Through the two years that Speyhawk, the company he created, staggered under the weight of its pounds 350m of debts, Mr Osborne never doubted that it would survive. 'It came as a devastating blow to me,' he said of last week's appointment of Price Waterhouse as receivers, even though Speyhawk had run up over pounds 300m of losses over the previous two years.
Although Speyhawk had been on the critical list for a long time, the collapse was ironically timed. Property has enjoyed a boom since Britain left the ERM. Since then, property shares have outperformed the rest of the market by nearly 50 per cent, reversing a five-year decline. The larger companies have taken advantage of this to shore up their balance sheets by raising pounds 620m from the market, culminating in a pounds 199m rights issue by the new management of Hammerson on Thursday, an issue that followed earlier fund-raisings by Land Securities, Slough Estates and Brixton Estate.
But this did not help Speyhawk. After 18 months of trying to thrash out a refinancing deal, the bankers' good humour had turned to annoyance. They clearly grew tired of Mr Osborne's optimistic forecasts and wanted to know when he was going to sell some of his tenanted properties and return some of the banks' loans.
'We'd all got fed up with 'Clever Trevor' and his perpetual optimism years ago,' said one analyst. 'We respected him as an excellent builder, but he was a terrible finance man and was too autocratic to employ a proper finance director. If he'd been sensible, he would have been more realistic with the banks.'
His over-optimism had led Speyhawk into some rash commitments. Although nearly half of last year's provisions related to Speyhawk's City projects, notably its flagship development above Cannon Street station, his optimism had also led him into severe trouble in Birmingham. Three years ago, just as the boom started to turn sour, he had assured British Rail and Birmingham Council that he would build 1 million square feet of offices on a site they owned near Snow Hill Station - double the potential estimated by more sober developers. His offer was accepted, but the site is still vacant.
Speyhawk's 46 bankers, led by Barclays and Citibank, could dispense with Osborne's services once the builders had finished work on the two shopping centres - in Harrogate and Wimbledon - that Speyhawk was developing on behalf of pension fund investors. Both developments have been completed in the last few weeks. The banks could then pull the rug from under the company without running the risk that the contractors would walk off site and demand massive payments to resume work, a lesson the banks learned when Canary Wharf was placed in administration last year.
Speyhawk's collapse is a classic function of the recovery in some areas of the property market. Though the banks say that receivership is only contemplated as a last resort, cynics argue that when bankers see a chance of some improvement in asset values they put in the receivers to push through quick asset sales. That is exactly what happened at Speyhawk.
In the last month or so, the division between the rich and the poor in the property sector - the good sites fully or mostly let to substantial tenants that can provide good covenants and the unlet, unfinished or undeveloped sites - has widened.
According to Phillip Lewis, a director of surveyors Conrad Ritblat Sinclair Goldsmith, the desperate shortage of quality investment property has meant that 'they are being snapped up at increasing prices'.
'There's little obvious justification for yields of 7.5 per cent or less on properties without any real prospect of rental growth for five years,' said Geoff Marsh, of Applied Property Research.
The purchasers include pension funds, showing a confidence that has not been apparent for three or four years; European investors, notably from France and Germany; and a large influx of money from Hong Kong. Not only are they snapping up well-tenanted office blocks, but also shopping centres, industrial property and even development land. Only business parks appear to be excluded from the party.
But some counsel caution. Alec Pelmore, property analyst at Kleinwort Benson Securities, said the recent boom was set to level out, as much of it had been self-financing. 'These rights issues have pushed money into the sector, and that pushes the asset price up.'
Ronald Spinney, managing director of Hammerson, agrees, saying that the rights issue would allow Hammerson to decide about property disposals 'on sound real estate terms'. In other words, with the pressure off Hammerson's balance sheet, it can hold out for decent offers.
But the door is closing. The market confidently expects that MEPC will call on its shareholders for extra money soon, but it may be the last to be able to take advantage of the opportunity that the market offers. And there are many heavily borrowed property companies that will be left in a perilous state because developers with empty buildings are finding it hard even to give them away.
Analysts have identified a number of things to watch for when attempting to spot whether a property company is close to collapse. These include:
Debts that exceed the value of assets, and insufficent rental income to cover the company's interest payments.
Let properties that could be sold quite quickly.
Empty properties that are hard to let because the company cannot afford to fund the incentives needed to bring in tenants in the current market.
No significant developments in progress.
In the words of one banker: 'There are companies where management is still seen as having a role, and there are companies where they are seen as an expense.' Or to put it another way, management costs money and tends to run the company to get value for the shareholders. Receivers should cost less and only act in the interest of the creditors.
Companies where the management is seen as still having an important role include Heron, where Barclays insisted that the other banks accept the retention of Gerald Ronson on a pounds 5m contract, because Barclays said he could sell the company's properties for more than anyone else could.
But unless the market improves, analysts are increasingly pessimistic about a number of companies including Greycoat - which has to refinance a zero-coupon convertible at the end of 1995 - UK Land, Bredero and Clayform.
The lesson of Speyhawk is that the banks are getting restive and are looking for assets to sell in an improving market to recoup their loans. More collapses look inevitable.
Quentin Lumsden, Page 22
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