EXPO REAL: TH Real Estate’s Mike Sales has likened merger and acquisition activity to the experience of being a football manager.
“You need a couple of quick wins to settle down the team,” he told a gathering at Expo Real.
He raised the timely example of German manager Jurgen Klopp’s appointment at Liverpool Football Club to explain the validation that early victories can bring to a merger.
Sales was drawing on his experience with the acquisition of TH Real Estate by pensions giant TIAA-CREF this year.
He admitted managers underestimated the level of operational support required for a seamless transition.
“We had to employ HR and IT teams to serve 300 employees across 18 markets and the volume of what was required, plus the cost and time involved, we probably didn’t have enough people in our business plan to be honest.”
However, it has not put the company off the idea of further acquisitions, provided they “found the right fit”.
“For us it is about increasing exposure to markets that our clients want to be in, so buying capability, track record and market knowledge.”
TH Real Estate was looking to enter the private rented sector and Asian markets specifically.
Sales also said he was certain of merger activity across the industry generally on the horizon.
“The volume of stock will decrease and that means people won’t deploy as much capital as they have and there will be pressure on the profits of smaller companies.”
Sales was joined on the panel by Frederic de Klopstein, chief investment officer of French REIT Klepierre.
Klepierre’s acquisition of Dutch retail company Corio in March gave the retail giant the capacity to significantly upscale its investments, de Klopstein said.
“By being together we benefited from access to financial markets that we never used to have and we have been able to buy trophy assets because we are a big operation. Size matters.”
Also on the panel was Oliver Shumy, chief executive of Austria-based Immofinanz Group which created the spin-off German residential subsidiary Buwog in 2014.
He said timing of any acquisition or merger was crucial: “The German residential market was appreciated by investors.”
