A vile anti-Semitic undercurrent ran through the 1980s’ Guinness affair, which saw those of the Jewish faith selected for prosecution, while members of the Anglo-Saxon City establishment were not. This undercurrent was detectable last weekend in an article in The Sunday Times, which suggested that Number 10 had blocked a knighthood for “disgraced property tycoon” Gerald Ronson.
The unsourced tale of how Ronson has been forced to make do with a CBE was written in a straightforward enough manner – given the paper is now just a flabbier version of the Daily Mail. But the undue front-page prominence of the story under a “fraudster” headline left a feeling of unease that a subconscious prejudice that dare not speak its name was at work.
Ronson, now 72, has donated more than £30m to charity. Yes, he is judgmental,a bit of a grouch and a man you dare not rib. But he is a man of self-evident honour, demonstrated by a refusal to buy his way into the establishment. Had Ronson diverted 10% of his charitable donations to the Conservative Party, we would surely be congratulating Sir Gerald today.
AXA in the money
AXA seems to have finally raised enough equity to go for a third and final closing of its third European Development Fund. DVIII is the reassuringly unimaginative name of a fund billed to have €2.5bn of “development capacity,” whatever that means, founded on investors’ equity of €588.5m.
Let’s hope it does not mean that the fund is 77% geared. DVIII was supposed to have raised €600m by September 2010. But it has taken three “closings” to reach €588.5m. Only in the strange world of funds can you haul up the drawbridge three times, then lower it to let more investors through the portal.
AXA real estate investment managers boast that their first two funds, which completed €2.3bn of developments, “provided its investors with internal rates of return in excess of 40% gross pa on a project level”. What does “on a project level” mean? Does it mean before AXA’s fees? Anyway, how much gearing was involved?
As investors know, the higher the gearing, the higher your IRR on equity can rise. Say you borrow £9m and add £1m of your own money into a building that costs £10m. If you sell it for £11m, you will have made 100% IRR. In 2001 and 2004, when AXA’s first two funds were set up, making high IRR’s was child’s play.
Where AXA is going to find the other billion or so of debt while lenders drawbridges remain firmly raised is not explained. But let’s stop being negative and see the raising of nearly €600m as a signal that a group of investors are confident that we are now at the bottom of the cycle, and that it is time to invest.
And if you are going to invest, do so in development projects that will mature in three to five years’ time. This seems a genuinely good plan. Good for AXA too. Over a drink before Christmas, an unimpeachable member of the property world gently confided the true purpose of property funds. “It’s not about the investors, silly, it’s all about the fees.”
Hatt joins DTZ
Nice to see Mike Hatt coming to DTZ amid all the goings of those unconvinced that new Aussie owners, UGL, are the bosses for them. The former boss of Nelson Bakewell, who moved to Capita Symonds when NB was acquired in 2010, will no doubt find DTZ more comfortable than Capita, which has an uncomfortable reputation for shedding senior staff. Hatt left last May.
He and his partner in crime, Dave King, did well for NB over nearly 10 sometimes tumultuous years. King has decamped to CBRE. It will now be interesting to see if any former NB staff defect to DTZ – or CBRE. One thought: maybe they should wait a bit, just to ensure UGL doesn’t do unto DTZ what Capita did unto Nelson Bakewell.
