Real estate, alternative real assets and other diversions

Prop. Notes: WeWork, Bakelite telephones and London tribes

Prop. Notes

In my previous life as a RE Fund Manager, I was not very interested in meeting other professional investors. But one of the best bits about being proprietor of The Property Chronicle is that I get to meet with, and hear what is on the minds of, very senior, very smart buyside types and their consiglieres. In recent weeks, a couple of topics have cropped up frequently.

WeWork. I have lost count of the number of times I have heard, “Of course, this is not just hindsight, but…” What follows 

is a look of incredulity that anyone could have bought the assertion that the WeWork model was new, let alone its Pre/non IPO valuation. One potential investor told me that he was summoned by the WeWork bankers to attend the court of Adam Neumann at, where else, 

The Ned, only for 55 minutes of the hour-long meeting to be taken up with Neumann recounting his life story. Another tells me that WeWork’s fundraising problems were partly, but notably, semantic. WeWork’s own insistence on being described as a tech company meant it did not quite fit her pure, RE investment mandates. Problem was, her tech colleagues felt the same.

I am no defender of Neumann, and have always thought the WeWork sofas, faux meeting places and table-tennis tables pretentious, but I really do not like the way unstoppable, blood-thirsty lynch mobs form in the virtual world when someone makes a mistake. I first noticed this when Luke Johnson was stoned over Patisserie Valerie, but both Johnson and Neumann were mere looseners for the napalming of Prince Andrew. The pattern seems to be that an accepted view crystallises quickly on social media and then gets reported as news by the BBC and other mainstream media. The beast then starts feeding on itself, and what started as mere opinion becomes biblical orthodoxy that no one dares rebut. God save me from the wrath of the Twittersphere.

The other concern of the big cheeses is their junior colleagues’ reticence to talk on the telephone. A top RE investment banker recently told me that he was amazed when his colleagues did not ring to find out why they had lost out on a deal. Instead, the accepted communication method had been an e-mail, maybe a text. Another private equity founder worried that his colleagues reduced human contact with counter parties meant that commercial relationships were not getting formed in the same way they were ten or 20 years ago. This, he thinks, will be a problem when the next downturn comes, and people move on and round. Of course, the Bribery Act has ended the old lap-dancing days of, er, ‘relationship banking/broking’, but a telephone call is free, so there must be something deeper going on here.

Compared to the old dealing floors, modern buyside and sellside offices are incredibly quiet, like libraries, with everyone e-mailing their next-door neighbours. My suggestion to the bosses and office designers would be to do away with the modern, light, plastic desk phones and replace them all with heavy, black, 1940s Bakelite models. I recently bought two and absolutely love both the ring, transporting you straight to the police station in Heartbeat, and the small sense of occasion when a call needs to be made. Not sure it will catch on though.






Prop. Notes, zLead Article, zNewsletter

About Stephen Yorke

Stephen Yorke

After Cambridge University and a few years at the Commercial/Chancery Bar, Stephen spent two years in John Major’s Political Office at Number 10. He then laboured on the FX/ Bond trading floors of two investment banks during the 1990s. In 2004 he founded (and ran until this year) a small Real estate Fund management company. In 2017 he founded 'The Property Chronicle' and is now a new boy publisher.

Articles by Stephen Yorke

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