Property’s very own Back to the Future trilogy aired this week, with gripping yet familiar scenes playing out in auction rooms, boardrooms and dining rooms across the industry.
With apologies to filmmakers everywhere, here’s a plot summary:
EPISODE 1: Setting, the Park Lane Hotel, W1. A cast of hundreds. On the stage the auctioneer wraps up a busy session, visibly pleased with his day’s work. After all, he has just achieved his best success rate under the hammer in three years. More than 80% of lots have been sold, raising £40m. A pan across the audience reveals visible disappointment on the faces of some present. Strong bidding has left many would-be buyers empty-handed.
EPISODE 2: Setting, a non-descript office somewhere in London. An untidy desk, strewn with coffee cups, chewed biros and magazines. A slightly disheveled, tired-looking man is scribbling into a reporter’s notebook, a phone cocked to one ear. “Debt is a good thing,” says a voice on the other end of the line. “Debt has been taboo in the property world for the last few years, but property companies do need to be geared. There is no point in a company like ours having an LTV of 20% and delivering a return of only 3%.”
EPISODE 3: Setting, a crowded black-tie dinner. A disheveled blonde steps up to the microphone. The applause dies down with all eyes moving from the well-lit dinosaur in the middle of the room to the speaker at the back. “In the immortal words of Chris Huhne to Vicky Pryce,” he tells the audience, “there are three points I want to get across to you tonight.” The laughter subsides and our speaker precedes to run through a well-rehearsed case for greater government support for addressing London’s chronic housing needs.
Like the original series, this Back to the Future trilogy will undoubtedly play well. Later in Episode 1 its star, Allsops’ George Walker, talks of the “real depth of appetite” for property among bidders in the room, evidenced by a return to trading in the market. Recently purchased private treaty properties are being brought to auction to turn a profit, he says. It’s an upbeat and encouraging final act that suggests the current market malaise may be easing.
Our star of Episode 2 is St Modwen chief executive Bill Oliver. His gearing has come down from 73% to 71% but he clearly has no plans to eliminate debt from his business model. This episode follows neatly on from Episode 1: with greater availability of debt comes greater market activity, as the star of another long-running film franchise was once nearly told. (Episode 2 also contains the trilogy’s most dramatic plot twist, when US private equity giant Blackstone shelves plans to sell Chiswick Park in west London. Instead it decides to refinance the park. No wonder the episode begins with dramatic music and a voiceover that kicks off with: “The financing markets had been quiet. Too damn quiet. All it was going to take was a maverick to step up”)
Episode 3 is much enjoyed for the comic turn by its star, Boris Johnson. But it uses comedy to make a serious point: London faces a chronic housing shortage. Between gags the mayor (the flawed hero) urges ministers (the redeemable bad guys) to give the £1.3bn of stamp duty raised annually back to London. He tells them then he would use the money to build the 1m homes needed in the next 25 years.
Much of the dialogue is classic Back to the Future fare – especially our hero’s impassioned plea for the removal of borrowing limits on town halls and his call to transfer surplus government land to City Hall – but some was new.
And with so many loose threads yet to be tied up, Episode 3 hints at a further sequel. Will the bad guys be redeemed or will our hero move on to fight other battles?
Damian.Wild@estatesgazette.com
