EDITOR’S COMMENT “I was so naïve just four or five years ago that I thought our purpose was to make money for shareholders.”
I am hugely paraphrasing SEGRO boss David Sleath here, but that is pretty much what he admits in this week’s EG Interview.
Luckily for him, the business does make money for shareholders, with dividend payouts only moving in one direction since 2012 and its share price growing from 255.73p in 2011 when Sleath took over as chief executive to 1,361p on 26 April this year. But I would wager that growth has not come because of a sole focus on making money for shareholders. Much will have come from favourable market conditions and the increasing human desire to consume stuff. Fast.
However, most will have come because Sleath has recognised SEGRO’s purpose really isn’t to make money for its shareholders and that making money for them is a byproduct of the REIT’s purpose.
He is pretty sure (now) that making money for shareholders isn’t what gets every SEGRO employee out of bed in the morning. Can you imagine? “Hurrah,” they all chant over their morning tea, “today I’m going to work really hard to line the pockets of a passive shareholder. I can’t wait to get to work.” Absolutely no one thinks that. We go to work because we hope we are going to make a difference. We are going to deliver something that enables. That’s certainly what SEGRO landed on for its purpose. It says it delivers the space for extraordinary things to happen.
Shouldn’t that be the purpose for all of the built environment? To create spaces for extraordinary things to happen?
Sleath, as you would expect, waxes lyrical about how amazing the logistics sector is, about how SEGRO is a business of 1,000 trades and how every week – maybe even every day – we touch, use, eat or wear something that has been through a SEGRO shed. The data we use to send these pages to the printers, the data you are using to read this on your computer, tablet or phone, the device you are reading it on, the croissant you are eating as you read these words, the socks you are wearing… I could go on.
Then there is all the other really extraordinary stuff. The stuff we need to talk about more to make people understand the magic that real estate enables. Things such as creating spaces where cancer might get cured – that is happening in a SEGRO shed in Amsterdam. The property is being used as a place where blood from all over the world is flown in, cleansed and then flown back out, hopefully curing someone of blood cancer. That is pretty amazing stuff and is the kind of message that would certainly get me out of bed in the morning and make me want to work hard for my business.
Imagine how different the perception of the real estate industry could be if we all spent a little more time focusing on what it is that property really does and if we changed the way we talk about what we did to what we enable.
Picture the scene: at a dinner party or at the pub/coffee shop, someone asks you what you do. You could answer: “I work in real estate.” For some that will end the conversation right there. They’ll immediately think you are an estate agent and either walk away or ask you what’s going on with house prices. But imagine if you answered the question with purpose in mind. At SEGRO (and many other places, I’m sure), you could legitimately answer that question with: “I create spaces where cancer is being cured.” Definitely not a conversation-stopper.
Uncovering real estate’s true purpose and being able to talk about it in an engaging, passionate way will go a long way in helping change the perception of the sector.
Sleath will admit it took him a while to truly understand SEGRO’s purpose, but now he does, the REIT seems almost unstoppable.
What if all of real estate did the same?
To send feedback, e-mail samantha.mcclary@eg.co.uk or tweet @samanthamcclary or @EGPropertyNews
