s largest office building – for around £20m, as first deal for his proposed new company, Glebe Holdings. Glebe will be owned by Phillips, Bank of Scotland, Elliott Bernerd and some Chelsfield private shareholders September 2004 Phillips to leave Chelsfield to formally launch Glebe Lifestyle Married to second wife, Julie. Four children – Milly, 14; Tiggy, 9; Isabel 3; Harrison, 2. Phillips was a racing cyclist to competition level as a teenager and still enjoys the sport. Also enjoys shooting and skiing |
He has done deals with Margaret Thatcher, Saudi princes and the Far East’s richest woman. He has handled over £2bn worth of deals and managed to keep Elliott Bernerd happy for almost two decades. So it is little surprise that David Phillips is confident about his decision to leave Chelsfield – the company he and Bernerd started from a Portakabin in Marylebone 18 years ago – and go it alone.
The liquidation of Chelsfield’s £500m investment portfolio, run by Phillips, has been on the cards since last year’s announcement by a management team – headed by Bernerd and including Phillips – that Chelsfield would be taken private. Rather than opting for a different role as investment property is sold off to service the debt and the company is refocused as a long-term developer, Phillips feels the time has come to step out of Bernerd’s shadow. At the end of September, Glebe Holdings, Phillips’ own investment company with £100m of initial spending power, will start trading.
Sitting in his Grosvenor Street office, Phillips, who considered leaving Chelsfield several times in the past, says: “I’m looking forward to making all the decisions. There comes a time when you need to do your own thing. It was about doing it at the right time.
Leaving at the right moment
“I’ve always been close to Elliott, and started this business with him, and it’s close to my heart. I was always hoping there would be a natural event that triggered the move.”
The event came 18 months ago, when it became clear he would not have a role in the future Chelsfield. The MBO team of Bernerd, Phillips and fellow directors Robin Butler and Nigel Hugill was summoned to a dinner meeting at Chelsfield’s Brook Street office with Bank of Scotland, which was to fund the take-private move. Phillips, “jet-lagged and tired” from an 11-hour flight back from a holiday in Florida, arrived at the meeting to be shown the business plan by BoS’s head of integrated finance, Peter Cummings. Phillips recalls: “Peter asked if we had any questions and I asked ‘What is it about this business that interests you?’ He said it was the large-scale regeneration projects. I told him ‘I don’t do large-scale regeneration projects’.”
Chelsfield’s focus has “at times been frustrating” for Phillips, who has seen his division’s annual profits of £15m eaten up as working capital for long-term and as yet unrealised projects such as White City and Stratford – a side of the business run by Butler and Hugill.
Cummings recognised this, telling Phillips that BoS would back him if he wanted to set up an investment company of his own. A year and a half later, BoS is putting up a debt-equity package for Glebe, and taking 30% of the business. The rest will be owned by Phillips and some of Chelsfield’s wealthy shareholders – notably Bernerd himself.
“It’s now or never for David and it would have been a shame if it was never,” says Bernerd. “We considered the various options for David, including setting up a subsidiary of Chelsfield, but we felt this was the best solution.”
“It’s a great honour that Elliott wants to back me,” says Phillips. “I could have raised the money elsewhere ten-times over, but I didn’t want or need that.”
Phillips is “extremely confident” that he can turn Glebe’s initial £100m into a £500m portfolio over the next three years. For its first deal, Glebe is to team up with Blackfriars Investments’ Malory Clifford, taking a 50% share in a large Twickenham office building (EG, 10 July). Lease regears and a potential 1.5m sq ft development will allow Phillips to create value — a strategy he has always stuck to. Phillips is also lining up a former school building in Victoria to be converted into apartments and a West End office, which is likely to become his new headquarters.
His long-time adviser and close friend, Mark Shipman of Michael Elliott, credits Phillips with “exemplary timing; he is quick to adapt to changing market conditions”.
Money in experienced hands
And Phillips is unconcerned by the large amounts of money currently chasing property. “Our advantage is that our money is in very experienced hands,” says Phillips, who will be joined at Glebe by his close colleague Richard Goodman and three asset managers. “There isn’t much out there that I haven’t had a go at, and I have a network of people who want to do business with me. I am not concerned about finding deals.”
Understated and often inconspicuous, Phillips has proved an able foil for the charismatic Bernerd. “He’s ideal US vice-president ma-terial,” says Clifford. “But it’s time for him to step up to president.”
Having left school at 17, Phillips realised that a career as a racing cyclist would never prove fruitful enough, although he still likes to get up at 6am to cycle around Richmond Park. “It’s good thinking time, apparently,” according to Peggy Henry, his PA of 18 years.
He wrote to every estate agent in his home town of Coventry and the surrounding cities. After months without success, he started the list again and finally landed a £5 per week job at local agent Cartwright Holt. “It wasn’t rocket science,” he says. “There was this one street where every house was valued at £5,000 – or £5,500 if it had central heating. That was pretty much the extent of valuation.”
After two years, Phillips applied to study estate management, “to progress to the next level”. After being turned down by several polytechnics, Bristol offered him a place if he passed the RICS exams for his best subjects, valuation and planning. “After that, all I studied was valuation and planning; I’d turn up for exams in the other six subjects, do the best I could for the compulsory first 30 mins, get up and leave to study. I got 90% in valuation and planning and, to my amazement, passed almost all the other subjects.”
He spent the final summer vacation of 1981 touring America. It was the beginning of a love affair with the States for Phillips, which eventually saw him redevelop a Manhattan hotel, secure Ralph Lauren as a loyal tenant and meet his second wife. “I came back for my final year at Bristol and decided that unless I got offered a good job in London I was going to head to New York and take my chances.”
Chasing a job at Rugby
It was then that Rugby Estates chairman David Tye, another ex-Bristol student, came in search of an assistant at what was then Hillsdown subsidiary Rugby Securities. “But after a few weeks I hadn’t heard from David so I started chasing him. When I finally got him on the phone I said, ‘Look David, you sat in front of me six weeks ago and said that you can see a property one day and exchange the next, so make your mind up about me’. I guess it was what he needed to hear.”
From 1982 to 1986, he learned everything he could from Tye, who says “David never had to be told something twice”, and became the youngest director of a Hillsdown company along the way. But after four years, Phillips’ Thatcherite ambition took over. “I wanted to work for and learn from one of the great property guys.” For Phillips, that meant John Ritblat, Godfrey Bradman, Gerald Ronson or Elliott Bernerd.
Advised against contacting Ronson or Bradman, and realising that Ritblat’s already-burgeoning property empire would probably have swallowed him up, the 26-year-old Phillips decided it would be Bernerd who would back him in his new venture. There was one problem: he had never met the man.
The route to an introduction came in the form of now Franc Warwick partner Dennis Warwick. Warwick was then at Michael Laurie, which Bernerd ran. Phillips recalls: “None of the deals I’d done interested him.” Bernerd’s memory of the meeting is more favourable: “I felt David knew what he was talking about. He was much the same as he is now: a straightforward person.” Later, as Phillips says, he and Bernerd “just clicked”.
Over the next six months, the pair toyed with the idea of setting up an investment company. “It got to the stage where we had to make a decision. One day, Elliott looked at me and said, ‘It’s like a black hole — we jump in and whatever comes out the other side comes out. If you want to jump, let’s jump because it’s more of a risk for you than it is for me’. So we jumped.”
Chelsfield began in May 1986. “We started with only about £200,000 to pay bills and have a bit of working capital,” says Phillips.
Despite having little direct contact in the first year with Bernerd, who was still busy running Michael Laurie, Phillips’ purchase of a building on Great Newport Street, WC2, for £1.35m provided the seed capital that would allow Chelsfield to survive and flourish. Phillips exchanged, paying a mere 5% deposit, and sold it for £3m on the turn. “We made £1.65m on a £67,500 outlay. Finally we had some real money in the bank.”
The next year, Bernerd called time on Michael Laurie and decided Chelsfield was going to be his main business, bringing in Butler, his right-hand-man at Morgan Grenfell (which had bought Michael Laurie), and Michael Brook, managing director of Bernerd’s former property firm Stockley.
Not what Phillips wanted
“It wasn’t what I wanted,” says Phillips. “I wanted more independence – but I thought ‘you’re either inside or you’re outside’. It was the right decision because the late 1980s were crazy property trading days.”
During those “crazy days” Chelsfield grew to a true net worth of about £100m, before it all went wrong with the £500m acquisition of Laing Properties – in a jv with P&O – at the top of the market in 1990. Bernerd was forced to sell off equity to his high-net-worth associates and finally to float Chelsfield in 1993. The restructuring worked, and the company survived and grew as a quoted mid-cap. “Going private again this year should not have been a surprise to people,” says Phillips. “It was never Elliott’s choice to be a public company.”
Over at Glebe, Phillips intends to stick to his well-trodden path. “One thing I’ve learned over the years from Elliott and from Thatcher is that things are possible that other people think are not. I’ve always tried a bit harder and realised that taking the more difficult route can get you to the better spot.”
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Scattered on David Phillips’ desk are dozens of puppets, models and memorabilia in adoration of former prime minister Margaret Thatcher. But one item, perched on a corner table between portraits of his wife and children, shows that this is more than just admiration from a fan who grew up in business with Thatcher in power: a professional black-and-white photograph of Thatcher and husband Denis standing alongside Phillips and the other influence on his business life, Elliott Bernerd. Phillips met his idol several times in 1996 after buying the Chesham Place Estate in Belgravia, SW1, and working up plans for the scheme. Thatcher, by then writing books and running her Thatcher Foundation charity, was an office tenant there. “My working life grew up under Thatcher,” he says. “She changed the attitude of the British people, whether you like her or not, and got everyone off their backsides.” Phillips first met her when Chelsfield wanted to move her as part of its plans to redevelop the estate into a high-end residential scheme. “I was apprehensive. I’ve met some amazing people but had never met anyone like her. She has the amazing skill of being very interesting and very interested and making you feel comfortable.” When she left the building, Thatcher invited Phillips and Bernerd over for a drink with her and Denis, to thank them for the way they had handled the move. “She was very kind,” he recalls, nodding at the picture. “She arranged for the photographer. It was a great privilege.” |
