BEFORE it even started, the Sydney to Hobart yacht race was one of the most
hotly followed in the history of the event, now in its 63rd year. On Boxing
Day the favourite, Wild Oats XI, led the fleet out of Sydney Harbour but all
eyes were on City Index Leopard, the UK challenger, and its “Buccaneering
Brit” skipper, Mike Slade, also chief executive of Helical Bar, who said he
would win.
He told a local newspaper: “For the past month, last thing at night going to
bed and first thing in the morning waking up, all I’ve been thinking about
is the starting line in Sydney. Not very exciting for the wife, but hey ho.”
In the end, Leopard was narrowly beaten by Wild Oats, but this weekend Slade
is already on to the next challenge: he has hired a cricket pitch in Hobart
for a “Bashes” match between “England and the rest”.
It’s classic Slade. He is flash, flirtatious, brazen and almost as famous for
high spirits as for the property investments from which he made his fortune.
Shortly before he left on this trip, I caught up with him in the London
offices of Helical Bar, his listed property company – valued at £290m.
I heard him long before I saw him. “Darling, how wonderful. You look
fabulous,” a voice boomed in the distance, and then “Oh marvellous, it
really is”. Slade, tall, tanned and wearing an open-necked shirt, tumbled
into the lobby. There were more waves and “wonderfuls” for the others
waiting, then an almost theatrical sweep of his silver hair and a flash of
white teeth as I became the focus of his attention.
“Follow me, follow me,” he said, waving at photos of him sailing. “There’s my
beauty,” he said, pointing at one. I wondered if he was talking about the
boat or himself.
Actually the picture is of Slade’s £6m, 100 ft Leopard heeling wildly in its
first competitive race in August in Britain’s famed Fastnet race, in which
it smashed the course record by nearly nine hours.
The result had set him up as one of the favourites for the Sydney to Hobart
race. “I’m so excited,” he said. “We can dip her mainsail as we go under
Sydney Harbour Bridge. I suppose we don’t really need to – it’s showing off,
but it’s great.”
So is this it for Slade now, the life of a carefree playboy? A long-time titan
of the property world, Slade has a formidable reputation for calling every
crash since the 1970s. So how bad will 2008 be, and how has he prepared for
it? Or will he leave it to the new, flashy young guns on the property scene?
I thought I had my answer when, without blinking, he said: “Sweetie, tell me
about you instead.”
Back on to property, Slade has clearly not lost enthusiasm. He said: “For the
past few years every chap in a pink Rolls-Royce has been able to borrow
money, buy property and watch his money grow. Even you probably, sweetie.
Times have changed and will be very different over the next six months – and
the swing is back in our favour, back to the professionals. This is what I
do, difficult times. This is my opportunity again.”
He went on: “I’ve been saying it’s bad and could be even worse than we think.
But it’s very different from times before, too. This weight of money has led
to global inflation. One problem is syndication. If the purchase price of an
asset is shared between many, it starts to become less relevant. For
instance, take a stretch of river costing £6.5m and shared between seven of
us – we’d be less fussed if it went up to £6.7m.
“In the post-9/11 environment the big impact [on property investments] has
been zero interest rates and the shift to investment from fund managers, who
are concerned with volumes and fees rather than the quality of assets.”
Slade is also gloomy about the potential impact of the property downturn on
small investors who have taken a stake in the market through fund managers
and new instruments, particularly real-estate investment trusts (Reits).
“The worry I have is that it all ends up with Joe Public. In 1974 the banks
were lending far too much and they got burnt – served them right. It’s a bit
like 2007, the banks have lent too easily to hedge funds and other
speculators to fund things they didn’t understand, so it serves them right
again. But Gordon Brown’s idea was that the man in the street invests in
Reits. Now you can’t get your money out of some of these funds even if you
ask.
“Reits are a tragedy. Paul Myners should be shot for allowing Land Securities
down that track. It’s such a wonderful company and it seems so sad it’s now
a Reit. Land Securities, British Land and Hammerson – we’ll all bow to the
phenomenon eventually but, perhaps out of nostalgia, I don’t like it.
“The longer we independents survive, the better. But a company like ours will
be forced to privatise, there’s no longer the space in the quoted sector.
Not immediately, perhaps, but in the next 10 years.
“But the gloom is not the same now. In 1991, interest rates were 15%. We were
fine because Nigel [McNair Scott, finance director] had spent £50,000 taking
out a cap on 11% interest rates. At the time I thought why on earth would we
want to do that, but it saved us. I really must send him a case of wine more
often.”
So what has Slade’s survival strategy been this time? “I’ve always done
different things. In the 1990s we were the largest owners of speculative
office space. In 1998 we were the largest supplier of out-of-town retail
parks. We’re doing none of that now and it’s no mistake. We also hold a
large amount in cash. We’ve been doing this over the past two years, cashing
out, getting defensive while every Tom, Dick and Harry has been splashing
round.
“And I’m afraid there’s a certain schadenfreude when things go wrong for them.
We own large residential investments in Battersea and White City, industrial
buildings and converting to owner-occupier, student houses. We have six
retirement villages around the country – it’s the new game in town and it’s
very profitable. We’re buying a hospital and other brownfield sites.”
Property has been Slade’s passion since he was a boy. He grew up in the Home
Counties with his parents and one brother. He went to Sherborne school in
Dorset and spent summers at a family house in Cornwall, where he learnt to
sail.
“When I was 15 or 16 my father got involved in real estate by buying some
plots of land in the Bahamas. I got a holiday job with a dubious crowd of
property boys that opened my eyes to, let’s say, the less professional
aspect of the market. Then I had a semi gap year in Grand Bahama island with
a heavy-selling mob outside a casino. I was a spotty 18-year-old in a smart
blazer and wandered round talking to tourists. It was in the days when a
smile would do.”
It was enough to get the young Slade hooked, and after school he set off to do
a property course at the College of Estate Management. He says: “My father
lost all his money on the plots in the Bahamas but it didn’t put me off.”
In 1968 he joined up with Julian Markham, another doyen of the property
industry, and spent a lot of time working on the Continent. “I was 22 years
old and sent around Europe for four years of building offices, shops and
commercial buildings in Holland, Belgium and France.”
By 1972 the property market was soaring and Slade was relishing it. “I got
married to Heather – we’re still together, much to her amazement and to that
of her friends. On my first day back in the office from honeymoon, I came
home and told her I’d resigned,” he says. “I suppose it was the exuberance
of youth. I was 26 and had a mad plan of wanting to work for myself.
“At first I did extremely well, focusing on what I knew, which was Europe.
Then there was the hiatus of 1974 with the miners’ strike, fuel crisis,
interest rates going through the roof and a rental freeze on all commercial
property. It was not unlike the hedge funds today risking a lot going in for
the super returns. The chancellor was giving out easy money. It was the
first major property crisis anyone can remember. We all thought the world
was coming to an end.”
But Slade found he was miraculously well positioned to survive. “Waves of
crisis took a while to hit different regions. So in 1976 America had caught
a cold that six months later hit Britain, but the Continent was about a year
later, so I was fine.” With the backing of a large insurance company, Slade
“went off to Europe building and developing”.
The lessons he learnt then are still pertinent today, he says. “In every new
city or country, I always bought from locals. You’ve got to be the early
guy. The locals see you coming, lick their lips and think I’m going to take
this guy’s trousers down. They’ll flog you something and you are likely to
have overpaid, which is fine if you are the early guy but you must pass it
on quickly and not be the last one holding the parcel.
“I did it for 15 years. Always in a bloody plane, working across five or six
different countries, different legislations, different schemes, letting,
developing, building. We did office buildings in Austria, Germany, France,
Belgium, Holland. It was brilliant but knackering. so I quit in 1983.”
Slade then started a new project based in Britain, reversed his new property
venture into Helical Bar, a quoted building company where he has remained
ever since.
“One thing I have learnt is never sit too long on real estate. Keep the
capital rolling over. It keeps you more flexible to deal with the downturns.
We’re old dogs, we’ve been here before. This downturn is the fourth in my
career. The market will come back but not until spring 2009. For now, I’m
going sailing.”
MIKE SLADE’S WORKING DAY
IF he is in London, Mike Slade wakes at 7am at his home in Kensington. He does
a “brief spell” in his gym or runs through Hyde Park to Helical Bar’s
office, close to Berkeley Square. He is normally there by 8.30.
“I run the business on a weekly basis: Monday lunch executive meetings to
determine the strategy for the week ahead. I work on e-mail, and a lot of
time is also spent on the telephone.” Lunch is important. “I maintain
business contacts and relationships with regular business lunches and could
not conceive of a life built on sandwiches at a desk,” says Slade.
He likes to work into the evenings, but tries to leave for home by 7pm.
VITAL STATISTICS
Born:August 13, 1946
Marital status:married, with three children
School:Sherborne, Dorset
University:University of London College of Estate Management
First job:trainee, Rupert Lawrence & Co, chartered surveyors,
Aylesbury
Salary:£450,000 pa
Cars:Range Rover, Porsche 911
Homes:Rock, Cornwall; Sway, Hampshire; Kensington, London; Vale do
Lobo, Portugal
Favourite book:anything by Tom Bower
Favourite music:Dire Straits
Favourite film:The Godfather
Favourite gadget:bottle opener
Website: www.scuttlebutteurope.com
Last holiday:Cornwall
DOWNTIME
MIKE SLADE’s main hobby is sailing. The sport takes him around the world for
competitions and holidays but he still returns to sail in Cornwall, where he
learnt on dinghies when he was a young boy. The family has a holiday home
there.
Slade also shares his wife’s passion for horses. Heather Slade breeds them and
the couple own a number of two and three-year-olds.
Slade enjoys other sports, particularly running. He has done five marathons.
With Heather, he enjoys travelling and playing golf, and the occasional
rubber of bridge in the evening.
Andrew Davidson is away
