Will Leaders Romans be the next estate agency casualty?
While all attention has been focused on Countrywide’s money woes, the financial misfortune of Leaders Romans has slipped quietly under the radar.
A year ago, the group posted a £21.6m loss over a nine-month period in its annual accounts ending December 2017, with £148m of net liabilities.
More worryingly, it revealed that £120m in bank loans needs to be paid back by next July and this is accruing a sizeable chunk of interest.
A further £132m in loan notes accruing 9% interest needs to be paid back by March 2023. With finance leases, the debt in the group totals £265m, most of which is to be repaid in the next five years.
Backed by private equity company Bowmark Capital, which supported the management buyout of Leaders in 2010 and Romans in 2013 before merging them in 2016, many will question the wisdom of its subsequent buy-and-build acquisition spree.
It now has over 160 branches and employs over 2,000 people but hasn’t announced any acquisitions since March this year when it acquired a block management business in Manchester.
Try dividing its debt between its branches and other income generating assets and it doesn’t add up. It really has the daddy of all debts.
So it appears its equity owners will have to take a full and overflowing bath on the debt.
Will they decide it’s time to pull out and sell up or perhaps sell off some of the crown jewels in the business to claw back the deficit? Or will it have to close poorly performing branches and put its hard-working foot soldiers out of work?
Or do they have another plan to inject capital into the business?
I can’t see it ever being floated, given what’s happened to Countrywide.
All eyes will surely be on its next set of accounts, which are due to be posted at Companies House by the end of this month (September).
Amazon continues to box clever
Amazon has now entered into the housing industry in the United States – but not in the way that people expected.
A couple of years ago it was feared they may offer online estate agency services, taking on traditional estate agents or realtors.
However, it’s now emerged they’ve signed a partnership deal with Realogy, America’s largest residential real estate business, in order to promote the sale of smart home products and white goods through its own portal.
Home buyers will be incentivised to use one of Realogy’s estate agency franchisee businesses – which include Century 21, Coldwell Banker and Sotheby’s – by giving them a $5,000 voucher once they purchase a home over $700,000.
This can be used to pay for Amazon Home Services, like painting, putting together furniture, cleaning or hanging a large TV. The voucher can also be used to install smart home products, such as a Ring doorbell or Alexa speakers, by Amazon professionals.
The new service, called TurnKey, is genius and mirrors what I was trying to achieve a decade ago with my online agency iSold, in partnership with Tesco. I learnt very early on just how hard it is to make money through online estate agency.
However, I wouldn’t put it past online agencies here to look for such partnerships, given how much they’re struggling to make ends meet.
Amazon has built an incredible brand and has mindshare. It’s even said that women trust Amazon more than their husbands – because Amazon always delivers!
It will be interesting to see how its new partnership succeeds across the pond – and whether it has plans to do the same here in the UK.
How does Keller Williams keep going?
I struggle to understand how an estate agency which lists 115 people associated with its six hubs manages to survive with just 223 properties for sale and 70 for rent (at the time of writing). Surely this is unsustainable?
It therefore puzzles me as to why people continue to buy into this franchise business.
Even more surprising is that Russell Quirk, who managed to drive Emoov into the ground, has emerged as a partner in the new Keller Williams Essex hub, along with his cousin Anthony Quirk and House Network founder Mark Readings.
I think we will all be watching this space with interest.
- Paul Smith is CEO of Spicerhaart
Excellent work on Leaders. As Thomas Cook has demonstrated, piling on debt to acquire dinosaur businesses in a rapidly changing industry tends to end very badly these days.
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Estate Agency, money for old rope?
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No Money for New Rope pal .
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It’s great to be able to aquire business but you need to be able to retain it.
I have seen leaders snap up a few local businesses my way but have had their clients into me telling me how poor the customer service has been!
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I would say most agents are struggling and topping up on a monthly basis. Tough times ahead for many.
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Keller Williams markets itself as a training company, at less than two instructions per person and Quirk helping out they ain’t got long to go. Steer well clear.
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Okay okay, Mr Smith now has a new target or two.
Instead of just shredding other firms could he not write something about positive change; or new ideas for a change????.
As I have said before it’s more of a self promotion piece……..
Anyone care to comment on his firm.?..
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Yes J1 amongst other things they had £16 million pounds of cash as at the end of August. Probably worth listening to.
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Excellent – positive if not sarcastic
Lets here how he does it then – don’t just shred others
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Why would he share his secrets with his competitors?
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Probably by employing estate agents that can spell ‘hear’.
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Ouch!
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More or less my feelings on most of the articles Mr Smith writes on PIE, J1…
”pot” and “kettle” spring to mind…
A wise man would be well advised to say nothing, as he knows the fate of a counterpart could also manifest itself at his own doorstep.
Many agents seem to take a perverse kind of pleasure in the thought of their competitors failing…not for one moment considering that they too could “fold” in these uncertain times…
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A brilliant reply post – maybe you could take up an opinion piece position
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I am no fan of Mr Smith or his agency – too many experiences of their ‘tactics’. But I recognise that he is head of a large, successful and profitable business and he hasn’t got to that position by sitting on a throne and pontificating. He knows agency and he has opinions. I don’t always agree with him but I do respect him for sticking his head over the parapet and commenting openly about matters that are of interest.
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Undeniably Agencyinsider…I think the point being made refers to his incessant ‘slating’ of other businesses, rather than his articles having any real value… other than being an outlet for his narcissism
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Spicerhaart’s parent company’s loss for the financial year was £931,692 ( 2017: loss of £3,330,517 ), and their staff retention in London is very poor, they’ve also been fined for bullying of their staff, but they make out they’re a fantastic outfit and like to take a pot shot at Leaders Romans and every other company that has the affront to compete with them.
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PS isn’t going to tell you how he makes his money, but then its his people that do that for him and he’s made more than a few errors along the way. I don’t think he has anything to offer!
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Spicerhaart’s parent company’s loss for the financial year was £931,692 ( 2017: loss of £3,330,517 ), and their staff retention in London is very poor, they’ve also been fined for bullying of their staff, but they make out they’re a fantastic outfit and like to take a pot shot at Leaders Romans and every other company that has the affront to compete with them.
PS makes most of his money from flogging mortgages to first time buyers.
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“I wouldn’t put It past online agencies here to look for such partnerships”
Easy for Realogy to incentivise like this when fees are 6% and minimum price caveat is $700,000. How on earth are online agencies in this country going to do it? Daft suggestion.
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Wow, you sound very desperate Paul.
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Will this gossip make an improvement on agents everyday life or is it just rubbing salt. How about coming up with something positive and constructive.
Let us hear some nice uplifting success stories by agents.
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It is a shame that Romans have become what they have. When i worked for them in the late 90’s and early 2000’s they were a major force and with Iain White, Dale Norton and Peter Coles at the helm they were so well run and employed and trained some superb agents and were market leaders in every town they operated in. Their reputation in my home town now is so far from what is was when i worked there. One of the best independent firms in the country. They lost almost all of their good staff and i am sure when Iain White left it was the beginning of the end for them as he was a magnificent MD.
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Well said Mrs White.
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Wasn’t me , wish I had thought of it though
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Not sure who you are but kind words Thankyou
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I had 2 months with Leaders in the Bournemouth area. Horrendous experience. Lots of promises but then a total lack of. The senior management were clueless.
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Sounds like a rather desperate uninformed attempt at causing uncertainty about a company without really knowing the strategy or economics of said company.
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An article based on non current information, what was the aim here? A complete waste of keyboard strokes in my opinion!
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Redundant speculation piece based on outdated information, potentially looking to generate more views off the back of the recent regrettable Thomas Cook disaster by just taking a look at publicly accessible figures and coming to his own conclusion.
The majority of successful business have had to at some point collate a level of debt in order to facilitate growth, those businesses would have a business plan and are not likely to make that public knowledge, they are therefore left defenceless when a “fear mongering” article such as this is published.
I didn’t see CEOs of TUI or Virgin holidays posting articles of this nature over the past few months……. just lacking in class I guess.
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The author’s timing is very suspect – ties in rather coincidentally with Kevin Shaw’s assumption of national sales MD for both Leaders and Romans. TI can’t see him actually haven written this article – it’s all far too eloquent.
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Estate agency, in the UK, doesn’t work for corporates. Time and again there is consolidation and then there is a bust. It is a good living for hard working local personable individuals, but that is it. You might need the comfort of a franchise, but if you are good, you’ll be a success without the fees.
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The Romans brand was once a great one and I think could be again . A once tight well run attractive business that has been decimated I’m afraid .-maybe Mr Smith should spend some of that cash and buy it up-would put SHG on a more level paying field with Connells Group branch numbers and I think would and could be more succesful
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