Where were you when Lehman Brothers collapsed, 10 years ago this week?
That’s not the only question we ask this week of several of the best-known figures caught in the eye of the storm – after all, it’s their experiences in the weeks before and after that are most revealing – but it’s worth a moment’s reflection.
For Johnny Sandelson it triggered a feeling of shame. Blackstone’s Ken Caplan says it meant “failure was not an option” on the largest deal in the company’s history. “What doesn’t break you makes you stronger,” says M7’s Richard Croft. He should know; it nearly broke him. (Spoiler alert: in our coverage words like crazy, bonkers and hopium feature. A lot.)
Each of them talks about the likelihood of another crash. Unlike then-prime minister Gordon Brown, who feels markets today are “sleepwalking into the next crisis”, they don’t see anything so significant on the horizon. But they are alive to the dangers – Aubrey Adams, former head of property at RBS’s Global Restructuring Group, warns of overvaluations, for instance.
When we come to look back on the 20th anniversary of the crash, might we look back at events around the 10th anniversary as being significant?
With populist, often nationalist, politicians on the rise, Brexit on the horizon and the prospect of international cooperation on financial security weakening, it’s not impossible.
And however these events play out – over what will be several years, not months – it may be that we look back on three deals around this 10th anniversary as a critical juncture. And hopefully a positive one.
Not only does Network Rail’s decision to sell its commercial real estate portfolio to Telereal Trillium and Blackstone for £1.46bn mark one of the UK’s largest ever real estate deals, it could also mark a turning point in how the industry engages with the public.
Goldman Sachs and Wellcome Trust had withdrawn from bidding, in part as a result of public perception and reputational risk. The Guardians of the Arches has been vocal in its opposition to the sale, but the campaign group appears to have softened its stance a little after seeing Telereal and Blackstone’s open letter to Network Rail tenants pledging a “tenants first” approach. Of course, the pair will need to demonstrate that its Tenants’ Charter is meaningful, but it’s a promising start.
Don’t underestimate the significance of two other deals this week either. Lone Star has pulled the sale of Quintain to a Delancey-led consortium including Qatari Diar, Oxford Properties and APG. Given that bidders would not meet the £2.25bn asking price, some will see it as a blow to the PRS sector. Yet in turning down the £2.1bn put on the table, Lone Star’s decision will legitimately be argued by its executives as a vote of confidence in UK PRS.
It’s a similar story at Almacantar, which at the start of the year instructed Rothschild to consider bringing a new shareholder into the business to help fund a significant investment drive in London. Having returned significant capital to the company’s existing owners since – including cornerstone investor Exor, the investment arm of Italy’s Agnelli family and others – the backers have decided to go again.
They are putting an additional £1bn into the London market through Almacantar as it seeks bigger projects in the capital. Again some eyebrows will rise, but first and foremost it’s a sign of confidence in the management and – notably – the market.
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