How sisters landed their £150m Harley Street tonic

How does that work? Easy really: all the shareholders in the 92-acre estate centred on Harley Street do is first pretend the 850 freehold properties aren't worth very much for simply ages.

Then, when a predetermined sum is needed, a predetermined number of properties are revalued. This provides a predetermined increase in the estate's value.

This provides backing for a predetermined loan that allows a predetermined £150million to be extracted.

Just 14 of the de Walden properties were revalued last year to reach this nice large number. This doubled the notional value of the entire estate from £150million to £300million.

RBS and Lloyds TSB then doubled the mortgage loan. After that, £42million was dispensed to the four daughters of the ninth Baron; the remaining £108million went to 51 other relatives.

The daughters are Hazel, 73, and her sisters Susan, Jessica and Camilla. There was a quiet tussle over the title after their father died in 1999. That was resolved in favour of the sisters.

In consequence, the quartet appears in the report and accounts of the estate published last week as the Hon Mrs Czerin, the Hon Mrs Buchan, the Hon Mrs White and the Hon Mrs Acloque.

In reality, the properties they control are worth not £300million, but between £1.2billion and £1.3billion, a rough guess based on the freehold values of those 850 properties and the rents from more than 2200 tenants, including all those doctors and dentists.

A private company can pretty much put whatever value they like on their properties. If you don't need the money, putting up the values and taking out the cash can simply cause a great deal of inheritance tax pain. So, for many years, Howard de Walden has not bothered to up its estimates.

But in the past decade it has invested more than £250million in reviving Marylebone High Street and brightening the dowdy surgeries of Harley Street, allowing it to push up rents from £20million to £60million a year.

Any normal property company would multiply that £60million by 15 or 20 to reach a value for the properties - so maybe £900million to £1.2billion.

The gap between the book value in 2007 of £150million and the real value of £1.2billion must have started to feel embarrassing. And perhaps some of the beneficiaries were also feeling a bit short of cash. So, let's raise some.

The estate now has debt of £158million after paying the family. But as the notional value of the properties has doubled to £300million, that's fine: after all, the properties are still worth four times that number - yes, even today.

Hell of a bad time for the real-estate high-rollers

Just over 400 real-estate bankers and advisers gathered in Paris this week at what used to be called the InterContinental hotel near the Place Vendôme, but now trades under the more prosaic Westin brand.

Contrary to popular wish, they were not there to perform an act of mass self-abasement for their sins of leading the sector into perdition.

Rather, the theme of the conference was "how do we find a way out of this hell?".

The event was run by a US not-for-profit organisation called the Urban Land Institute. It has 40,000 members, and acts as an urbane networking association for high-rollers in real estate.

To set the tone, a man from PricewaterhouseCoopers produced the results of a survey of 500 property bankers and fund managers across Europe. "Hunkering down: debt has vanished, value has been destroyed and equity is playing a waiting game" is the official line. "We're screwed" is a better summary.

Some, of course, are less screwed than others. The badly screwed includes anyone who bought property in the last three years. The less screwed are those waiting in the wings to buy property and loans from the screwed.

They are feeling fairly positive. What many are waiting for is for the poor bloody bankers to sell on an estimated £200billion of European real-estate debt.

Four bankers on a panel were badgered to say how many pennies in the pound these mortgages were worth. None wanted to give a straight res-ponse. But the answer appears to range from 80p in the pound for decent loans it might be nice to sell to zero pennies in the pound for debts that will never be recovered, but have yet to be written off. There's more hell to come...

Sexing up the Duke's street

French luggage maker Maison Goyard has just paid £650,000 to buy the last six years of a lease on a 900 square feet shop in Mount Street, Mayfair.

The business, founded in 1853, charges prices that will make buyers of Louis Vuitton blanch. But perhaps not the Duke of Westminster. His property company Grosvenor is rather pleased to have attracted a maker of luggage used by Madonna.

Goyard will further sex up a street once known for dull tailors who specialised in hairy green suits for country gents. In property terms, "sex up" equals raise values — and rents.

And that is the plan Grosvenor has for the thoroughfare that runs from Berkeley Square to Park Lane. A deal done with Westminster council in September 2007 will allow Grosvenor to widen pavements, plant trees and instal benches. Work is finally due to start this spring.

A naked plug for a terrific new book: called Le Deal (St Martin's Press), it centres on one property man's struggle to get permission to build a designer outlet centre near the French town of Troyes, south-east of Paris.

The author is Harvard-educated American J Byrne Murphy. In 1992, he came to Europe to build out-of-town retail centres selling discounted brands. The company he no longer works for now owns 16 centres across Europe.

In Britain, there were rows with partners BAA, a deadly rival, and the threat of being gazumped. But in France there was a near-death struggle with French bureaucracy and the byzantine political system that went all the way up to the Prime Minister's office.

Anyone wanting to develop in France should first read Murphy's book and then walk away. Le Deal is the opposite of the dry technical books businessmen normally write. Murphy is a New Yorker-standard writer, who just took the wrong job when he left college.