Interview: Nick Leslau (2011-07-28) by The Guardian

This is an unaltered copy of an interview of Nick Leslau, for use as a primary source on Sega Retro. Please do not edit the contents below. Language: English Original source: The Guardian

Nick Leslau, one of Britain's wealthiest property entrepreneurs, has just embarked on the grandest undertaking of his career: he has snapped up the historic St Katharine Docks near the Tower of London for £156m.

The son of a jeweller who grew up in Cricklewood in north London and says he has recently become "besotted" with reading books about the capital in medieval times, Leslau wants to refurbish the buildings around the 200-berth marina and hopes to entice City banks to the waterfront.

"For me it's a great privilege to be involved in such an important part of London's history," the colourful mogul says in his office in Cavendish Square, the day before he sets off for a summer holiday to Corsica on his yacht. "When you own real estate and you refurbish offices and re-let shops, it's not quite the same as the scale of St Katharine Docks, and it's an iconic location."

The only other deal that Leslau reckons comes close in importance to the St Katharine project is the Trocadero centre in Piccadilly Circus, which he and business partner Nigel Wray bought while at property company Burford.

That development was listed on Aim, but a disastrous deal with computer game group Sega sent the shares plunging. Sega had promised to turn the Trocadero into the world's first indoor theme park, Segaworld, but it became clear to Leslau on the day of the opening that he had "made a mistake".

"Sega could not deliver what they said they'd deliver. It looked amazing, but their rides were not capable of delivering the number of people they needed to deliver to support the operation. People were queuing for ages... It was a question of over-anticipation and under-delivery." So Burford bought the centre back in 2000.

Leslau insists Segaworld was a "PR disaster but not a financial disaster". But he has the necessary win-some-lose-some attitude of the entrepreneur: "If you don't have a go, if you have no skin in the game, you're never going to win or lose," he says. "You learn a lot from the ones that go wrong. PR-wise it was the worst deal I've been in – although Knutsford wasn't our finest moment either," he adds with refreshing honesty.

Knutsford was a 1999 stock-market phenomenon which has become a case study in over-promising and under-delivering. Leslau set up the company with Wray, ex-Asda boss Archie Norman and Julian Richer, the founder of hi-fi chain Richer Sounds. The quartet invested £5m and their plan was said to be to buy a major retailer like Marks & Spencer or Woolworths. They got a lot of media exposure, investors piled in and the shares took off like a rocket. The business-without-a-business was worth more than £1bn within weeks.

"It was all complete flights of fancy," says Leslau now. "If M&S had wanted Archie Norman, they could have recruited him. They didn't need to be taken over by a £5m business capitalised at £2bn." Knutsford failed to deliver on any serious scale and ended up buying investor relations firm WI Link for £50m.

The entrepreneur, who called the top of the property market at the end of 2006, sounds a cautious note about the current outlook. "We have two countries: we have London and the rest of the UK. While London is steaming ahead in all directions, the rest of the UK – outside of shopping centres, good retail warehousing and sale-and-leasebacks – is in trouble. And the question is: what are the holders valuing those assets at? If they are overvalued, and I suspect that they are, there could be some further systemic damage."

He adds: "What we don't know about is forbearance – how many property companies exist because their bankers are permitting them to exist, because the alternative is too painful? If we knew that banks were going to be putting stuff on the market, you'd be able to say prices are going to come down dramatically. If the banks stick with it, you might have this constipatory effect of values being mythically high."

But he concludes: "It's safe to say there's going to be a lot more stock available over the next year, two, three." And he certainly intends to pounce.

Leslau's father and Polish mother divorced when he was 10, and his maternal grandfather – a Polish diplomat turned businessman – paid for him and his two brothers to be educated privately at Hall School in Hampstead (of which he is now a governor) and Mill Hill School, also in north London. He went on to study German at Warwick University ("the only thing I could do to get in") but dropped out and did a degree in estate management at what is now South Bank University.

A big sports fan, Leslau co-owns Saracens rugby club and his office is adorned with an impressive collection of rugby shirts, a stunning black-and-white photograph of Muhammad Ali and a caricature of himself in rugby kit.

With an estimated fortune of £200m, he lives with his wife Maxine (whom he married at the age of 28 after a $250 "quickie bar mitzvah" at the Wailing Wall in Jerusalem) and his two youngest sons in a £30m mansion in Mayfair, but now wants to move to a smaller house in Primrose Hill.

When his sons recently discovered that their dad appeared as an extra in the video for I Love Rock'n'Roll by Joan Jett and the Blackhearts (as well as in Elton John and Level 42 videos), he "definitely went up in the cool stakes," Leslau says. It was more glamorous than selling umbrellas at market stalls – "anything I could do to make a buck to supplement my lifestyle". Between school and university, he worked for a grocery as a shelf filler and was soon jointly managing it. This is where he first came across Wray, a well-known City financier who shopped there. They met up again when Wray bought Burford in 1987, which Leslau had joined as a surveyor in 1982. At the age of 27, Leslau became chief executive while Wray was chairman, and together they built Burford into a £1.2bn property business over the next 10 years.

In 1997 Leslau quit and set up Prestbury, which now has a £3bn property portfolio, including Madame Tussauds, Thorpe Park and Warwick Castle, which are run by Merlin Entertainments, 152 Travelodge hotels and 21 private hospitals run by Ramsay Health Care.

In 2008, Leslau also floated Max Property, a new investment vehicle with a planned life of five to seven years. Despite the financial storm he managed to raise £220m. "I was very keen to raise as much as I could in order to take advantage of the fallout."

That year he also found time to spend 10 days working incognito as a social worker in Glasgow as part of the Channel 4 series Secret Millionaire. He was shocked at the poverty he witnessed – "something I didn't think existed in this country".

Leslau is also among dozens of landlords of the collapsed care home chain Southern Cross and recently made headlines when he called for management to be ousted. He came under fire from union leaders, who accused him of wanting "to put D-Day veterans and the elderly out on the streets".

Leslau says he "bristled" at this: "We care first and foremost about the residents, and anyone who's been a tenant of our knows we care hugely about our tenant businesses. The whole Southern Cross fiasco was just 'let's just blame everyone except the company'. And now the company is doing the right thing."

Southern Cross is being broken up. Leslau is in negotiations with potential operators for his 21 profitable homes in the south-east and hopes to appoint a preferred bidder soon.

"Hopefully, by October they will be up and running. In theory it should be seamless to the residents – all they should see is a change of name over the front door."