Glenn Rufrano’s fearsome reputation preceeds him, but can the man who saved Australia’s Centro bring Cushman and Wakefield back to profitability? The new global head of the firm talks to Bert Erik ten Cate
Glenn Rufrano has been president and chief executive of Cushman & Wakefield for less than four months. But expectations are already high for one of New York’s real estate veterans.
The outspoken 60-year-old was introduced as a “miracle worker” at the Urban Land Institute conference in London this week by Struan Robertson, global co-head of real estate banking at Morgan Stanley, and Rufrano has certainly built a formidable reputation as a man who gets things done.
“We want to make the firm better and add revenue where possible,” he told EG, shortly after addressing delegates at the Westminster Plaza hotel. “There are very simple ways not to only stabilise the business in the long term but also to grow it.”
Last year the business lost $127m, caused largely by restructuring costs, but trading has improved since then with the firm posting a $22m loss in the first quarter of 2010, compared with a $62m loss at the same time last year.
As well as improving performance, Rufrano, who took over from Bruce Mosler on 22 March, says he will focus on providing long-term liquidity.
The straight-talking New Yorker has spoken openly about the need to make the firm’s finances more transparent and has discussed the possibility of a float or sale of C&W, which is majority owned by the Agnelli family through their Exor holding company. The family bought a 67% stake in C&W for $563m (€430m) in December 2006, valuing the firm at $975m (€740.5m). “This new liquidity could be in the form of a listing or a private syndication with new equity coming,” says Rufrano. “It always needs to be at the forefront of my thinking [as chief executive]. I have to think of liquidity.”
But he denies he has been brought in to facilitate an exit for the Agnellis. “The company is not for sale and they [the Agnelli family] would not consider selling it,” says Rufrano. “I signed a five-year contract, and it would look a little silly if the company was for sale.”
Rufrano says he has no firm deadline for returning C&W to profitability, but is keen to focus on making the firm more efficient and bringing in a larger market share. “The important thing is the direction and we feel pretty good about where we’re going. Then the timing of profits will take care of itself,” he says.
“There are business lines we could add. A couple that come to mind immediately would be fund management and the sustainability issue.”
Cushman & Wakefield’s fund management arm, Cushman & Wakefield Investors, manages €3.4bn of assets. This is tiny compared with Jones Lang LaSalle’s LaSalle Investment Management, which has nearly 10 times that amount under management.
To improve communication internally, Rufrano has doubled the number of top directors at the firm who report directly to him. As well as the heads of the three main regions in which the firm operates (Americas, Asia and EMEA), he now also directly manages the heads of C&W’s capital markets, valuations and client solutions divisions.
Rufrano also sees a role for C&W to help shift ownership of the property held by the banks to the private market. In the US, banks own $3.4trn of property debt; in Europe, it is about $1trn.
“It’s only a question of when this transfer from the lending to the principal side will happen,” says Rufrano. “Firms like Cushman & Wakefield will be important in the transition from banks to private ownership.”
But are these really the turnaround plans of the “miracle worker” Robertson hyped?
Rufrano downplays such high praise, saying that Robertson, chair of the session in which he spoke, was “just trying to get attention as show host”.
But there is more to Rufrano’s impressive reputation than this. Robertson was directly referring to Rufrano’s coup as head of Australian property company Centro when last year he persuaded 23 different lenders to extend their loans, saving the company from going under.
Centro, a real estate trust listed in Sydney, piled up debts during the boom years to fund a buying spree that included the acquisition in April 2007 of New Plan Excel Realty Trust, of which Rufrano was then CEO, in a $6.2bn deal.
But its debt became crippling as the market turned.
“Centro was this close to being in administration,” says Rufrano, putting his thumb and index finger almost on top of each other. “We struggled for 13 months. We were dealing at any given time with seven days’ extension to three months’ extension from the banks. Had the banks not agreed on the restructuring, we would have been in administration. A$26bn of assets would have been on the market and all employees could have been let go.”
In January 2009, Centro’s 23 lenders agreed to a stabilisation programme, extending A$2bn of loans for two years and another A$5bn of loans for three years. How did he pull it off?
“I told them we were better alive than dead,” says Rufrano.
Rufrano denies suggestions that he was in effect holding a gun to the lenders’ collective heads. “No, they had the gun,” laughs Rufrano.
Then, more seriously, he explains how he told the banks that they would get a better return by letting Centro continue to trade and that there was no company in the world that could better manage a portfolio of 100m sq ft of US assets and 22m sq ft of Australian assets.
Perhaps more puzzling is why he stayed on to sort out Centro’s debt problems where most chief executives could have cashed in and walked.
“We did cash in,” says Rufrano. “But being CEO means more than money. We had 650 people at New Plan when it was bought by Centro and the CEO should have some loyalty to those folks.”
With Rufrano gone, Centro’s problems are far from over as all the debt becomes due again in December next year.
Rufrano, who had lived in Australia when he was head of Centro, wanted to go back to the US to be closer to his family. He says he could have worked for rival property investors had he wanted to but he thought it would be more interesting to be in the middle of the transactions for the next three years.
“There were opportunities for me to be a principal with a firm that had capital already or bought into capital. But I think entrepreneurial investing is difficult,” says Rufrano.
“There is nothing wrong with core business. But I thought, can I get into an entrepreneurial business where I can make a lot of money? I think it’s going to be hard for the next 36 months.”
Rufrano’s move from being a principal to become chief executive of an agency has raised a few eyebrows in the international property community. He jokes that he received both congratulations and condolences from friends and rivals.
So why did he choose C&W? “Cushman & Wakefield is a global business that survived the last two years,” says Rufrano. “And, if you survived, you’re a winner. I think Cushman is a pretty good horse [to bet on]. It is a great global brand and I’m taking it to a better level.”
The Rufrano story
January 20 1950: Born in Brooklyn, New York, the son of Italian immigrants. Rufrano jokes that when growing up he thought the world consisted of only Jews and Italians – the only difference being that “we went to church on Sunday and they went on Saturday”.
1971: Graduates from Rutgers University with a BA in business administration and a minor in computer technology, but becomes a property appraiser and starts valuing single-family homes.
1975: Completes a graduate degree in real estate at Florida International University.
1983: Moves to property developer the O’Connor Group, rising to president and chief operating officer.
2000: Joins New Plan Excel Realty Trust, the largest real estate investment trust in the US, as chief executive. The sprawling business owns shopping centres, factory outlet centres, offices and 10,000 apartments. Rufrano turns it into a shopping centre specialist, selling all other assets. Cements his reputation here as a turnaround specialist. The company’s share price rises from $11 in 2000 to $33.15 in 2007.
2007: Sells New Plan Excel Realty Trust and its 467 properties to Centro for $3.7bn. Rufrano stays on and becomes chief executive of Centro, sorting out its debt problems with 23 lenders.
March 2010: Rufrano joins C&W as president and chief executive.
Lifestyle: Rufrano is a keen scuba-diver, as is his whole family. He also likes to read – right now he’s reading The Big Short, Michael Lewis’ take on the financial crisis. He has backed Democrats and Republicans. Although he did not vote for Barack Obama as president, he is supportive: “He did a great job at the beginning when we had so much trouble he stood up and spoke well.” More recently, he believes Obama’s lack of experience is starting to show, but acknowledges: “The expectations were such that no one could have met them.”
