A veteran commercial investor who still gets a buzz from bidding tells Julia Cahill why he keeps going back to the auction room
At 70, private investor David Pearl still gets excited about auctions – and twitchy when there are no sales on.
“The first time I bought at auction my heart was pounding,” says Pearl, who is chief executive and chairman of Structadene, one of the most active and successful private property companies in the UK.
His £1.2bn portfolio, comprising 1,200 properties with 6,000 tenancies is heavily weighted towards London and the South East but includes assets across the UK.
Pearl estimates that around 120 of those properties, valued at around £60m, have come through auction. “I remember each and every one,” he says and starts reaching for the particulars he keeps in a set of alphabetically labelled files on the bookcase in his Islington office. “I enjoy looking back. I like to see how things have moved on,” he says.
For the lad who grew up in London’s Stamford Hill and left school at 15 to pack cardigans into boxes, buying at auction in a rising market in the mid-1960s gave Pearl his big break. He was 18 when he and a partner set up estate agency Pearl & Coutts. After a few years he went solo as an investor, buying residential properties in Hackney and Islington at auction.
He then diversified into commercial property, focusing on central London. For the next 30 years he bought heavily and borrowed heavily. Before 2008, he was buying “six properties in the morning and six in the afternoon” in Soho and Fitzrovia.
But when the downturn hit, he was 75% geared and his main bank at the time, Anglo Irish, suddenly wanted almost £1bn of debt repaid.
For five years after that, Pearl sold off assets. By the end of that process, Structadene had money in the bank and a much healthier gearing of 45%. And now Pearl is buying again.
Buying at auction is an “instinctive” process for him. “We do a lot of homework in advance, but the thing you do all the work on is the same thing everyone else really wants too. So if something else doesn’t sell in the room and I can get it cheaper after the auction, I will do that. I will work out the pros and cons within four or five seconds.”
He bought 10 lots at the last Allsop sale before the summer break and three at Acuitus. “You see the opportunity to buy high-quality investments let to good covenants outside London. Rather than putting your money on deposit for 0.5%, you buy something for a 10% yield. What can go wrong?”
He loves the immediacy of buying at auction. “There’s no faffing about with solicitors driving you mad,” he says. And he likes to watch the room. “It’s important to sit there from the beginning to the end of the auction. You need to be there to observe what’s going on. It’s about information.”
It has changed enormously, he says. “When I was a kid it was all property dealers. Now you get shopkeepers, accountants, solicitors, people buying for their pension funds.”
His only complaint is the chairs. “All the papers fall off your lap. We should have school desks,” he says.
What I would buy…
For £250,000
I would go to Sexy Fish (the Asian Seafood restaurant on Berkeley Square, W1) for a meal instead of the auction room.
For £500,000
I would buy a shop with a flat above, somewhere in the South East.
For £1m
The same but with two flats above.
