“The market’s evolved. Today I think there are so many more agents than there used to be. There are so many more players. You know, the market became more and more global. We were a great centre for London for international players and for quite a period I’d say 80% of our deals, probably more so today than ever, is made up of international players. You know, they were coming here because they like English law, they like the culture, they like the stability of the politics here really and it was a great place for wealth preservation.”
Susan Freeman
Hi, I’m Susan Freeman. Welcome back to our PropertyShe podcast series brought to you by Mishcon de Reya in association with the London Real Estate Forum, where I get to interview some of the key influencers in the world of real estate and the built environment. Today, I am absolutely delighted to welcome deal-maker extraordinaire, Mark Shipman. With over 40 year’s deal-making experience, Mark is widely regarded as one of London’s leading real estate investment advisors. As a Founding partner of Michael Elliott, founded 40 years ago, Mark and his team have successfully advised on the acquisition and disposal of over 60 billion pounds worth of UK real estate, mainly in central London. Mark has been involved in numerous high profile transactions including some of central London’s best known building including Millennium Dome, Centre Point, Burlington Arcade, Earls Court and Olympia and many more. Mark is also a senior partner of sister management company, Metrus helping to grow the portfolio from 300 million pounds in 2001 to 6 billion pounds today. He is a generous philanthropist, a board member of Rays of Sunshine, a UK charity that brightens the lives of seriously ill young people and their families across the UK by granting wishes and providing ongoing support within hospitals.
So now I’m really looking forward to hearing from legendry deal-make Mark Shipman with some of the highlights and learnings from his 40 years at the cutting edge of London real estate. Mark, good afternoon and welcome.
Mark Shipman
Good afternoon.
Susan Freeman
This is very timely as you are celebrating, um, 40 years since you founded your business in November 1985. So before we talk about Michael Elliott and how it all started, let’s talk a little bit about early days for Mark. Where did you grow up and what was life like for you as a child?
Mark Shipman
I grew up in Hampstead Garden suburb. I did a childhood backing on to Hampstead Golf Club. My mother lived there from sort of 1955 until she passed, so it was, uh, in the family for a terribly long time and, uh, my parents were divorced when I was about 1 years old and I was off to boarding school from the age of 8 to 18, so, uh, between Mill Hill and Hampstead Garden Suburb.
Susan Freeman
How was boarding school?
Mark Shipman
It was interesting, it had its moments. Mill Hill back in those days was relatively sporty which sort of suited me and, uh, I had two siblings so it helped my mother back in the day being, from a one parent family, and you learnt your independence at boarding school. You sort of, as they say, toughened up and, uh, I suppose it prepared you in a way for the big wild world.
Susan Freeman
And was anybody in the family involved in the real estate business?
Mark Shipman
Yeah so unfortunately my grandfather passed before I was born and, uh, he was, he arrived in the UK aged 8 and by aged 12 was the lead violinist in the London Philharmonic Orchestra, sort of childhood protégé. Then damaged his neck, couldn’t, uh, play the violin any longer and became an agent for his slot in the orchestra and then from there he hired a hall, showed a film, built a chain of 65 cinemas and thought, do you know what, I’d like to make films for my cinemas. So he, he bought I think, three film studios, Twickenham, Shepperton and Bray. There was an embargo of films from the US so he churned out all these films. They released the embargo, gave him a few issues and at the same time he went into real estate and he had an early public company called Regional Properties. I mean it sounds very glamorous and it was all gone by the time I reached a certain age so talk about, essential silver spoon growing up but he, um, he owned of Berkeley Square House. He owned Arlington House off Piccadilly where you might know the Caprice used to be. Blocks of flats in St John’s Wood so it was unbelievable and a block in Park Lane, I think 55 Park Lane with BMW and he lived in a flat above there. Literally everything was gone by the time I grew up and, uh, I suppose it was an unusual upbringing that parents were divorced and mother was quite frugal and my father, I didn’t see that often, but lived a very charmed life and, uh, wasn’t in the property business, he was just in the film business. So it kind of skipped a generation. Uh, I didn’t see a lot of my dad’s brother, my uncle but he was a qualified architect so there was creativity there and so when I reached a certain age, I knew I liked the look of buildings. I wasn’t hugely academic but I got by at school and, um, I kind of was going to qualify as a quantity surveyor and I decided – it was either going to be a quantity surveyor or architect but architecture took 7 years to qualify and being a QS, and believe me I had a lot of friends who are QS’s and Gardiner Theobald and all sorts but, uh, it wouldn’t have given me the wheeler dealery fine selling side I required. So I had this sort of character that enjoyed marketing and selling so it wasn’t to be. I missed out on going to Cambridge, I had a good offer to Land Economy and, uh, I ended up working full-time and going to college one day a week at Hammersmith, West London because I wanted to be out there working. I kind of grew up, as I touched upon, my mother was quite frugal, there was already talks of money, money problems and I was hungry and, uh, early 80’s the job market wasn’t great. I managed to find somewhere as a junior at, um, the big old wage of £40 a week. I kind of worked seven days a week. I was so hungry and keen to lean. I went on this upward learning curve and I remember being asked to open up a building, a tenant was moving out in a street called Great Newport Street, this super cool studio space and the guy was leaving. I opened the door so he’d get his 7.17 through it and the guy gave me a £50 tip. It must have been 1980 and I thought I’d won the lottery. I just didn’t mind working hard. I loved working but it was, it was sort of going from grass roots upwards so I really started in management. The first firm I worked was called Michael Coopman & Partners and it was a really tight run ship. We worked for the Barclay Brothers, David and Frederick Barclay who owned all those hotels. We did work for Gerald Ronson, we worked for the Kirsch brothers. There were some real old school real estate people and I remember my boss’s wife was in charge of accounts and she said, well you live sort of Hampstead way, there’s a parade of shops in Finchley Road, can you deliver the rent demands please, it’s easier than putting stamps on envelopes. So literally, I, it was sort of junior to understanding how service charges worked, how management worked, how leases were drawn up, the wording of leases, and I was like a sponge, I absorbed everything and, uh, within this practice they advised on development and I remember there was a scheme of industrial units down at Brent Cross, they were at the time, it was a tax efficient scheme where you claimed for what we called IBA’s, Industrial Building Allowances and I understood how construction worked, how costings worked, value of land. So I think I got a really good, um, grounding and I remember several people leaving and going to work in Mayfair. We were based out on Shaftsbury Avenue, you know, this Michael Coopman & Partners and I remember going in and handing in my notice and, uh, he was a really tough guy, Michael Coopman and he was solid and he was a bit shocked I was leaving. Asked if anything he could do to, if I would stay, I said, no and he actually sent me a note, if ever you change your mind your jobs here. I worked out a months’ notice and it was desperately sad with a week to go, he passed away. He was 49. He had terrible asthma and it brought on a heart attack and he was, he was a really good mentor actually and I, I owe a lot to him and I’m still in touch with one of his sons. They are really good people and, uh, I just thought I’d come to the end of my time there and I worked briefly for a chap called Tony Diner in Bond Street, put together a little investment team. I bought my first flat in North London. I had no cash, no equity. I had a credit card so I could put £2,500 on my credit card which I used for the deposit for the flat. I had a friend got me my mortgage, so literally my first flat was £40,000 and I did it up myself, it cost me £2,000. A couple of years later I sold it to a friend of mine’s older brother, who said he would buy it for £65,000. I cleared £20,000 on my first home. I was 21 years of age, it was tax free and I got on this housing ladder and I did really well actually; I must have moved about eight to ten times, going up into that period of getting married and did really well. I had an eye for residential real estate but, um, it just supplemented I suppose my income.
Susan Freeman
How old were you when you, um, when you actually started your practice?
Mark Shipman
So I was 24. There were four of us. I got one guy out of, um a company called Michael Laurie & Partners, uh, he was to head up management. I had two guys working with me, one was my junior who was four years younger so he was only 20. He was from a great family, he was bright, Peter Goldstein and my best friend, who I worked with called David Saul and David was two years younger than me and David was doing retail. So there was Peter Goldstein the office agency, Jeremy Charles, management and I was doing investment myself. Actually Jeremy Charles in fairness did investment as well. So here we were, the four musketeers, no secretary for the first year, in serviced offices at 67 Brook Street which was where the Bee Gees were based running serviced offices and within six weeks a chap called Barry Shaw, lawyer, Solomon Taylor & Shaw introduced me to a guy called David Phillips who had just gone into business backed by a guy called Elliot Bernard, set up a company called Chelsfield and it was love at first sight. Um, David came to me and he said, yeah I can buy this building in Great Newport Street, uh, Covent Garden for 1.35 million and I said, there’s a coincidence, the first firm I ever worked with is actually where that, that studio was. I opened up for the guy and he paid me £50, so I opened the door on a Saturday and I’d sold the street when I was at Michael Coopman’s but this hadn’t sold and I forgot about it. And he said, I can buy 1.35 million with a £50,000 deposit but I want you to trade it out for me within the three months. What will you charge me? And I said, 1.5% and he said, what figure can you get me out for? And I was really quite bullish in those days and I said, 3 million pounds and my goodness me it was a long three months until I found a buyer that took us out some 3 million pounds and basically it was, it was my first decent sized fee as Michael Elliot, it was 1.5% and for David it made 1.65 million which was really the equity that founded Chelsfield which became a public company and, and so I would say that the pair of us had this growth at the same time and you know, I’ll always be grateful to Barry Shaw for putting us together. That relationship with Chelsfield and the loyalty, I mean David if you spoke to him today would make a joke out of it, yeah Mark stumped me on the fee, it was, it should have been 1%, he charged me 1.5% and I would have said, it should have been a profit share and promote but, um, so it was a fortuitous start and then like everything happens for a reason, I firmly believe that. It was a really good journey and we were together through thick and thin. It was one hell of a journey because the pair of us had to be responsible for the trading profits in later years of Chelsfield which became a public company so we were charged to try and make up 65 million pounds a year trading profit. It was challenging but it was, it was an amazing time and, uh, we used to work round the clock. As lawyers used to, I don’t know if you remember back in the day, you know, you’d exchange at 4.00 in the morning.
Susan Freeman
Well I do remember quite a lot of those deals where we all just sat there, um, all night.
Mark Shipman
All night and, um, so why haven’t we done the deal yet, you say the next morning or, um, so it was many years of interesting deals and coming across the most incredible companies, operations, people. I remember one of the guys that we met along the way that there was a big relationship with Chelsfield, was a company called P&O, P&O Ferries and within P&O there was a property company called Town & City and the managing director was a guy called, uh, Sir Bruce MacPhail and he’s the only guy in the whole industry that I was nervous of. He had this most amazing presence and very upright chap and very well spoken and really commanded a room incredibly well and I felt like just some little humble agent trying to address a guy that’s running this large corporate beast with Lord Sterling and I remember actually having a meeting with him with Michael Slade. Michael Slade is probably one of the most extrovert people you’ve ever met and in the meeting he’s rubbing his hands in a nervous way. I, I sort of observe things and, uh, I would say he was the only guy ever that I felt intimidated by and I, let me tell you, I’m like a moth to the light, the sort of people that I’ve had the fortune of dealing with that can be quite intense, legendary in status and you sometimes think, how do I come across? Am I prepared enough to deal with these very well established, very smart, well-healed people. I am incredibly grateful for the luck and generosity that I’ve had from people giving the time of day and people taking my call and for me, the journey is still going. I absolutely love what I do and what’s in store and today more than ever, the challenges that we have ahead and through the journeys I’ve come across, obviously your firm in a big way and in fact, one of your partners, Nick Minkoff we worked together for 16.40 Bowen and as you know, with John Eldridge but it’s, you know, as lawyers have evolved and they’ve grown, we’ve kind of grown with them and their clients and it’s, it’s very symbiotic the relationship. The amount of clients we’ve shared and we’ve recommended, with our recommendations you live by the sword and die by the sword, um, you’ve got to make sure that the lawyers you recommend are honest, their commercial, they understand what needs to be achieved in what time frame and what should be accepted and what shouldn’t be accepted. What is relevant on a deal on the title or the wording of a lease and what isn’t relevant and how do you convey that to the client without the client being overwhelmed. And often the non-property clients where property is not their main business need the most help and I’ve seen it today more than ever in these uncertain times. We are all very nervous about making a mistake, is the title mortgageable, um, if you go to sell the real estate, how will the next people view the nuances of the asset. So we are still evolving.
Susan Freeman
And Nick Minkoff tells a story about being at MIPIM one year and getting a call from you at night saying, come down to, um, I think it was the Carlton Bar, now, there is a potential client, who will remain nameless, who is not happy with his lawyers and I think you should meet him. That ring a bell?
Mark Shipman
Yeah, it, it does. Actually I spent most of that night with quite foggy merchants one, but yes and, uh, it was a smart move to bring him into the fold, this client. It was the most horrendous situation, uh, with the previous lawyer, misinterpretation of value, the wording of a lease. I can remember it was, I am not naming names, so I can describe this for you. It was to do with, um, the rent review on a Mayfair Restaurant to be shell and core and the lawyer said, yes Mark I hope you’ve advised the vendor’s lawyers to put their insurance on notice and I said, why would that be? Well because it was obviously a mistake, uh, you should never buy a property where the, the rent review is geared to a shelled restaurant unit. And the deal fell apart and the client I bought into Mishcon’s bought it a year later and had to pay 11 million pounds more. It went from 6 million to 17 and, uh, we sold it very recently, Nick and I actually at 24 after many years but at great income. But yeah it was, uh, I am not sure he was a client when Mishcon’s done a lot of work but, uh, a lot of stress has come with that work and hopefully he thanks me and, um, it’s been an interesting journey but, uh, Nick and I have evolved over those many years on many large deals with John. It goes into billions and I, I try and look back as a team of what we’ve transacted, I know it’s more than 60 billion but I don’t know how much more and some of the properties, I mean one property I’ve got round for sale again for the fifth time and because we’re London Centric the market’s big but it’s not huge, huge. When you’ve been doing this, we’ve been around for 40 years, the chances are you end up knowing most of the buyers and most of the sellers and you know most of the streets in London. I am sure I could, in my later years get a job driving a black taxi and I know all the short-cuts but, um, I think what’s fascinated me more in the last 10 years is development. I am quite passionate about development, about architecture, about how a deal hangs together and about putting together the right team for the right project and, and actually the very first development I was involved with is now known as, um, Stirling Square. The building was known as Wool House off Carlton House Terrace and it was a 1960’s building owned by Chelsfield. I was super close to a guy called Nigel Kempner and Nigel was a hero of mine, taken from us far too soon at the age of 60, which must have been five years ago now, or six years and he was running a company at the time, public company called Benchmark and he wanted a development site and there was this cracking site in St James’s and it was leasehold from the Crown and it must have been 25 years ago. It must have been 32 -33 million. We did it off market in Chelsfield. It went like a dream and they used the architect Stirling, they named the building Stirling Square after the architect Stirling and the price was obviously named after him, Stirling Price and it was a block of flats and one side overlooking St James’ Palace and offices on the other side and it was a great modern scheme and it was the first new build down there for years and years and years. And for me to have been the first scheme I was involved with in St James’s it didn’t go better than that. I remember going to the launch of it, it was the American Ambassador cut the ribbon and these flats, back in the day they were £1,000 a foot, actually overlooking, yeah, St James’s Palace, the Queen Mother’s home and at £1,000 a foot at the time, you thought, well that’s expensive and, uh, they went like hot cakes. It was very special so I was lucky. I was lucky, I’ve always been lucky to be working with good people as well, good partners, good team, loyal and to see people do well. I always encourage people to get large mortgages and buy great homes because they work hard, it would focus the mind if they had a good mortgage, as it did for me and also getting married a few times, it focuses the mind to making more money to, uh, anyway. So I think, um, the longevity of me and the practice is based around good partners and it’s funny, my wife’s just popped in to say hi with one of my daughters and, um, Dominic Rowe is my equal partner and Dominic and I have worked together for 30 years and when Dominic comes up and starts chatting I put my arm round Dominic and I say, this my wife in the office who I see more of than you and it’s just bizarre and these are two people that know me better than anyone and you need good people in your life.
Susan Freeman
Mark you talked about luck and obviously having good luck is very much part of it but when you set up this business you were 24, you were surrounded by, you know, all these titans of real estate. How did you go about winning new business, obviously the Chelsfield relationship was great because you were in there at the beginning but how did you go about winning other clients?
Mark Shipman
You have to show what you’ve, you had to offer. Why should someone deal with you rather than anyone else and I think, I think certain people like the idea of a young hungry agent being on their doorstep that would put the hours in and help find them the deals and, and be top of the list and that must have helped. I think that, uh, we were very nimble, you know, our competitors were these big, big firms that had been around for years. They were established. So going back, I think we were different because we offered an approach of different specialities, management to retail and office agency to investment and then development and I think that, uh, we were quicker and more nimble and we were 24/7. Whereas, I think we considered the bigger firms to an extent were a little bit sleepy. They weren’t as ambitious or I suppose, hungry. I mean yes I heard that we were supposed to be spivs but how can they, how can they be players, well they’ve come from nowhere, how can they have clients so, uh, we were in that sort of pigeon hole and I remember going to the RICS and asking for dispensation because we were a limited company so we could trade and we could get our insurance and that at the time was quite a new thing. You know, the markets evolved. Today I think there are so many more, there’s so many more agents than there used to be. There’s so many more players. You know, the market became more and more global, we were a great centre for London for international players and for quite a period I would say 80% of our deals, probably more so today than ever, is made up of international players. You know, they were coming here because they like English law. Chances are members of the, if they were high net worth, members of the family were educated here. They liked the culture, they liked the, um, stability of the politics here really and it was a great place for wealth preservation. It was the centre of Europe really and you know, everyone knows I was a remainer, I was very upset when we left the EU. I felt we abandoned them and they didn’t seem too upset to see us leave and the rest as they say, is history.
Susan Freeman
But what’s the situation now with overseas investors because I keep hearing that a lot of the investors, you know, cooled off on London. What do you see?
Mark Shipman
I think it ebbs and flows and I think at the moment to a, a certain degree that’s true but what you do find, uh, number one, there’s been this wall of US money, it’s a cross between anti-Trump and your tax systems no worse than ours, it’s a spread of risk, it’s a good time to buy, can be considered a good time to buy London because certain parts of London seem to be great value, almost on the floor and I think the, the bear market traditionally has been a lot shorter than the bull market so we know we’ve got an election in three and a half years, we know that towards an election there’ll be hope in terms of politics changing. At the moment where we stand, and I’m not being political in what I say but, you don’t get that warm fuzzy feeling as a, a property investor developer that the circumstances are best for making a massive burst on UK Plc, only because of where does tax sit, where’s the money going to come from to plug that big black hole. What I am hearing today, are we going to have a Mansion tax. They are talking about 1% on residential over 2 million pounds. What message will that send to the international community? But the fact is, real estate represents 20% of the GDP. Supposedly I am told that the real estate industry employs directly or indirectly, 1.5 million people so it’s a, it’s a very big, um, contributor to the running of, of the country and I think you’ll look back on certain areas like public company sector, the REITs, they look very cheap. Is there going to be a consolidation of the sector? A lot of them seem to be trading at a 50% discount which is very harsh and some people are looking for higher returns so they are going to bridging, they are going to lending, bridge lending, they’re going to possibly into anything associated with AI, you know, things are changing. But you’ll always see, actually we see more in the last few years of owner/occupiers coming to London so I’ll give you an example, Larry Ellison buying 11-12 St James’s Square, you know, he’s building a big team in London and there are other Americans following suit. We sold, um, 3 St James’s Square to Realty International for their European HQ. So there is this drive of buyers of very prime real estate, sort of Mayfair, St James’s, wanting to buy best in class and it’s a finite pot of real estate and, and when these buildings go long-term it becomes more difficult to replace and replicate. So that end of the market is holding up relatively well.
Susan Freeman
Yes that’s, that’s good because it’s not the sort of real estate you can go and buy in New York so that’s encouraging. Now in your 40 years you’ve been through a number of real estate economic cycles and, um, I imagine there have been difficult situations noted to deal with. Anything in particular and has that experience that you have do you think, influence the way you are able to approach negotiations for clients now because, you know, you’ve probably seen everything that could happen?
Mark Shipman
Yeah definitely, I mean I think going through the 90s was horrendous, you know, people moan about 2008 and 2008 was really horrible, it really was but the 90s, you know from 1990 onwards I mean I remember, number one, uh, looking at 1960s built offices with a very discerning eye saying, they’ll never let again, floor to ceiling high support, who’s ever going to want to be in a building like that, the world’s come to end, no one wants to own these buildings, the market has shrunk. We’re look at very few buildings that are fit for purpose, they’ll never come back. So there was that kind of negativity that things would never be the same again. I remember looking at the housing market. I remember thinking, oh my goodness me, these prices have gone down to such a level I, I must get a big mortgage because I’ll never regret it, it’s the depths of the market and, um, my ex-wife going, why do you want to do that? And I said, because I think it’s quite prudent and we’ll grow into it. Well I don’t agree with you. That might be why we’re no longer married but and it was the right call because those properties from the 90s went up tenfold but they were bleak and I remember August 1998 like it was yesterday and it was the, the hedge fund LTCM and they went long on the Russian ruble and, um, then Russia defaulted on their debt and it was horrendous and it was that blip. And I can tell you it was August ’98, so I remember that because Nick Minkoff, John Eldridge and myself were doing a deal and I worked on it for quite a long time with a bank called Swedbank and back in the day they created good bank, bad bank and they put all their non-performing loans and property, they pulled back and what they called the bad bank protected the balance sheet. And we had the opportunity to buy a portfolio, ’98, it was 108 million and it wasn’t an everyday size deal back then. Anything over 100 million in the 90s was big and particularly when there were terrible jitters and again, this was for Chelsfield and I remember Elliot Bernard saying, I am not comfortable with this, it is a risk. I think NatWest weren’t happy giving him a loan and I, I mentioned to you before, this was the deal where we had one week where we could change our mind after exchange and it was at that 12.00 o’clock cut off point and the vendor’s lawyers were in Clerkenwell and the guy running it for the vendors said, can you look outside your window, I want to see if there is a car with a number plate EB1 and there was and he saw it driving off in the background. So he was going to rescind, changed his mind and came home so the deal went unconditional and he said, Elliot said, on your head be it if, if you mess this up. And we traded out so fast between exchange and completion. I think we got 80% of our money back, the client’s money back and it was just a phenomenal deal. John even did an exchange with Brixton Estates on a Sunday. Franco acting for Brixton Estates who was 50 million quid so we did the rest of the deal and it was a, it was a retail warehouse park on the Great West Road, Brentford and there was WH Smith, DIY and it ticked every box for, um, Brixton Estate and they said, oh do you mind if we exchange on the weekend, it’s just we’ve got so much business on, we’re so busy and it was, they were desperate not to be gazumped. And it was the first deal I ever did on a weekend and, it was the most satisfying thing that, we had the courage of our convictions to push the client to do it.
Susan Freeman
How do you cope with that pressure? If you’ve got a very important client to your practice, saying, right, you know, this is totally on your head, you know, you’ve got to make it work?
Mark Shipman
We had a whole series of these discussions. I’ll give you another example, years before that we got hold of a building and it’s weird I remember the addresses of these buildings, this was 7-11 Lexington Street and it was a very ugly, grey building. It wasn’t freehold, it was leasehold on the Sir Richard Sutton Estate and Elliot rings up David Phillips and he says, I am now outside this bag of ‘s h 1 t’, what do you expect me to do with that? And I thought, that’s really taken the wind out of my sails really because I recognise the potential of this asset and each time you get these comments, you start to doubt yourself really. I said, well we can paint it black, it doesn’t have to be grey. We can approach the Sutton Estate to extend the lease. Fundamentally the pounds per square foot is cheap and it’s got some residential in it that’s cheap. I think that it’s got quite good potential and long story short, we did the deal and actually it ended up some years later – I don’t know how – with Nick Leslau but, um, we had a series of these deals where we were constantly doubted just, I suppose, to keep us on our toes. I mean one deal we had and again it was the 90s. I don’t know how we came across it. I think we were called by Charleston, it was, it was a bunch of properties from the Australian Bank, Westpac. They were going to do it with a guy called Roger Orf, I’d never met Roger before and I know Roger, Roger’s been on your show and it was the Whitehall Fund, who’s the Whitehall Fund, Goldman Sachs, I didn’t know they had a fund called White… So it was kind of that thing back in the day, the Whitehall Fund and again it was a privilege to work with such great people. Roger had an assistant called John Blenko the Third. You couldn’t make this up, it was fantastic. And some of these assets were absolutely bizarre so there was a car park in the heart of Clerkenwell which I think it had been the former site of Booth’s Gin and they knocked it down, there were a couple of advertising hoardings on the corner with Clerkenwell Road and it was a car park. And it was a big car park and it was on the books for £400,000 and Dave Phillips and I looked at each other and thought, £400,000 and we both blurted out in the meeting, oh, I, I think that, um, I could relieve you of that if it works with the business plan and Dave and I seemed to be saying at the same time, I said, gentleman, that’s not the objective here. The objective here is to put a business plan together and max out. And actually we sold it to Frogmore, we created a block of flats on the, on the corner there and it, it was a big building but there were so many of these little gems and, we had these experiences of getting to work, burning the midnight oil and working through these non-performing loan portfolios, doing these trades and it went into buying debt. All these, um, CMB’s that were failing and doing discounts on these loans.
Susan Freeman
So Mark you said the 90’s were horrendous but it sounds as if there was loads of deal activity going on?
Mark Shipman
There wasn’t as much as there should have been. What you have to watch out for in a market that inflates and deflates is that it stagnates. Lack of liquidity was a big thing and therefore can people afford to sell, have people got the competence to buy and so the 90’s was pretty much like that. It was just bumping along. We weren’t, um, saved by quantities of easing, there were no mechanisms to pull us away from where we were at. It was tricky and actually I looked through all these cycles and there’s always a defining factor. What’s created the cycle? You know, if you look at the States, what it did to us, the sub-prime mortgage market, everyone was heavily invested in it. Everyone had exposure. Goldman’s blew up. We caught a cold from what went on in the US. So we were affected. You look back on decades of what damaged us and the, I personally believe, Covid of 2020 damaged us beyond repair. Because I think what we’ve got today is a direct result of what it’s cost to bail us out of the worst period of our lives. You know, we haven’t been through world wars thankfully but what Covid did to the world and the cost of getting out of it. So I’ve always known the world, from one side of the world to be trading up and the other side down and they would always, it was like a seesaw effect. I think what Covid did to us was to damage us beyond that kind of seesaw effect, is that we’ve deflated together and all these countries have debts. Let me tell you, I’m not trying to be negative or, it’s saddled us all with the most humungous debt and all, all these countries seem to have been downgraded on credit rating. You know, the cost of, uh, UK Plc servicing the debt has gone up and up and up because we’re not rated very highly and whereas before, you know, from, say 2008/9 we did this QE which we thought was great but we didn’t have hyperinflation and assets balloons because we looked at interest rates were negative. And the correlation between cost of money and asset is there to see. If an interest rate is really low, your asset values are really high. And then came more recently the sort of hyperinflation, the double digit inflation. I think for us as a team, as a practice, the work that we are doing in our sales and purchases, I think we’re doing a lot of deals with operational businesses, we’ve got OpCo PropCo. How to help the operational business expand the business or realise money to go again or pay the banks back. So there’s a lot of that and, or people looking for operations, looking for the right building, right location to enhance their business. I mean, it was interesting, we’re a part of the Fenwick’s deal in Bond Street which for us was a huge deal, it was 420 million and that was something that we’ve been looking at for 20 years hoping that one day Fenwick’s realise their business model is a bit defunct, the department, um store model. And at the time they didn’t have an online presence and the value was greater for real estate than it was an operational business and with the genius of the client, Lazari, with the team they had around them to create world class offices on sort of six adjoining buildings is a spectacular success because how often do you manage to pre-let a development two years ahead of schedule, apart from obviously, uh, Lansdowne House and Blackstone in Berkeley Square. It was fantastic and me being a very simple individual can work out how do you get a sloping site and have a continuous slide. And I should have worked it out, I mean I am fortunate enough to meet Foster’s and the guys that look after it and they are also doing Grafton and 3 Bond Street for O & H and it’s just compensated by, as you go down the street the shop ceiling heights get greater. It’s just a great client who does things to the best of their ability and a great scheme to have our name attached to.
Susan Freeman
I mean it is an amazing site isn’t it just sort of on that prominent corner on, on Bond Street. I have to say I do miss having, you know, the Fenwick’s department store there. So it is going to be offices above and then retail and restaurants.
Mark Shipman
Yes I think it’s 25,000 feet of retail and basement ground floor underneath, I think five units. Someone’s probably shouting and saying it’s more or less but I remember it being five units but I think the idea is by the time it’s closer to completion you’ll end up with some LVMH brands, you’ll end up with probably Valentino and other top quality brands and those fantastic brands just live on and so for us we like to get to know all the brands, the retailers, the hospitality, the high end offices, the developers, the designers because if you understand that world and that market, you can add value. Like who would you bring in as an architect, who would you bring in as a designer, what tenants are you going to attract. So if you have that knowledge, whether it’s a hotel, restaurants, food, retail, hotelesque offices which is what people want today at the higher end. You then have a chance of putting together something quite valuable.
Susan Freeman
So, you actually get involved, you know, with the client in deciding who’s going to come in and.
Mark Shipman
With some, yes very much so and what is the longevity of, of certain clients. One of the deals, and it, it wasn’t big and we did it I think, must be a year and a half ago now. We bought some, for clients, the BBC studios in Maida Vale and I’m close to a couple of film producers, uh, Working Title, Eric Fellner and Tim Bevan and they are, you know, it’s an honour to speak to these people as they are top of their game in film and they said, we’d like to do it with this guy called Hans Zimmer. I said, Hans Zimmer and, um, you know, I knew who Hans Zimmer was but I, I didn’t know how many unbelievable title themes he’d written and he’s like 160 and if you looked up in the dictionary, genius, you see the name Hans Zimmer. It’s very humbling and I remember pitching to the BBC and he was in LA and he’s worked a lot for the BBC and you could tell we were favoured because we wanted to continue and expand the BBC legacy and we knew who we were up against. We were up against, um, Len Blavatnik who is a great guy at Warners, with the Pear’s Family property, Matthew Vaughan film maker and a music producer. But we were the guys that, and we were both at 15 million, they wanted 10 and to show how committed the client was, we said that we had an anti-embarrassment clause that lasted 10 years and I was like looking round the age of the people at the table, where were they all going to be in 10 years and also the Council are so welcoming, Westminster City Council, as they want to expand the space by 30% and we came up with this plan to open the studios to schools, um, so they could see rehearsals and recordings and my point is, is going back to how the asset relates to the operation and you put it together, is so important and also when you’re doing a scheme, if you’ve got creatives you can put into the scheme, others will come. Because there’s nothing better than having quality creatives that have the coolest offices, the coolest people working there which attracts the food, the retail and then spreading into living. So we do get involved in, in living as well in London and it could be helping schemes for co-living, could be super high-end resi schemes, it could be serviced apartments. But that, that is quite a big market and, um, so far this year we’ve done five hotel deals, we’ve got another two on and London has stayed quite strong at that kind of four star, well three to four touching five. I think where we’ve slipped is, you know, Raffles is the most magnificent building but I think what’s happened with non-dom’s leaving to a point has reduced the number of super high-end visitors. Mainly actually I’d also say, my biggest bug bear is losing duty free. We’ve lost the shoppers that come for the weekend. I mean some cases, I know one guy he spent 1 million pounds a day for a month. So we’ve lost that sort of power of, oh the luxury, uh, visitor, wealthy visitor. So Raffles, as great as it is, The OWO slightly funny spot but magnificent. I think it’s probably suffered a bit because of that, cost of that room rate. I think the Peninsula, what a great brand, that’s suffered occupancy where that room rates sits. Where I think will be okay is, I think Chancery Rosewood is Mayfair, very special. I think that Mayfair is now stronger than, you know, your Knightsbridge’s and down sort of Savoy/Trafalgar Square way, I think it’s sort of consolidated a bit. But that, the rest of the London scene for hotels is, is really quite strong. You know, £150 to £400 to £500 a night is, is really strong. It’s anything over £1,000 unless you are giving someone something that’s very special is not as robust as it, as it was.
Susan Freeman
No I think you are absolutely right about the tax free shopping.
Mark Shipman
Well I’m backing our Mayor here, this is where he and I, I think would be on the same wavelength if we sat in a room together because he’s, he wants to bring it back as well.
Susan Freeman
Well I hope so. So Mark, I mean listening to the way that you talk about the deals and the clients, I mean it seems, seems to me that the relationship is, I mean it’s personal, you know your clients really well, they know you really well. So I wondered how you think the role of the real estate investment advisor is going to change because we have, you know, AI, there is so much that’s…
Mark Shipman
I knew this was coming.
Susan Freeman
So what’s the answer?
Mark Shipman
Personally and we talk about this a lot, I think AI is unbelievably valuable, the things you can do with AI from spreadsheets to, my PA took a building the other day and re-rendered it using AI where you expect an architect to do that and charge many thousands. Where I think we’re always incredibly important, it’s not just the negotiation it is, I still think we will have the vision more than AI will have the vision as to what’s ahead. Our buildings should present in real life, um, physical inspections. Yeah the numbers employed will probably be reduced, you can’t get away from that but there will also be to an extent a gut feel, a reading of how negotiation takes place. Some people do not want to hide behind faceless data sheets and, uh, and emails. So I, I think that there, there will always be that, that human contact. You know, how do you negotiate a sale, do you, do you negotiate a piece to stay behind to show you have confidence to the vendor that there’s more to come and you are prepared to take less now and be involved in taking the deal to the next stage. So I, I think there is still a huge amount of human input and the other thing to bear in mind with AI, you know, we all write reports and people look to AI but everything you put into AI is out there for other people to use and I’ve heard, and even had lunch with my accountant today which is a first and he said you have to be very careful with AI because there is certain information that comes out of AI that isn’t quite right and you have to be a little bit careful. It’s only as good as the information it’s hoovered up and AI will go straight into Google and lift out a Google and often AI gives you a choice, it doesn’t make your decision. So you still need a lot of human intervention but it’s, it’s changing rapidly.
Susan Freeman
Yes, I mean it hallucinates, I think that’s the issue. So, you know, occasionally you will get something that is just completely wrong so you just have to keep on your toes. So, if you could go back to your 24 year old self at the start of this, um, this career journey. What advice would you be giving yourself? And is there anything you would have done differently?
Mark Shipman
Yeah I think I became too complacent at times. I took my foot off the gas too many times. I regret not pushing harder to win certain clients on the larger scale at the time. I look and the advice I give people today, number one, you have to be numerate. You have to be great with numbers. You can’t operate businesses without analysts. The numbers are so important, knowledge of text, costings analysis, risk analysis. It’s not as much gut feel today. You have to be on it with your numbers. Numbers for banking. What debt does the transaction support. Whether you’re selling, whether you’re buying for a client, whether you’re advising on an asset management position, I think it’s a lot more technical today than when we set up. And actually laws are changing rapidly. The Building Safety Act, BSA 2022 I’d say has changed our world forever. What denotes a high risk building. We’re waiting for the Government to tick off Gateway 2, Gateway 3. And a lot of factors that have slowed up development and that people have become very vulnerable to the cost of the schemes being held up, you know, the cost to the development of the land, you know, interest rates.
Susan Freeman
Yeah so, 53.00 stage is a lot more complicated than it was, um, 40 years ago and one of the comments that, um, my partners have made that, you know, the partners that deal with you on some of these transactions is that after 40 years you haven’t lost any of your drive or enthusiasm for deals. You’re still as on it as you, as you would have been then. I mean, how, how do you account for that because there must be times when you think, this really is quite difficult?
Mark Shipman
Yeah I mean I am told by my wife, because I don’t have dopamine, this is my substitute, um, but if you have six children you want to help them get their foot on the ladder, housing ladder, you have to keep going. And the other thing is, it’s, you know, it’s an addiction, it’s my way of life. I don’t want to stop what I am doing and die. I love working with people. I mean I’ve worked with everyone, I mean my oldest client, uh, I don’t speak to him every day but I am doing things for him, is Bernie Ecclestone and Bernie is 95 and that man’s brain makes my brain look totally insignificant, well it is fairly insignificant. But he is such an intelligent worldly man and I’ve worked for years on and off with Simon Reuben, who’s a legend and you know, Lord Sugar, tough guy, legend. He has a love hate relationship with agents or me, I don’t know but, uh, you know, Lawrence Graff of Graff Diamonds, all these people and I want to look back on my career and say that I’d mixed it with the most interesting people, I’ve held my own and I’ve had something to contribute and to me, I want to look back on a time that I haven’t wasted and I’ve had something to say and enjoyed, not every moment, you have to take the rough with the smooth and at times it is soul destroying but I think we get work because of our experience; here Mark can you tell us what should we do, what do you think is up ahead?
Susan Freeman
Final question for you Mark, of your six children, how many are in or going in to real estate?
Mark Shipman
Mm, that’s a difficult one. I had my youngest son, aged 24 with me for three months. He is a mathematician and I thought it was for him. When he was a kid at school and he had a day out with us he said, uh, after a full day, some, allowing him to sit in big meetings, I said, what about real estate? His exact words were, real estate’s too illiquid, I want to be an investment banker. But from there he, he did a Masters in data analytics and couldn’t get into 55.45 and thought he will try in real estate but, uh, he could have made it but he wasn’t passionate about it. And, uh, so boys are out and with my girls, Brooke is last year at Uni and she is into nutrition and then I’ve got twin girls who are 15, one wants to be a lawyer and the other one wants to be a vet. So there’s no, property doesn’t seem to be in the genes. I think kids today, some of them feel it’s a slightly bit of a, a dinosaur industry.
Susan Freeman
Well that’s a whole other conversation isn’t it?
Mark Shipman
It certainly is.
Susan Freeman
Perfect, we’ll end there. So thank you very much.
Mark Shipman
Thank you for giving me the honour of being on your podcast.
Susan Freeman
It’s a pleasure and here’s to the next 40 years.
Mark Shipman
Absolutely. Thank you very much.
Susan Freeman
Thank you so much Mark for talking to us about some of the highlights and the challenges of 40 years of negotiating London’s top property deals. As one of my colleagues remarked, you still had exactly the same enthusiasm and drive as when you started out. Huge congratulations on your 40th anniversary and Mishcon’s look forward to working on many more deals with you in the years to come.
So that’s it for now. I hope you enjoyed today’s conversation. Please join us for the next PropertyShe podcast interview coming very soon.
The PropertyShe podcast is brought to you by Mishcon de Reya in association with the London Real Estate Forum and can be found at mishcon.com/PropertyShe along with all our interviews and programme notes. The podcasts are also available to subscribe to on your Apple podcast app, Spotify and whichever podcast platform you use. Do continue to subscribe and let us have your feedback and comments and most importantly, suggestions for future guests and of course you can continue to follow me on LinkedIn and on Twitter @Propertyshe for a very regular commentary on all things real estate, Prop Tech and the built environment. See you again soon.