To describe Mark Pears as a man who doesn’t seek the limelight is something of an understatement. He takes to a platform, but only occasionally. He rarely talks to the press. And you won’t find a photo of him on the internet. Anywhere. He’s not, in short, an ego person.
Yet he’s admired by his peers. Last year he ranked ninth on our rich list and, without giving too much away, will feature on next week’s 2012 Estates Gazette power list. He turns an insightful, rather than merely headline-grabbing, phrase. And he balances caution with delivering enviable performance.
Last year, Williams Pears Family Holdings – led by Mark with his brothers Trevor, who runs the Pears charitable foundation, and David, who drives the group’s core residential business – turned a profit before tax of £42m, a tenfold rise on the previous year.
What’s more, he makes it sound gloriously simple. “Our targets are, as a portfolio, to consistently try and beat inflation plus 3%. We are obviously a private company, but that has been our target for the past 20 years. We don’t go and say we want to return 10% or 20%. We just say inflation, and inflation plus 3%. Clearly, in years such as 2008, where properties fell 20% in value, we’re not going to hit the target. But we are looking for a consistent return over a five-, 10-, 15-year period, rather than a one-year return.
“Last year we probably slightly underachieved. Inflation was quite high, at above 4%. So we did not achieve inflation plus 3%, but we made a positive return that we felt was satisfactory. We had a reasonably active 2011, not quite as active as we might have anticipated at the beginning of the year, but we tend to be a better buyer when there is slightly less competition and the value of our cash is greater. We probably had what I would say was a seven-and-a-half out of 10 year.”
A quieter year ahead
The year ahead, Pears expects, may be quieter. “I would anticipate this year being a six-and-a-half out of 10. It just feels that, in terms of activity, we are going to have quite a quiet year. I wouldn’t forecast economic collapse. I think it’s likely to be a very cautious year during which interest rates remain very low. If you assume there is going to be no run on gilts, then with interest rates at zero, most vendors, unless they are really forced to, will just sit on their hands.”
£500m-plus in acquisitions
You couldn’t accuse the Pears group of sitting on its hands over the past few years. It has spent north of £500m on acquisitions. Among the more noteworthy was the £140m purchase of the 4.5-acre Notting Hill Gate estate. Bought 18 months ago with LaSalle Investment Management’s Special Situations fund, this stretch of prime shops, restaurants and offices along Notting Hill Gate and Kensington Church Street, W11, was bought from Land Securities’ and Delancey’s Metro Fund.
“Notting Hill Gate is exceeding our expectations. Virtually no voids. Jamie Oliver has just taken his new flagship restaurant. It’s a big unit. Eat has just doubled its unit, Pret A Manger has just doubled its unit. The acquisition is doing far better than we would have anticipated. So we and our partners are happy.”
Perhaps less glamorously, the group is quietly acquiring stock from the banks. He is optimistic on this front.
I don’t think RBS is in quite as bad a position as some people think. I think Lloyds will want to sell, they will want to deleverage the book, but the question is, will they want to sell at 50p or 60p in the pound? I think they may, but I think they will do it slowly.”
He continues to work closely with Nama too. “Nama will clearly want to sell. We are all aware that there are a couple of deals that they are trying to sell, but I don’t see a flood of transactions coming to the market. These are complicated, very complicated, loan deals. It’s not like a simple property sale of 50 Bond Street.”
Pears’ low profile no doubt helps in his dealings with these institutions. His track record helps too. But there is another factor. “The other thing is that we will do it if we say we’ll do it. We have a good reputation for having a good team, being able to close complex deals, and getting things done – actually doing it rather than talking about doing it.”
Opportunities at Telereal
There are parallels too in relations with government through Pears’ property outsourcing company Telereal Trillium. Last year the company, which has grown from its roots running the Department for Work and Pensions’ portfolio, completed its deal to buy the Flagstaff portfolio from Lloyds Banking Group, a group of 35 secondary and tertiary assets.
It is currently thought to be pitching to manage the Ministry of Defence’s property portfolio. Pears sees further opportunity for a business that began as a jv with Land Securities in 2000.
“We have a very strong relationship with the government. They trust us. Telereal Trillium is a solid business. It’s not all smooth sailing at the moment, but I think government like the fact that we will take the rough with the smooth. If we enter into a contract with government that at times is to our benefit and at times to our detriment, and let’s assume at the moment it’s to our detriment, because they are vacating more space than we would prefer, we still continue with the deal.”
A strong relationship
“I would hope that as and when government makes up their mind with regard to how they are going to rationalise and improve efficiency in their estate, and they do have a vast estate, that they reflect on the relationship and that they value it as we value it. It is a strong relationship.”
So what next for Pears? “I often think how on earth are we going to continue to grow? I do think that it will be difficult in the UK, unless we were to branch outside of property.”
The ability to think unconventionally may be a key. “Closing the Telereal acquisition, a very complicated transaction, was possible only with an understanding of the way the securitisation market functioned. This, some 12 years ago, set us aside from most of the competition.”
Again, though, he doesn’t forecast plain sailing. “I think the UK is and will be a difficult place to really succeed in business over the next few years. Therefore, one has to broaden one’s horizons.”
“But,” he adds, “very, very cautiously.”
Family foundation
The Pears’ pride and joy: the family’s charitable foundation
Perhaps the project that Pears is most proud of is the charitable foundation he set up with his brothers 20 years ago.
“Trevor, David and I set up the Foundation together in 1992. When I was 28 – I’m now 49, Trevor was 26 and David was 21 – we thought about setting up a foundation, and we did it. And we’ve stuck with it too. We have donated more money every year for the past 19 years to the foundation. That includes 2008, which was a challenging year in business.
“It’s about longevity and it’s about relationships. This year we donated to charity a figure well in excess of £8m. Last year was about £7.5m, the previous year £7.2m.
“Trevor runs the foundation. He does a fantastic job. We have a full-time team of seven or eight people working with Trevor full time. Why do we do it? We just think it’s the right thing to do. And if I think about what drives Pears, it’s that: the desire that if you’re in it, to try and do it well.”
