Dear The Weekly,
My name is Oliver Dowden. I am the Secretary of State for Digital, Culture, Media and Sport. You can call me Olly.
And my name is Nigel Huddleston. I am the Under-Secretary of State for Sport. My friends call me Cuddly Huddley... and I have absolutely no ambition at all to be on Spitting Images.
To put it plainly, neither of us are terribly happy with you. We understand that you played your Annual St Bride’s Managers vs Boost Charitable Trust Golf match last week, and we weren’t invited! We acknowledge that neither of us play golf but that’s not the point. On top of that we were looking forward to telling DC and BJ that we were going to be sharpening up our sector knowledge by going on a course! Instead it was yet another grinding week behind our desks fielding grumpy questions from grumpy members of the public. And, on top of that, we now have Dishi Rishi on our backs too. He wants to cut our budget to help pay for all the confetti he has been sprinkling around everywhere. Well, we told him, in no uncertain terms, to take an almighty Greg Rutherford. (That’s a running jump, if you didn’t get it).
Anyway, despite our no-show at your golf day, we understand that the right team won - Team Boost. Well done them. Let’s face it, the more money that the charitable sector can direct into grass-roots and disability sport, the less the Government has to find. So, please keep it up.
And, if you think that with all this COVID thing going on, our department is being stingy, well, we are not. You may like to know that we are putting an additional £53.4 million of exception funding into supporting Team GB’s campaign for next year’s re-arranged Olympics and Paralympics in Tokyo. Of course, when I say we are putting in the money, what we really mean is that the National Lottery is … but hey, who’s splitting hairs?
Rishi was bragging that he had written to you on a couple of occasions recently telling you how wonderful he is. So, we thought we would get in on the act too. Why should he have all the limelight? And anyway, how easy is that bloke’s job? Oh, by the way, he asked us to thank you for letting him have the September rent collection data from Remit Consulting. He wasn’t sure whether collecting 56.4% on Day 0 was good or bad. Why should he? After all, he's only the Chancellor of the Exchequer. And he said that if the figures are good… then it surely reflects what a terrific job he is doing. And if they are bad, well, he wanted us to remind you that we are all in this together.
I don’t know whether it was meant to be confidential or not, but everyone in our department had a right ol’ laugh at the Investment Commitments paper you sent to Rishi last week. The truth is that we didn’t understand a single word of it, but we wondered how many convictions you would have to have before you lost your licence. Rishi really liked it as it was all on one side and he was able to make a great paper airplane out of it. But I don’t think he really understood it either. We have made a few observations next to each point. We hope you will find them helpful.
St Bride’s Managers Investment Commitments – Quarter 4, 2020
The impact of COVID-19 on the economy has not yet fully filtered through into property prices/valuations. A mutual estate agent friend told us that a valuation is made by sticking a finger in the air. What happens if someone wants two valuations?
A satisfactory result to Brexit and the announcement of a viable vaccine will generate an immediate boost to investment sentiment. However, it will not be sufficient to reverse the negative economic impact on the sector. Rishi says… where on earth did you get the notion that there has been a negative economic impact?
The risk to valuations relates more to adverse occupational demand than softening yields. When we asked what a 'softening yield' was, BJ's response was...Ah yes...I think you will find that they mean 'emollitio tradite'. So...we are none the wiser!
Existing portfolios will (continue to) require intense attention throughout 2020/21 to avoid a hefty fall-out. Collaborating with tenants should be a priority. We referred this one to DC. He wondered why on earth anyone would want to collaborate with anyone about anything. (Please do NOT quote us on that).
It may already be too late in the cycle to weed out assets with poor performance potential. Why would weeds be growing on bicycles?
For buyers… be patient. Prices will be lower in 2021/22 than now. Apparently on his way up to bed, having read this one, Rishi was heard to have bellowed ‘Horlicks’.
Where possible, invest in existing assets (redevelopments and refurbishments). This avoids having to bear high up-front land purchase costs. We wondered whether ‘bearing up-front’ was a criminal offence.
Acquire adjoining sites which will generate value-add / marriage value. Fine, but please remember only 15 people in England are now allowed to attend wedding ceremonies.
Generally, there is little financial distress at present. However, some open-ended funds are under liquidity pressure and may sell properties at discounted prices. In such cases, speed of execution is important. We agree. Anyone exiting pubs after ten with liquidity pressure should be executed.
Office values are likely to fall on weaker occupational demand and industrial land is hot. Isn’t this a bit of an exaggeration. We know that much of the UK’s industrial land is contaminated, but it is nowhere near exploding yet. (That is not expected for at least another five years).
Negative investor sentiment in the retail sector is over-exaggerated. Prime regional retail warehouses (non-fashion, on sustainable rents) are priced at 6.50% pa plus and are worthy of consideration. We referred this one to our wives. Their reaction was that they didn’t really care what happened to retail so long as they could carry on shopping at Waitrose.
The recent rise in house prices is an aberration. Neither of us know what aberration means, but we really hope that house prices will keep on going up as we both have ridiculously hefty mortgages to pay off.
The UK population is ageing. On this premise, we favour long term investment in healthcare and retirement assets. Please, please, please can you find a care home for BJ and DC.
Long leased properties are (still) attracting premium prices and are invariably over-rented. If the risk can be accommodated, better value may be obtained by investing in assets with only 2-3 years rent security where the valuations are heavily discounted. Sorry… but we did not understand this one at all.
Well, that’s all we have time for just now. But please do invite us to next year’s St Bride’s/Boost Charity golf day. It sounds like fun. Although, to be honest, since there have already been five Secretaries of State for DCMS and four Ministers for Sport in the past couple of years, there is a good chance that we will have both moved on by then! Let’s hope that it’s not to one of those retirement homes you have been talking about!