While the bodies of MFS, Centro and Allco lay wounded, possibly fatally, as far as slow, agonising corporate deaths go, few rival the decline of property manager, Run Corporation. Long a Crikey favourite (ever since spending $5 million in fees to raise $20 million in an IPO), Run has descended headlong into an ever-widening morass, despite the best efforts of its hapless management team.

Run floated at $1.00 back in 2005, chaired by former NAB high-flier, Frank Cicutto. A series of unfortunate events ensued, leading to a continued run of losses and an emergency bailout by Elders, which pumped $10 million into the property manager.

Unfortunately, the Elders infusion hasn’t stopped the bleeding, with Run shares continuing to slide, touching 5.5 cents earlier this month. Run’s situation wasn’t improved by a legal wrangle with former director, successful Sydney-based agent, John McGrath.

As Crikey has noted last year, Run’s string of losses is even more remarkable considering that its main source of income, property management fees from landlords, has increased significantly in the past two years with rents going through the roof. Some rentals are up as much as 50 percent since Run floated. In effect, Run’s revenue should have automatically risen by a similar amount (as property managers take a fixed proportion, usually around 7 percent, of total rent as management fees). To lose money in such an environment is truly an impressive feat.

While Run has been heavily criticised for the botched execution of what seemed to be a fairly logical business plan, questions would also need to be asked of its advertising strategy. Amusingly, Run has spent thousands on radio advertisements which have appeared on Austereo’s FoxFM and 2DayFM’s evening countdown show.

Perhaps someone at Run forgot to listen to Austereo’s Hot30 countdown before buying hundred of minutes of ad-space. The Hot30 is presented by what sounds like a couple of nineteen year-olds and is clearly pitched at the tween to early-teen market. You don’t need to be Harold Mitchell to know than not too many 11-year old girls own multiple investment properties.

Run is capitalised at around $4 million — less than what a moderately-successful suburban real estate agency would probably sell for.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey