Back in 2008, Giles King found himself taking on the role of UK country head at CBRE Global Investors in the depths of a global financial crisis and just two weeks before the collapse of US investment bank Lehman Brothers. Thirteen years later, as the new chief executive of Mayfair Capital Investment Management, King finds himself leading a business through crisis once again. As a student of history, King knows he has lessons to call on. But the Covid-19 pandemic has proved a different type of challenge, requiring King to be a different kind of leader.
“I was very much a leader from the front back in the GFC days – ‘I’m going to work long hours, I’ll bring all the team with me and we’re going to manage through the crisis’,” he says. “I still believe in that work ethic. But now I think a leader needs to be multifaceted. You can lead in very different ways in today’s world because you’re having to deal with different generations, whether it be Millennials or Generation Z, who have a different way of working and are perhaps looking for incentives that are different to how they would have been 10 years ago.”
King is one of a sizeable group of new industry leaders who have taken the top role in their company during the most testing times real estate has faced. And he is now grappling with the same questions that have perplexed many of his peers. How do you manage teams that are largely working remotely and still keep some semblance of workplace culture? How do you develop a hybrid way of working that keeps everyone happy and productive? And how do you keep finding deals that deliver for your investors while the markets are shifting around you?
Three targets
King became chief executive in January, taking the reins from James Thornton, who announced his departure late last year.
Having joined the company in 2018 as executive director, King now leads a business with about £2bn of assets under management. Owned by Swiss Life since 2016, Mayfair Capital manages funds and vehicles including the Property Income Trust for Charities, which invests in real estate on behalf of some 1,300 charities; a property unit trust for pension clients of Schroders; and Cadogan Estates’ portfolio outside of London.
The business is performing well, King notes – the Property Income Trust for Charities, arguably Mayfair Capital’s flagship fund, has outperformed its MSCI/AREF benchmark over one, three, five and 10 years. In following Thornton as chief executive, the new leader says he feels “very lucky” to have such an “excellent foundation” upon which to now build.
And there will be change. “It’s always a chance for a reset when you have a change of leadership in a business,” King says, outlining three goals he has for his time at the top.
The first is to make the UK “a more significant part” of the broader Swiss Life Asset Managers business.
“We’ve a relatively small AUM of just under £2bn out of £70bn, so there’s huge scope to become a bigger part of the Swiss Life real estate business,” he says, adding that many of pan-European Swiss Life funds could invest in the UK through Mayfair Capital. “Over the next two to three years, it would be perfectly reasonable for us to target doubling our current AUM to £4bn-£4.5bn.”
The second is to win more separate account mandates from institutional clients such as existing customers Schroder and Jupiter Asset Management. “From a strategy perspective, I’d like to see our business 70% core, core-plus and 30% value-add,” he adds.
And then there is the culture of Mayfair Capital itself. “I want to have a culture that encourages smart and enthusiastic people in our business,” King says. “I’m a great believer in nurturing talent and encouraging that talent to perform. Part of that comes through having a genuine interest in improving diversity and inclusion in our business. Our industry’s been pretty poor at that over the last 10 to 15 years. We’ve still got a way to go at Mayfair Capital, but we’re making progress on that. You ignore it at your own peril.”
Hunting for value
The pandemic has tested myriad industries, but for real estate the challenges have been particularly severe.
“What was scary, looking back from a real estate perspective, is how this crisis hit very much at the heart of what we do – rent collection,” King says. “The GFC was all about the credit squeeze and banks going bust, which had a very different impact on the real estate markets, whereas this time around it was our bread and butter, collecting rent on our investments, which was hit right between the eyes. In the first six to seven months of the pandemic, we were just trying to do our best to work with our customers, our tenants, to cope. And unlike the banks in the GFC, some of which behaved pretty badly in terms of how they treated their customers, generally speaking, the commercial real estate world reacted positively to dealing with tenants in distress and recognising that this was an extraordinary, once-in-a-couple-of-centuries event.”
The crisis has not stopped Mayfair Capital’s dealmaking. Recent transactions have included buying an industrial estate at Brackmills Trade Park, Northampton, for £15.6m for the Property Income Trust for Charities, reflecting a net initial yield of 3.8%; teaming up with Opus Land to develop an office block at Trinity Park in Solihull for its Schroders fund; and, last year, selling four warehouses for the charities fund for a combined £40.2m.
“The challenge for investment managers over the next five or 10 years is to pick where the value is in the market at any one time,” King says.
Logistics is still hot and “has got a way to go”, the chief executive says. Retail warehousing is in focus, as are data centres, life sciences and self-storage. And given Swiss Life’s residential investments in Switzerland, France and Germany, King wants Mayfair Capital to make a mark on that market in the UK too.
“We’re looking at both build-to-rent and PRS,” he says. “For some of our Swiss Life Asset Managers funds, the preference is to buy built and let stock, so we’ve been looking at one or two PRS investments. But, equally, we’ve got clients who would like a little bit more yield, hence looking at the build-to-rent sector.”
In the office market, King says the difference between “winners and losers” is starker than in any other sector. He is confident Mayfair Capital knows how to pick winners, including its Bonhill Building, EC2, and its refurbished Forge in Woking.
“Historically, when you were looking at two offices on the same street in London, they would broadly be valued the same,” he adds. “The rent per square foot would be roughly the same. The yield would be roughly the same. But now if you look at those two buildings and one has what I would call very good bones – nice floor-to-ceiling heights, good natural light, maybe a roof terrace – that is going to be worth more than the building that has low floor to ceilings, poor natural light, lack of amenity.”
The draw of the office
Sitting in Mayfair Capital’s own office just north of Oxford Street, W1, King knows that the question of what makes an attractive workplace have never been more pressing. The office is busier than he can remember in a long time on this August day, and the streets outside are also livelier than the capital has enjoyed for much of the Covid crisis.
Mayfair Capital is developing a remote working policy that King suggests might involve most members of staff working in the office for three days a week and at home for two. But he is also putting in place a near-term initiative named Mayfair Reunited; a month in which staff are encouraged to come into the office for at least four days a week to bond as a team and to allow members of staff hired during the pandemic to meet their new colleagues properly.
For King, there is a lot lost when remote working becomes the norm. “The more junior employees that we have learn so much more when they’re around their more experienced colleagues,” he says. “That mentoring that they get and physically participating in meetings, you can’t beat… Some of the sparks that you get from interacting physically and driving the business – maybe a new business idea – I think is harder to do remotely.”
Like so much, the consensus on the future of the office has shifted over the past 18 months.
“A year ago there were a lot of articles about the death of the office and some quite large, global companies saying ‘staff don’t need to be in an office’,” King says. “But I think you’ve gradually seen some of the arguments for the other side come through. I’m not somebody who supports going back to the old ways of five days in an office. I think the hybrid style of working is very much part of a structural trend that was already happening pre-Covid, but it’s just accelerated.”
Nine months into his latest role, King is adamant that Mayfair Capital can keep pace as such trends accelerate, and that his team will be there to help ensure it does – in the office or elsewhere.
ESG: ‘The absolute number one criteria’
As Mayfair Capital’s Giles King reflects on the differences between the global financial crisis of more than a decade ago and the Covid-19 crisis of today, the focus on environmental, social and governance issues is front of mind.
“It is interesting how in the GFC, [ESG] got to the bottom of the agenda. But with the pandemic, it did the reverse and became the absolute number one criteria,” he says.
That’s as it should be, the chief executive adds. “As an industry, we needed this wake-up call,” he says. “As we all know, the built environment is responsible for a large chunk of the carbon footprint, and we’ve seen in the past 12 months that climate change is very real and very urgent.”
Mayfair expects to publish its own commitment to becoming net zero by the end of the year. And this summer the company hired JLL’s Christi Vosloo as its first head of ESG for the UK.
Now a month into her new role, Vosloo says she is busy understanding Mayfair’s ESG “baseline”, and says it is “evident very strong foundations have been established through the efforts of numerous members of the team”.
“It is through understanding the foundations that I can identify our priority focus areas for improvement,” she adds. “My priority at this stage is aligning the ESG strategies and developing a clear path forward and UK roadmap for 2022.”
Vosloo joins some 12 ESG-focused colleagues across Swiss Life’s businesses and will work with team members on the continent to keep Mayfair in line with broader groupwide goals.
“In the UK, our goal is to ensure we are moving at pace with the industry and continuing to take a proactive approach on key ESG topics, improving our baseline and setting clear targets,” she says. “A priority for us is improving our ESG data quality. This is a challenge for the entire industry, critical for mapping net zero and gaining an understanding of ESG performance. We aim to enhance existing processes to improve our ESG data coverage in the UK.”
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