Real Estate Comment:
The irony of price haggling should not be lost on an estate agent. Nor should the odious practice of being “gazumped”.
So it would seem that the ranked activist shareholder opponents to the recent attempts at a Management Buyout, of the UKs largest Estate Agency Countrywide, new something that many proponents of the deal did not.
The conviction with which the Board of Countrywide, backed by private equity group 3i, marketed the deal as good value to shareholders, were met in with an even greater barrage of opposition, in particular from several US investment groups lead by Artisan.
At that time The Board of Countrywide were keen to point out that at 490p per share, represented a sale valuation that fell at the upper end of the firms multiples going forward.
Well they would say that wouldn’t they. Artisan’s assertions that the Countrywide assets were undervalued, drew some tart criticism from Countrywide board members.
So when the deal finally got voted down in late January the proof of the pudding would evolve in the immediately subsequent performance of the share price in the light of the facts.
So within a day or so Countrywide’s share price increased by around 3%! Within a similar time frame rumours flooded the markets that Appollo, US private equity giant and recent $6.6bn USD bidder for Reaology the US real estate agents was waiting the sideline to make a play for Countrywide.
It is now clear that Appollo had already been in discussions about a possible bid for some time but were keen to have the Board of Countrywide on side, to engineer a friendly bid.
Thus contrary to the sardonic comments made by Countrywide retiring chairman , those very “clever men and women” in the private equity groups may know a thing or two about the estate agency game…..its called gazumping!
NB
Real Estate Short:
In what the Olympic Delivery Authority, the QUANGO set up to pull together plans for the planning and construction of the extensive facilities destined to hosue the 2012 London Olympics.
According to ODA Chief Executive David Higgins, this process of publishing plans for all construction in such an open forum, is intended to make the tendering of contracts as “transparent” as possible for the purposes of obviating any controversy about how large money contracts are ultimately commissioned.
Visit: https://etenders.london2012.com
Personal Comment: Who can argue that in an international industry that regularly engages in practices that would put many a self respecting Third World dictator to shame, allied to the mass of politically motivated Fleet Street vultures, the processes involved in tendering for such big ticket construction contracts must necessarily be “see through.”.
Whilst this drive for openness is likely to be a some what over bureaucratic process, doing deals behind closed doors will almost inevitably lead to multitudinous “ghost scandals” if not real ones and the temptations of the large and voracious protagonists in the construction industry, well practiced in the black arts of getting contracts by fair means or foul are less tempted to practise their witchcraft on the na�ve quasi lifelong bureaucrats that usually populate government QUANGOs.
The evolving scandal that is pervading many Local Council procurement departments, where contractors have manoeuvred themselves into monopolistic positions of service supply and have locked down cash cows into a spiral of price dictatorship and wildly fluctuating quality of supply.
These conditions should serve as adequate warnings to the ODA
TB
Construction group Galliford Try will hold their AGM on Friday
source www.gallifordtry.plc.uk/
Footfalls
Short: The housing information researcher Hometrack, said that whilst the UK house prices evidently grew at substantial rates, much of the increases were skewed upwards by the “London” effect.
Much of the evidence points to increasing differentials between growth rates in deferent locations and in actuality general average house price inflation was far more modest than many other commentators were saying.
Smithy Says: Surely what we are witnessing is the inevitable “cherry picking” by the mass of smaller investors. Hence there is a great deal of price increase differences between the more desirable hotspots and not so appealing locations.
Moreover the primary driver in the South East is the near relentless demand for property, the earning power that underpins this demand and the chronic shortages of available property.
Source
Smithy
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TBrewer
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