At the Investment Property Forum annual dinner three years ago, ex-Patisserie Valerie chairman Luke Johnson delivered one of the most lacklustre speeches I’ve ever heard.
It was essentially a pitch for his private equity firm, delivered with all the verve and passion of a man who had given the same speech several times that same day. His views on landlords may explain his lack of effort. The following year, he called for a 1% annual tax on ownership of commercial property, which he said would raise about £17bn a year.
Whatever the reason, it meant I had little sympathy for him when Patisserie Valerie collapsed in such a dramatic fashion earlier this year. But reading his account of the final days of the café chain in The Sunday Times last weekend made me think again. He said the stress made him physically ill. He was on antibiotics for weeks to fight a series of debilitating infections and suffered from chronic insomnia, made all the worse by a paranoid sense that everyone was staring at him in the street.
His account is a reminder of the personal suffering caused by business failures of any kind. If retail remains in the doldrums, more stores will close and businesses will fail, with the inevitable loss of thousands of jobs. Landlords need to be conscious of this. All too easily, they could be painted as the villains of the retail crisis.
Johnson is certainly not the only retail figure to have little love for the property industry. At a panel discussion I chaired last week, one retailer went so far as to argue that pension funds should be stopped from investing in retail property because their drive to maximise rents was destroying the high street.
More than ever, landlords need to be heard making their case against such views. They will have to demonstrate the positive impact they can have and be careful not to take an overly aggressive approach in their dealings with tenants.
Property investors and lenders are demanding more transparency on trading figures and the industry is moving towards turnover-based rents – in such a world, mutual trust and collaboration between landlords and tenants will be vital. Landlords that are constantly at loggerheads with their tenants could live to regret it.
The M&A chatter around Helical sent the company’s shares soaring 10% on Monday. Now trading off a discount to NAV of less than 20%, the developer doesn’t look particularly cheap any more when you consider the risks posed by Brexit and the danger that the flexible office boom could implode. For bargain hunters, there are richer pickings in the listed sector.
I wouldn’t be surprised to see M&A interest in Capital & Regional. The shares have slumped more than 50% in the past three months alone and it is now trading at a discount to NAV of about 75%, making it worth less than £110m.
Clearly, the company has its challenges, not least its exposure to Arcadia, but with more than half its shopping centres by value in London, surely it’s oversold. Are there any takers?