The property industry should “never use its own nationals to invest in a foreign country”, according to Martin Barber, the chairman of Capital & Regional Properties.
Barber told the audience at the latest FIABCI lunch meeting that they should “recruit and incentivise local management” if they wanted to avoid the mistakes he made when buying 545 North Michigan Avenue in Chicago for $3.2m. Barber recounted the saga of the 1983 purchase of the 18,000-sq ft office and retail property.
Delegates heard how “everything that could go wrong with a transaction went wrong. We got taken apart by the contractors; the leasing was much tougher than we thought it would be; we knew little about how to market and promote our product within the market-place.”
In subsequent — and more successful — US operations, C&R’s newly recruited local manager bought and refurbished redundant industrial complexes. Investing in this unfashionable medium added to the firm’s net assets and profits in each of the past eight years — despite a falling market.
C&R’s £34m portfolio is split 60:40 between the US and the UK, where the firm has also bucked the trend, halving its portfolio in 10 months at the peak of the market in 1988. Now believing that “the current market produces excellent opportunities.” Barber hopes to “at least double” C&R’s UK portfolio by the end of the year.
