Last year, Rebecca Worthington shocked the property industry when she left regeneration giant Quintain to strike out on her own. She tells Sophia Furber why she now wants to bring her expertise to the post-crash distressed asset market.
“I remember once in the early 2000s I was on a plane travelling to MIPIM and someone handed me an article that was called something like ‘Only bastards do well in business’. There was this whole cultural thing about being rough and aggressive and treading on anyone who got in your way. That was a culture that was allowed to thrive.”
So says Rebecca Worthington, the former deputy chief executive of Quintain who shocked the industry last summer by leaving the regeneration giant just after her promotion from the role of chief financial officer to strike out on her own.
The 41-year-old insists that the time to go solo was, and still is, ripe – the crash has helped to stamp out at least some of the “bastards” associated with the world of commerce a decade ago: “One of the great things about this recession is that it has forced people to remember that behaving with integrity and honour really matters,” she says, sitting in her new office just off Oxford Street, London. “And that trust and relationships are critical to business.”
This all sounds well and good, but whether Worthington’s new venture, Lodestone Capital, which is to invest in and advise on distressed real estate, will thrive in what she considers to be a new, post-recession market remains to be seen.
Quitting Quintain
Worthington says her decision to leave Quintain last June was just something she “had to do” and is adamant there was no acrimony surrounding her departure. “In my heart of hearts I am an ambitious person and I knew that I had to take the next step in my career. I decided I wanted to walk away from Quintain with my head held high, knowing that everything was well managed. And that’s what I have done.”
Her former role, on top of more than a decade of experience at the regeneration specialist, should stand her in good stead for the new venture. It will focus on the distressed end of the market in areas where she and her three colleagues have niche expertise, including healthcare and student accommodation.
Working in the property market through the bleak post-crash years has been a seminal experience, she says, and one which inspired both her decision to go it alone and the type of business she has set up.
Distressed properties and underwater loans are often thought of as the scavenging ground for private equity companies looking to swoop on high-return, high-leverage deals. But Worthington takes a rather different view, seeing it primarily as an opportunity to solve problems and to bring portfolios out of distress.
What next?
Worthington’s new venture will help banks to make sense of their distressed real estate exposures and get their balance sheets into better shape. These are challenging times for banks as they try to find ways to rationalise their real estate portfolios, making decisions about which assets to shed and when, and which to hold on to and develop.
One area Lodestone is looking at is working with banks to improve their capital ratios against real estate assets. Slotting, a set of FSA regulations that mean banks must hold progressively more capital against assets the higher they are on the risk curve, has been seen by many in real estate as yet another block to flows of funding returning to the market.
Worthington explains that one way Lodestone’s expertise can help banks is by asset-managing portfolios and individual properties so they sit in a lower category of risk under the slotting regulations, perhaps by renegotiating a lease, renewing tenants or renovating the building. Some practical “de-risking” at the level of the individual building or project means that the bank does not need to hold as much capital on its balance sheet.
But when can we expect to see the first deals from Lodestone?
“Well, that is literally the million dollar question,” says Worthington. “We are looking at very challenging transactions, so it is going to take some time for anything to get over the line. And everything takes longer in this market. It could be two months, six months. What I can say is that a lot more is going to get unlocked in 2013, perhaps with banks selling off their asset management businesses.”
She adds that the relationships, integrity and honour she referred to at the start of the interview will be key in making a success of the venture, despite the challenging market: “Relationships matter more than they have ever done in the property world, especially when it comes to the banks. The network I have now is one that I have been building over the past 15 years. If I tried to start building those relationships from scratch today, it would do nothing for me.”
Lessons learned
Worthington is convinced she is on to the secret to successful business post-crash. But what about the rest of the industry? Have any lessons been learned after the 2008 banking disaster?
“The question is, how long are people’s memories?” Worthington says. “It is also a generational thing. I don’t think I will ever forget what it was like working in the aftermath of the crash, but it remains to be seen how the next generation in property and finance will behave. Hopefully some lessons will be learned and people will manage banking positions better, but life goes in cycles. People will always lend too much.”
Sensible risk
For someone so ready to see an opportunity in such a tough part of the market, Worthington is surprisingly reluctant to describe herself as an entrepreneur. By her own admission, she is not a risk-taker, a characteristic she associates with entrepreneurship. But neither is she risk-averse.
“I like to understand the risks properly and then make calculated decisions. That’s how I operate.”
Fittingly, this philosophy is at the heart of Worthington’s new venture. Risk, but approached sensibly.
Worthington thinks small to make a big impact
Rebecca Worthington read philosophy and economics at Nottingham University before qualifying as an accountant with PwC in 1997.
She had a brief spell as financial controller with packaging firm Britton Group before joining Quintain Estates in 1998, where she became finance director three years later.
By 2012, she had risen to become deputy chief executive and was at the helm of Quintain’s £5bn Greenwich Peninsula regeneration project, a major scheme that will include up to 9,800 homes and 350,000 sq ft of retail space.
Her 14-year career in property has included working with direct real estate and on structuring and finance. She was responsible for taking Quintain through a major refinancing which saw her negotiate a £715m club facility with 10 banks, and a public equity raising in 2009 which netted the company £192m.
She has a particular interest in alternative real estate assets, such as care homes for older people and primary health properties, after gaining exposure to the sector during her time at Quintain.
Worthington says that she has made a conscious decision in her career to work for smaller companies because this offers more opportunity to “leave an impact”.
She has put in place a three-strong team at Lodestone Capital, comprising Andrew Ovey and Dominic Williamson (both of whom have investment banking backgrounds) and former Quintain head of corporate business Emma Brookes.
sophia.furber@estatesgazette.com
