Susan Freeman
Hi, I’m Susan Freeman. Welcome back to our PropertyShe podcast series brought to you by Mishcon de Reya in association with the London Real Estate Forum, where I get to interview some of the key influencers in the world of real estate and the built environment. Today, I am delighted to welcome Honor Barratt. Honor is the CEO of Birchgrove, a specialist age-exclusive developer working to establish a portfolio of assisted living neighbourhoods with well thought out facilities for rental. Central to Birchgrove’s proposition is the belief that renting instead of owning a home is the most liberating form of tenure, allowing neighbours to retain their independence without the burden of home ownership. Birchgrove has communities in Sidcup in Kent and two neighbourhoods in Woking and Ewell, both in Surrey. Following closely behind are Banstead, Godalming, Leatherhead and most recently, Chiswick in London. So now we are going to hear from Honor Barratt on her career pivot to building homes for later living and why she feels at home with older people. Hello, good afternoon, Honor.
Honor Barratt
Hi Susan.
Susan Freeman
Lovely to have you in the, in the virtual studio. So as you know, I am fascinated by your back story and we’re going to talk all about Birchgrove but I think before we start, it would be really interesting for our listeners to just know a little bit about you and your previous career and how you just made a decision to completely change what you were doing.
Honor Barratt
Yeah, and I made that decision a little bit late actually Susan, I was 42 and there’s bits of me now that think “Oh my god, I wish I’d realised my purpose before the age of 42” but there we go, can’t go back. I did have a really wonderful career. I loved it. I worked in TV, predominantly around news and sport and I love current affairs and I’m like a football junky so, I had this perfect, perfect career working all over the world, travelling, at someone else’s expense and it was amazing but I didn’t, I didn’t have purpose, I wasn’t changing the world, I wasn’t making the world a better place but we built in partnership with an amazing older man, I built an agency which we sold in late 20… 2007 actually, to Octopus, the private equity house and they took a big stake in our agency and I then stayed with them, with Octopus actually, for seven years working under their tutelage and I learnt an awful lot actually, about how to work with your financial partner because we hadn’t one prior to that and we were a bit rogue and I learnt an awful lot off Octopus. And then one day they were like “Oh we’ve got this really struggling portfolio company over here dealing with old people. Can you go and have a look” and I was like “Oh Jesus, you know, who wants to work with old people, I mean, prrrr.” So, I begrudgingly went down the M4 and got there and of course, just completely fell in love with old people. It was like an instantaneous love affair and came back up the M4 and said “Right, Octopus, you know, I’m selling out the rest of the agency” and we did an MBO and by the end of the week I was just 100% in old people.
Susan Freeman
That’s extraordinary. So, up until then, you had no inkling that you would have an affinity with older people?
Honor Barratt
I’m not sure I’d ever met any. I do have this one amazing woman in my life called Dierdre and so she met me at a time in my life when I was a single girl, just coming out of a relationship, buying my first house on my own and feeling a little bit, ooh, you know, out there in the world on my own and I was moving in and she trotted over the road – she was 72 at the time, I won’t tell you how old she is now but she was 72 at the time – and she came over the road with a bottle of Riesling and I found two mugs in a box and she sat down with me and it was the beginning of this amazing friendship. She is like the most important person in my life and at the beginning, it was all one-way traffic, she was giving me amazing support and I got married and I had a couple of children and as we know, raising children, staying married, is bloody hard and having Deirdre in my life meant that at times of crisis I could trot over the road and say to her “S**t, I want to get divorced” or “I hate my children” and she’d send me back over into my life with a story, telling me, with her wisdom, just setting me back on track and so I sucked her dry, I think for a good eight years and our relationship started to change, where she actually needed more than I needed her and, you know, every Sunday I’d trot up into her attic and re-start her boiler and you know that’s the relationship that we had and through Deirdre, I realised, oh my god, there’s this thing called wisdom, which if you don’t have it, there’s an absence but if you can find somebody who can share it with you, you’re just better equipped to face the world. So, Deirdre was probably the first old person that I met that I realised it can be a co-dependent relationship. So, in the business that I run now, it’s not me looking after old people, I absolutely take my problems to them and we reciprocate, it is a very balanced relationship. And she started it all off, she’s my muse.
Susan Freeman
It’s really interesting. I was just sitting here thinking, okay, if she was 72 when you met, where does old start?
Honor Barratt
Do you know what, we met this… I met this amazing, indigenous chap recently and I don’t even know the name of his tribe and I don’t actually know which country he came from but he has this amazing concept of retirement and he says, “In my tribe, we believe that retirement starts at 17 and it finishes at 28 and those are the years where you leave the tribe, you are completely selfish, you are self-absorbed, self-centred, you are all those horrible words that begin with self and you just look after yourself for those years but at 28 you come back to the tribe and then you starting working on behalf of the tribe. Then you have purpose, then you realise that you can, you know, join a committee, other people need your wisdom, you can move trees” and for him, retirement was 17 to 28 and I was like, oh my, you know that’s so seductive isn’t it. The idea that until the day of your death, you are valued, is ah, man, that’s so powerful and I would love this stage of your life to be seen as just a third stage, you’re not retiring from anything, it’s not a sit back, it should be a sort of sit forward but I, you know, I know behind your question is, you know, when do you get old? We have a concept of the young-old so, I have a chap who lives with us, Brian, he’s 94, my god he is, he’s just whipped us into shape, he’s got on top of the library and catalogued it, got us together, our s**t together, you know, Brian’s not taking any passengers and he’s 94 so, equally, you meet people… I know some people in their early sixties who live with me and they’ve just sort of given up. I’m like, “You’re 60, you should still be working” but something in them has broken and that’s it, they’re retired at 60.
Susan Freeman
So, it’s very individual. So, Honor, you found yourself wanting to work with older people and help, you know, provide homes and communities. So, how did you go about doing that?
Honor Barratt
Well, my training my ground I guess was about Octopus business and I think the people at Octopus are whip smart, I mean they are super bright people so, they asked me to raise my game and I was frequently in the room with people and I just didn’t understand anything they were saying, like, all these acronyms, like what are you talking about but I also learnt from them, they had one slightly difficult investment where the relationship went a bit toxic actually, and it goes as investor versus entrepreneurial founder and became incredibly adversarial and being on the side-lines of that, I was like okay, I don’t ever want to be in that position where I’m hiding my homework from the person who’s funnelling money in my direction so, I sort of learnt for myself that that confrontational investor, entrepreneur relationship was not what I wanted to have and as I was learning this, I was approached by Bridges, which is a social impact investor who, and they themselves had had this amazing idea that you should rent in retirement and so they tracked me down at Soho House and said, you know, what do you think and I was like, ooh Jesus, you’re mad but of course two minutes later, you were like oh my god, that’s genius. It wasn’t, I didn’t immediately think rent was going to work but it took about two minutes and then you go, oh my god rent’s going to work. Renting in retirement is exactly what meant some people, not all, what some people have been waiting for. So, I mean, it’s an extraordinary piece of luck isn’t it that somebody tracked me down and said oh I’ve got 65 million quid to get rid of in this arena of retirement and I’m like, ooh, I can help you spend that. So, Birchgrove was born.
Susan Freeman
But Honor, you, I firmly believe you make, you make your own luck so, I’m sure it didn’t just, it didn’t just happen. So, what year was that?
Honor Barratt
2017. So, I started the 1st of March 2017. Yeah, left the Octopus business and went and joined this one 1st of March 2017, we started on site I think it was 1st of June 2017 with my first very ugly baby, which was in Sidcup, which was a plot of land that was gifted to me to get going, with planning and I think in a… so this is what I think about female CEOs, I think we can be incredibly pragmatic because there’s no testosterone on the table and so I’m looking at that, going that’s an ugly baby in a fairly crappy town but I’m going to, I’m just going to get started and I’m going to build this thing. So, we just cracked on and built it and I do have an amazing chairman actually, and as a sounding board, to have a relationship with someone who is completely, not completely detached, not even disinterested but I don’t know, he just has distance from the business, which allows him to function as this perfect sounding board. I tell you, for the first two months, while he got used to having a female CEO, as the chairman, I would go to him and go ooh, here’s a pile of cat sick and he would think that he was riding in on his white charger to rescue me and after two months, I said, no, no Mark, your job isn’t to rescue me like I’m some damsel, your job is to just help me pick through the cat sick and find the gem of an idea. Stop riding to my… this, you know, and it was really interesting, his sort of holding himself back from riding to the rescue and going okay, we’re both in this, how do we sort through the cat sick? And find this little gem of an idea in the middle of it. So, I think that’s really, a really important relationship in my life and I know it’s reciprocated, you know, we’re, we’re co-dependent.
Susan Freeman
And when did you discover that there were other people also, you know, trying to help build this nascent Build to Rent sector because I think we first met each other at Build to Rent conference and I can’t, it probably was maybe earlier than 2017 and of course there were all these other people who’ve been sort of trying to develop a rental that weren’t necessarily getting, you know, government support and were finding it quite difficult because it took quite a long to time to, you know, to really get it going.
Honor Barratt
It’s funny isn’t it. I think someone called and said, “oh will you come and speak at a BTR conference” and I was having a whole year of my life, it was actually 2018, and for the entire year I had agreed to myself that I was going to say yes to everything, whatever I was asked – except I never told my husband that that was the year that I was having though, he didn’t get the benefits of the yes – so this chap called, never heard of him, “Will you speak at a BTR conference?” So, I said yes, with my phone like this, typing in Google, “What is BTR?” and then I quickly read the Wikipedia definition and I was like s**t, that’s what I do, that’s like what I do but for old people. So I went to this conference and just met loads of people who have the same obsessions with me and the same misunderstandings or the same challenges and I was like ah, these are my people. It was a very weird, you know, come to Jesus moment that I was suddenly with my tribe and it was lovely and that’s where I met you, Susan, you were there.
Susan Freeman
And, it was funny, I mean because the Build to Rent title, I mean originally it was PRS, we were organising PRS dinners and then we realised we needed to differentiate this new build from you know all the existing housing stock, so we came up with Build to Rent.
Honor Barratt
Were you there at the beginning, Susan? Were you there, coming up with the words?
Susan Freeman
We were there at the beginning because we acted on the re-development of East Village, which was effectively the first Build to Rent scheme so, we were there at the beginning having the conversations and I remember, you know, somebody saying, “Well, if we call it Build to Rent, what happens when we’ve built it?” because nothing had actually come out of the ground, you know, very much at that time so, you know, when we’d built it, should it be called Built to Rent but I think we settled on BTR.
Honor Barratt
That’s fantastic, you were in the room right at that moment when someone said it. Love that.
Susan Freeman
Yeah. So, you know, we are now, you know, effectively ten years on. So, it’s really interesting to hear how Birchgrove got started. Do you think there was anything that you brought from your TV career that helps you in your current, very different role?
Honor Barratt
I think in TV we obsess about insight and we understood… So, it’s really funny, I think about people over 65 as the same as children, who are technically under 18, so I as well as doing news and sport, I would do children’s TV and you know, an 11 year old girl has got nothing in common with a 15 year old boy but they are still technically children and so you have to find the insight very specific 11 year old girl and a little bit in retirement, you can be incredibly lazy and just put everybody over 65 into one generic, homogenous chunk of old people or you can understand that just as you and I, Susan, are entirely different people, so we will still be different as we turn 65 and you have to build to the insights. Do you know what’s interesting, when sometimes, you know, we drag people into retirement and I go through this whole process with them which, I watch it happening, I know it’s got to happen, I know it’s going to take a certain amount of time, which is where they always think about their parents because the only old people that we know are our parents and so they say, “Well, my parents,” you know, “they wouldn’t shop at Waitrose” or you know, “they don’t like bar stools” or” they would like carpet here” but you know, your parents are not really relevant, you’ve got to find an insight and probably from years of trying to distinguish one children’s television channel from another or one news set from another news set, is about trying to find that little nugget of insight rather than being lazy.
Susan Freeman
So that is a useful way to look at things.
Honor Barratt
I hope so. I hope I don’t get lazy and, you know, like build a really vanilla product because you just don’t have any idea who you are building it for.
Susan Freeman
So, let’s talk a little bit about Birchgrove and how, you know, your vision, what sort of communities you are looking to build and yeah, how you differentiate yourself from, well, there aren’t that many other people in the market providing rental for older people, we seem to have started off really focussing on the younger generation and of course we’ve got this demographic timebomb with the aging population so, tell us a little bit about Birchgrove.
Honor Barratt
Well, yeah, that demographic timebomb that you talk… I mean it’s coming over the hill, isn’t it, like a sort of tidal wave of oldies and I felt that in the for sale product, I was constantly meeting prospects for whom most of them, when you buy a retirement apartment, it is life changingly brilliant. If you buy it at 70 and you live there for twenty years, it’s the best investment you’ve ever made in property terms but also it will extend your life and have great friendships, you’ll never be alone, I mean it’s amazing but frequently, when you’re selling retirement apartments, you meet an 85 year old widow whose husband died a year earlier, she’s not spent her life making decisions on her own, she’s always been a partnership, she’s probably never had a one-to-one discussion with her solicitor, he always did the banking and for her, to buy a five hundred grand retirement apartment at the age of 85 is overwhelming and so, when you talk about our competition, actually, my competition is the family home so, it’s always, she trots back to the family home, lives there on her own, heating only the ground floor and at some point she’ll trip over the step and that’s the end of her and I spent those few years with Octopus learning all about the people at 70 that I could help and then saying goodbye to the people at 85 that I couldn’t help and I think the joy of working for a social impact fund, which is Bridges, so they say don’t they, you’ve got to make a ton of money, I mean there’s no denying, I have to do some stellar IR and money multiple but I have to also make the world a better place and they don’t compromise on that, it’s not, it’s not just a gimmick, they ask me, “Have you made a better place this month, Honor?” and that is about finding those people who are currently excluded from retirement living, for mostly financial reasons and bringing them into the fold and so, Birchgrove was a business set up to capture all those people who are excluded and take them on this epic rental journey. But that’s not to say, Susan, anybody wakes up in the morning and says right, I’m off to rent in retirement, I mean they don’t, they still think that they should buy because they’ve spent their whole lives being homeowners. I’m sitting here talking to you, Susan, in my community in Woking and – my favourite, you’re not supposed to have favourites but obviously, Peter is completely my favourite and the reason I love Peter is, almost the day that I completed on this piece of land here at Woking, he went onto the planning portal of the Local Authority, downloaded my plan, chose his apartment, found me on LinkedIn, bearing in mind Peter was 84 at the point, called me and said, “Oh hi, my name’s Peter, I’d like to buy apartment number three, with bank.” I was like, “Jesus Peter, like I haven’t even found a contractor, like, what?” and so, three years out, Peter put down his reservation and he wanted number three and so I went and visited him at his home because I didn’t have a show apartment, I’ve got nothing, went and visited his home and at some point I knew I was going to have to say the words, “I’m sorry Peter, you can’t actually buy apartment number three, you have to rent it.” When I said that he sort of recoiled because he’s quite posh, Peter, and he said “Well, Honor, I’ve always thought of myself as an owner” and I said “Well, you’re going to have to start thinking of yourself as a renter, Peter, if you want to live in apartment number three” and by the end of that talk, we had a cup of tea, sausage roll, he went “Okay, yeah, I get it. That works. I’m in” and it’s amazing how quickly, in the same way that it took me a couple of minutes to get over the concept of rental so, it takes them a couple of minutes and they’re like oh okay, I get it, right, I’m in. It’s amazing. Very liberating.
Susan Freeman
And it makes sense because if you’re living in a property that you can sell, you can then release a lot of cash and invest it somewhere else.
Honor Barratt
Or get power. So, someone like Peter, so Peter’s amazing, he was like a director of Safeway, like super corporate dude, made a lot of money, raised two amazing children, had loads of power and at some point in his life, Peter stops becoming the provider and starts becoming the burden and now other people have got to look after him and, and that’s painful but when you sell that family home, it actually didn’t matter to Peter’s family but normally when they sell the family home, suddenly you’ve got power again because you’ve got disposable income, you can affect change, you can educate your grandchildren or help your children get on the housing ladder themselves and suddenly, I’m an 87 year old gran and everybody’s been ignoring me for twenty years, I’ve got power again but economic power, especially for the guys, is liberating and powerful and potent and gives them back a bit of their testosterone, you know, they get a bit more va va voom.
Susan Freeman
And also, there seems to be a community, I mean you are sort of focussing on getting people together, you know, so they’re not living on their own in a house somewhere, there’s actually, there’s actually company.
Honor Barratt
Susan, this is the joy of this business model. So, in the for sale model, the developer makes money on two days, you know, the day that you buy it and the day that you die and he gets the exit fee but in the rental model, I make money every single day that you are alive so, I am entirely motivated to keep you healthy and happy and living forever. Like, if Peter lives to 104, I’m the happiest girl alive and he’s really happy too because he’s lived and he’s healthy. So, we realised, again, can’t be lazy and just sit back, we have to be completely on the front foot every day and get these guys to live forever and we’ve realised, this goes back to you know your original question about what is retirement, how old is old? If you have no purpose in your life, no reason to get out of bed, you kind of just give up and die and there is so much research that says if you have purpose, if your entire job is just to keep a budgie alive, you will live longer because you have to get up every morning and give him some new seed so you’ve got to put your lipstick on, you’ve got to get your clothes on, you’ve got to get out there and walk the dog. I mean, here at Woodbank, we have chickens, people have jobs, we have a jobs board here so, we have residents who do all our sales tours, we have residents who answer the phones on Sunday mornings, residents who lay up the tables every day before lunch. There is no option to sit around on your arse, giving up. You absolutely have to have purpose and I wonder whether we’re a bit fascist about it because we feel motivated by purpose and we expect everybody else to conform but that’s the community that we run here and so, we ask our neighbours – this is why we call them neighbours, we don’t call them residents, resident is someone who resides and sits back on their butt and waits for you to give them cake, a neighbour is someone who looks out for you and so, if you know, if someone is going on holiday, their neighbour should absolutely feed the cat, that’s what you do in a normal community so, it’s absolutely what you do here. So, we live in neighbourhoods, we live with our neighbours and this is quite new for us, Susan, and somebody observed the other day that I would know that we’d cracked it, if when I walk into one of my neighbourhoods and one of the oldies said, “Oh, Honor, can I get you a cup of tea?” Then I’ll know that they’re not waiting for me to serve them, we’re in a reciprocal, mutual relationship here. So, let’s see. I mean, I don’t know how to evidence that living with purpose for these guys will make them live longer, it’s just a hypothesis and I need to find some data.
Susan Freeman
Do you know, as you’re speaking, it sort of reminded me of that wonderful Marigold Hotel films.
Honor Barratt
Yes, exactly. The longer you live here, the younger you get.
Susan Freeman
Sounds perfect. Do you, are you pet friendly? Do you allow dogs?
Honor Barratt
I mean, we’re pet obsessed. Dogs, cats, chickens, obviously fish, birds. Oh, I did have one woman, she’s on my database, she’s got like fourteen rabbits, I don’t know whether I’ll take fourteen rabbits but you know, if it keeps her alive.
Susan Freeman
But those fourteen rabbits will be a hundred rabbits before you know.
Honor Barratt
Well then fifty people will be kept alive won’t they, looking after the rabbits. But even the staff, you know, this doesn’t just stop at our neighbours absolutely for the staff, I mean they all bring their dogs to work, we all bring our kids to work when it’s half term. All that stuff keeps you alive, makes you happier. You know, times like these, you need whatever break you can get, don’t you.
Susan Freeman
You do and I know that you’ve also talked about intergenerational living, which again seems to make so much sense, to actually get older people sort of living, you know, in some way with the younger generation because it just, you know, as you talked about, you know, the relationship with Deirdre, it works both ways.
Honor Barratt
It does cut both ways yeah. But what do you think though, Susan about, I mean, for retirement one of the things we all talk about is our challenges planning, isn’t it, just getting stuff through planning, we’ve all got tons of money, we can build faster than anything but we can’t get through planning. In your experience, if you take something as complicated as intergenerational living to a Borough, do their heads like explode or do they think oh, I know what pot to put you in?
Susan Freeman
Well, things are changing. I mean, you don’t have to go back that far to find some Local Authorities not quite understanding what Build to Rent was and not wanting to support that sort of model so, and I think it is different between different Local Authorities, I mean quite recently there was a Local Authority I think that turned down a later living development which I think was on the high street, saying that, you know, it wouldn’t add to the sort of vibrancy of the high street. So, I think you just have to sort of demonstrate that these things work and there are I think quite a lot of examples now sort of particularly of sort of universities actually making sort of room on their campus for maybe retired sort of academics so that they can actually mentor the students. I mean, it does makes sense but I think, you know, one just has to trial different models because you know, the way we’ve done things in the past isn’t necessarily right and just in terms of your locations for your communities, I mean do you go for a sort of busy high street location or do you go for something quieter? What works?
Honor Barratt
So, much as I’ve just said, you and I are totally different, people over 65 choose different things. The only thing I won’t compromise on really is hiding my old people away at some cul-de-sac because it’s really difficult, I mean actually, for women, it’s like over the age of 44 you become invisible so, imagine being a woman of 84, no one see… no one looks at you so, the only thing I won’t compromise is putting the oldies off the beaten track, out the way but I have, you know, a community in Chiswick that hopefully we will grow that is, I mean, oh my god it’s right on the high street opposite Marks & Spencer’s, Waterstones, it’s totally carless because it’s so urban and I have one which is five acres looking out over fields of horses and I’m happily selling both because we’re all different and everybody likes different so, I just don’t want exactly what that borough was saying that you just cited, ooh, we don’t want old people on our high street, you know that’s where you want to go f*** you, I’m going to put loads of old people on your high street just to prove this is how we are going to regenerate your bloody high street, you know. These are people, not only are they spending really amazing disposable income in all your cafes and independent shops but as they walk around, they pick up the litter, you know they sort of slow down the traffic to let the… you know they’re amazing, don’t tell me that you don’t want them on your high street. So, I’m going to go and deliberately build in that Borough now.
Susan Freeman
I think it was overturned on appeal, if I remember rightly.
Honor Barratt
It was. It was.
Susan Freeman
But it was a bit shocking at the time. And your scheme, I think your, I think it’s your seventh scheme in Chiswick, I think it’s a former police station, is that right? That you’re, you’re…
Honor Barratt
Yeah, it is.
Susan Freeman
…converting. So, it’s a sort of retrofit rather than a rebuild or?
Honor Barratt
No, it is a new build. It was a, I mean I’m sort of slightly ashamed, Susan, I, we are absolutely planning to demolish the building that was erected in 1972. That feels like it hasn’t had long enough as a building. We did a design review panel and the joy of that building is it’s so brutalist, it’s so concrete, the panel sort of said you know it screams out ‘I’m a police station,’ it tells you exactly what it is and for my use, ‘I’m a police station’ is not, is not ideal so, we will have to demolish it and you know then you are all into carbon, you know, we’ve got to reuse all our concrete as well as pulling out all the asbestos, you know it’s interesting challenge isn’t it but I know I can’t, not least of all, to be honest Susan because the ceiling heights of the police station were so high that if I wanted to get the same number of units, I’d be like eight storeys high so, no, I can’t reuse.
Susan Freeman
Were they high because the policemen were tall, I don’t know?
Honor Barratt
But we now, we still have because we haven’t demolished it yet, loads of cells so, obviously every time we go there, we all do a photoshoot in the cell like kids but um, you know it has to come down but I think we can proudly honour it by reusing some of the concrete and all that sort of stuff so, yeah, can’t wait.
Susan Freeman
And I don’t know whether you have sort of used any sort of redundant office buildings obviously, we talk a lot about office buildings which you know are slightly older aren’t fit for purpose anymore. Do they sort of convert well to later living?
Honor Barratt
So, we’ve bid a couple of times actually, Susan. I’ve never won the bids because actually on those occasions quite often the C3 bidders can go further than we can. Probably the only thing that I worry about this year, I mean it’s a year of things to worry about but quite there at the top of my worrying about list is construction and refurbing an old you know twelve storey London office block or whatever is actually not an easy task, is it? And right now it’s not me going around town like the big client, hey who wants to pitch for my business, it’s me going round town going who can I find to build for me and I think it’s actually easier, so as a sort of strategy, as team, we’ve decided we just need easy this year, we need one acre, flat sites, yeah with no flooding risk because that’s all we’re going to be able to find construction companies for and when the market sharpens up again then potentially there’ll be people who say yeah alright, I’ll take on complicated or I’ll refurb that building for you but right now, it’s tough out there you know.
Susan Freeman
And what’s your goal ultimately? I mean we talked about the fact you’re just, you’re on site with your seventh scheme but I’m not sure how many, how many units you’ve got now, how many people you’ve got, you’ve got in your schemes but what’s the goal? How many, you know how big do you want to get?
Honor Barratt
So, Bridges, the funders, I think would be happy if we never stopped. There is always money to put into this market at the demographic time bomb that you cited earlier is going to off and keep reverberating for about twenty years so, there’s more than enough appetite and there’s more than enough money. For me, personally, I haven’t cracked for myself how you run a really big business with the same start-up mentality and energy that we have now and so for me, I think when there’s twenty four communities, I won’t be the chief exec to run it because I’m a start-up kid and I’m not really into policy and procedure and paying attention to the detail. So for me personally, my efforts now are we invented the rental model, we kind of think we’ve proved it because we’ve had a very successful exit to M&G. So what’s the next big thing? So I’m never the girl who invents the idea, I’m the girl who takes someone else’s idea and makes it work so, I’m hopeful that we can find, in retirement – because I am obsessed about the oldies so I don’t ever want to leave them – what is the next thing in retirement living that makes people happier and live for even longer and it may well be what you just talked about, intergenerational. I need to find the next big thing and I know that Bridges will back it, they just have so much appetite and love for the oldies as well, like we’re all completely aligned about that so if I came up with a new idea, they’re in. And then Birchgrove will probably be run by somebody much more sensible who can keep everybody alive forever.
Susan Freeman
So, Bridges are part of M&G? Is that right?
Honor Barratt
No. Bridges completely fund and own Birchgrove. We sold the first two and soon to be the next, the third asset to them and they pay us to run them for them. So, Bridges, all the money that they’ve put in, they’ve massively, they’ve had big returns so they’re super happy and now I’m spending that same money on sites seven, eight and nine. So, we’re recycling the Bridges’ cash through the next developments. I think Bridges know that they’ve never had a larger exposure to any business other than Birchgrove, you know we’re the company that they’ve funded to the greatest extent and that, Susan was partly because at the very beginning we couldn’t get any bank debt at all. I spent like three years hawking around town going god who’ll give me some debt and nobody would come to the party. They were like oh we need some comps, we need you know a track record and there aren’t any comps, there’s nothing, there’s nobody out there who’s done it so, the first development was entirely funded by equity, which makes it you know quite expensive but was also a big mouthful for Bridges, they weren’t able to share the risk with anybody so I’m really happy that, as a team, we have said thank you Bridges, I’m going to take that money you’ve given me and I’m going to double it so, I feel really proud that their risk, the punt that they took on us, has been returned in spades and now they’re just reciprocating by going great, have the same money and keep going. But it was a massive risk for them and I’m really impressed with them as people that they could follow through on that.
Susan Freeman
Well it’s fantastic that you came together and that you’ve been able to prove the concept but it does beg the question, I mean we seem to be behind the States and behind Australia in terms of providing liveable communities for our older people and the population just continues to get older but there doesn’t seem to be a sort of huge rush to solve the problem. I mean, why is there so little accommodation for older people?
Honor Barratt
Why are we such massive underachievers? We really are like the slow kids at the back of the classroom, us Brits. I don’t know. I mean Susan your guess is as good as mine. Is it because we’re an island and we just don’t have enough land? I mean if you’re building in Florida or you know New South Wales presumably land’s pretty cheap, I don’t know, why do you think?
Susan Freeman
I think it, it must be the cost of land because you see these wonderful developments in the States where you know you move, you know in your sixties and you gradually sort of move do different accommodation within the development as you get older and then they provide more medical care as you get older but it takes, you know it takes room if you are going to provide you know cinemas and swimming pools and it’s just not on the cards sort of in around south east England but nevertheless you know we do need to provide some sort of solutions so, I think it’s great that you have gone in there and despite the lack of encouragement you got at the beginning, you’ve made it work.
Honor Barratt
You know one of the little stats that I love, Knight Frank tell me that every time someone moves in with us, we free up three and a half bedrooms out there in general housing and that is pretty powerful, isn’t it? All those underoccupied family homes that people are screaming for. If we could just stimulate this sector, we don’t necessarily have to build tons of other stuff because there’s family homes out there, it’s just we’ve got oldies sitting in there because they don’t have an option, they don’t have anywhere to go and I just want them to come in with us and the really great Boroughs, when you ask, when you are in planning, the really fantastic boroughs go oh yeah, I get that and they go right, what do we have to do to help you get going because they completely see the benefit of freeing up housing. The Borough of Bexley, who are amazing – run by a woman, obviously – she said, “Gosh, Honor, if you get any incoming residents who don’t want to actually sell their three-bed family home, can the Borough be first in queue to take it on as a council house and we’ll fill it and they’ll have zero voids and zero management fee?” And she was like, “Oh my god, give me those family homes.” Ring. I mean I actually never did that because everybody just sold their homes but that would have been pretty powerful.
Susan Freeman
Yeah, and that’s really positive and constructive response. But you’ve obvious… I mean the last few years has been a little bit difficult – understatement – what happened to your communities during lockdown and how did you spend lockdown?
Honor Barratt
We went earlier than Boris. I think the whole country went oh Jesus, this is coming. So, I think it was about the 12th of March 2020 we called and emergency board meeting and I said right, this is what we are going to do, we are going to shut the doors, we are going to lock in and shut the doors and Bridges, who, this is why I love them so much, they said, “Honor, don’t worry about EBITDAR, just don’t let anybody die” and so for twelve months I didn’t worry about EBITDAR, they were totally behind us. So we went into our communities, said to the family members, “You’ve got twelve hours to say goodbye because we’re going to lock the door. We’re on the inside and you’re on the outside.” And for, it was about nine months in the end, amazing members of staff moved in. I mean I had one, my side kick, Matt, moved in for nine months and took his exercise bike, Lisa took her cat, you know they just moved in, shut the door and no one went in or out for months, months on end and the boundaries between residents and staff just became incredibly blurred and my job, I would move in for the nights where they were broken and couldn’t do it anymore and they needed some downtime and I’d move in and I’d, you know, it was quite a gift actually because I think, I mean I really know the residents now because it was so intimate. I really know my buildings because I’ve hoovered every bloody inch of it, I’ve filled every mop bucket in a sink that’s not big enough and gone why the bloody hell did I specify this sink, that’s not going to happen and my sockets are in the wrong the place for the hoover and I can’t get to the ice machine and so, the guy who was our Construction Director, now Development Director, he moved in with his dogs, he lives in the building that he built and then he’s lying there at night listening to a rattling door going right, I’m not going to specify that door again. You know, it’s the insights but they, those few members of staff were just so selfless, they just went for it and just lived and so we didn’t get a single outbreak, no deaths, no nothing because it was total lockdown. But after the first three weeks, everybody came out of their apartments going well it’s not inside the building so it’s like a party town so, you were isolating with 58 other people, which isn’t remotely isolating. You can’t see your kids but you can have a coffee morning and yoga night and all that sort of stuff, it was amazing. I don’t think I want to do it again but it revolutionised our business, Birchgrove, in that our insights are much stronger and the tech that we have is much better because you know when you are in like a little Tupperware box of exclusion, it’s really only the tech that’s allowing anything to happen so we’re a better business at the end of it.
Susan Freeman
Well it’s good to actually hear something positive that came out of lockdown but you know what extraordinary dedication on the part of your team.
Honor Barratt
They’re just, I love them.
Susan Freeman
And how, how do you manage all this, which all sounds you know very, you know 24/7 with relatively young children? How do you fit everything in?
Honor Barratt
I don’t Susan, the children absolutely raise themselves. They, I sometimes go really guilty about it but I do also know that there’s lots of evidence that your children will be more gritty if they watch you behaving with grit and purpose and they will believe that there’s more to life so, since they were born, they’ve been treated as adults and during lockdown it was very clear to them, mum’s living over there, she’s not living with you. I mean actually, to their benefit, they got key working schooling so they were fine but there’s no, there’s no, it’s a bit shocking really Susan to say there’s no confusion on their part about where they stand. I mean, even when they look at my ‘Favourites’ on my iPhone, they’re like “Ooh, why are we on page two?” You know like “What’s all this?” But I think they will be better adults, who understand the role of women in the world better by having a working mother.
Susan Freeman
And are they girls or girl and boy?
Honor Barratt
One of each. Yeah. One of each.
Susan Freeman
Well, it will be interesting, it will be interesting so, hopefully they will want to do something that has a purpose too. Well you’ll know soon enough.
Honor Barratt
Either that or I’ve totally f***ed it up and they’re really in trouble but I’ll tell you in about twenty years’ time, Susan.
Susan Freeman
Absolutely. And you are, I think, about to embark on a Harvard course?
Honor Barratt
Yeah, I am. I just, oh my god, you know these rooms of lads who are talking in acronyms and I’m like god, I don’t understand what you’re saying so I need to go and learn some hardcore real estate finance and I suppose it’s related to what you, your previous question, you know how do you juggle that with being a mother? I obsess about Birchgrove I don’t really think about anything else and so I’ve done this once before, I went to Wharton. So, in going to Harvard and leaving the country and not having any relationship with Birchgrove for that period of time, I can completely think about growing my brain, like expanding my horizons, getting some inspiration. I could absolutely have done it as a remote course, Zooming in but then I’m just sort of juggling kids and Birchgrove aren’t I so, I decided I’m going to go there, I’m going to immerse, I mean I don’t know about you Susan but for me, the two years of lockdown, I didn’t really meet anybody new, I didn’t get any new ideas, I was actually a bit depleted by the end of it, I was kind of out of ideas and a little bit this is about getting some new inspiration and if I can come back at the end of it with a brain that is able to come up with the next big thing for Bridges to invest in, I think it’s time well spent because right now, it’s been so head down into Birchgrove, I’m not sure that I’m in receive mode of this great new idea. Either that or I’m just going to meet someone I can steal their idea and bring it back here and pretend it’s my own.
Susan Freeman
Well, having gone through the Sloan Masters Programme at London Business School, I, certainly you will know all the acronyms so, you will be talking about all these things with huge confidence but a lot of it’s about the collaborative learning so, you’ll have some really interesting, know people from all over on the course and you know even that, just being with people who think differently and have had different career experiences is you know is really, is really helpful and I think you’re right to you know to leave the country and actually be immersed in the course.
Honor Barratt
I think so.
Susan Freeman
So, when are you doing that?
Honor Barratt
The month of October. So, any minute now, heading out to Boston. Oh my god, I can’t wait, Susan, I’m going… I’m sorry I can’t wait, it’s going to be so much fun. I’m just going to love it. I’m going to love being out of my comfort zone. I’m going to love being in a room with whip smart people and going oh s**t, I’ve got to keep up, you know, I’m going to love this. I can’t wait.
Susan Freeman
All I can say is that before I started my course, I had to do a week of pre-programme accounting because everybody else on the programme had some either economics or banking or financial background and I didn’t so there was a week of this accounting and during that week I, you know if I could have sort of stopped then, I probably would have stopped then…
Honor Barratt
Oh no, Susan.
Susan Freeman
…but you so, so whatever they throw at you, even if you think my god, this is impossible, you have to stick with it because you’ll, you know you get through it and then you come out the other end and think well this has been just so, so valuable and amazing.
Honor Barratt
I’m going to be tuning you into my brain in those evenings where I want to cry. I’ll go come on Susan did it, I can do it.
Susan Freeman
That’s right. If I did it, anybody could do it. No, absolutely, it you know it’s going to be a fantastic thing to do and I think we’ll have to speak again when you come back, you know with the new idea.
Honor Barratt
With some learnings. Yeah, with a new idea, with the next big thing. I do feel the pressure to come up with the next big thing because it’s really motivating isn’t it to prove other people wrong. So right at the very beginning in 2017, I got on stage and I sat next to some dude from Savills, who said “I give Honor 50% chance of success. I don’t think she’s going to make it. I can’t believe old people would rent in retirement so, maybe it’s even less than 50%” and I just thought f*** you. I mean that really motivated me to go, I’m going to show you and it’s incredibly energising isn’t it to prove a point so, I need to find the next big thing to prove another point.
Susan Freeman
Yes but whatever you do, you mustn’t leave real estate so the next big thing…
Honor Barratt
Funny though, I don’t think that I’m in real estate, I think I’m in old people and I just have to put them in an envelope of safety, which happens to have a roof on it but yeah, it’s funny, gosh, do I work in property? No, maybe.
Susan Freeman
Well, I would put it to you that you do and definitely you should be staying in the business of putting a roof over people’s heads, you know even if it’s a sort of different way, different way of doing it so, yes you are I think, Honor, I have to tell you.
Honor Barratt
Okay. I’m staying.
Susan Freeman
So, when you’re, when you meet somebody new, dinner or at an event, they ask you what you do, what do you say?
Honor Barratt
If I want to close down the conversation quickly, I’ll say I’m in care homes because everybody goes ooh Jesus. I don’t really say I’m in property. It is interesting isn’t it, I can feel that my husband used to be very proud that he had a wife who designed Match of the Day or launched Sky Sports or whatever, he found that really sexy and now I can feel him at dinner parties when people say well what does Honor do? He doesn’t want to say the words but it’s not a sexy industry but you can make some serious money and that’s the property thing so you are absolutely right Susan, it’s the property piece that’s driving the IRR and the return, it’s not, it’s not care, it’s not looking after old people, it’s absolutely rooted in the ability of property to make these sort of stellar returns.
Susan Freeman
And it’s a fantastic story so, Honor, thank you so much, I’ve really enjoyed the conversation.
Honor Barratt
Susan, I could have talked to you for hours, that was so much fun. Thank you so much for having me.
Susan Freeman
No, it is a pleasure and good luck with the Harvard course, I think it’s going to be amazing.
Honor Barratt
Oh my god, I’ll call you if I’m crying.
Susan Freeman
Do that.
Honor Barratt
Thanks Susan. Thank you. Bye-bye.
Susan Freeman
Thank you Honor, the self-professed startup kid for talking to us about how Birchgrove came about and your passion for creating homes for older people. And best wishes for your Harvard course and I am looking forward to hearing about all your new ideas when you come back. So, that’s it for now. I hope you enjoyed today’s conversation. Please join us for the next PropertyShe podcast interview coming very soon.
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