The City View: Re-Leased CFO Sam Caulton on real estate’s brave new world
Today Andy Silvester talks to Sam Caulton, CFO of Re-Leased, a commercial property management proptech. They discuss his journey to the role; why the commercial real estate sector’s been in desperate need of change, and how he effecting such change with Re-Leased; the impact of Covid on the sector; and the importance of being in a good office.
And in the news, there’s been disappointing results from Rio Tinto, BHP, and Antofagasta; and Elon Musk has stated that he has raised the funds to take over Twitter.
Episode transcript (auto-generated)
Andy Silvester 0:08 Hello and good afternoon to The City View podcast. I’m Andy Silvester from City A.M. this third my last of the week before you’re joined tomorrow for our tech special and a few minutes are joined by Sam Colton. He’s the Chief Financial Officer of property management company Re-Leased and we’ll talk about the state of the office market as Life begins at least to return to some version of normal first though some corporate headlines and it’s really all about the miners today in the City of London. We’ve had disappointing results really in warnings from bhp Rio Tinto and answer for gusta over both today and yesterday, all of them just at the point they should be capitalising on the commodity boom. That’s precisely the point at which it seems like production struggles are increasing tungsten wiced on the alt share, also struggling today. Stateside Twitter back in the news Nobody necessarily missed it. But there we are. Elon Musk saying today needless to say Where else but on Twitter that he had raised the money to finance a potential takeover bid of Twitter it will be a tender offer in which he goes to shareholders direct rather than to the board after they put in place a poison pill. This is going to run and run at one imagines close to home and Serena Williams and Lewis Hamilton have joined the what many people believe to be the leading bid for Chelsea FC that run by Martin Brawley. We will see the results of the bidding process run by US investment bank rain in the coming weeks to decide upon the future of West London’s football club. That’s all from me in terms of the corporate headlines, but there’s plenty more to come when we talking about London with our guest today. Sam Waltons Chief Financial Officer of released a very interesting company trying to do its best to bring the 21st century to property management. Sam, pleasure to have you on
Sam Caulton 1:55 Yeah look great — great to be on the podcast really looking forward to this to this discussion. Yeah, Andy Silvester 1:59 why don’t we start it off? Before we get on to the discussion about the wider sector and what we’re probably interested in and how we saw start forecasting the future of this space? Why don’t you give us the kind of elevator pitch of view and how you got involved in released and what what it was that appealed to you about about the company? Sam Caulton 2:19 Yeah, look, look fantastic. Look, my background is actually five years at KPMG in New Zealand. And I turned up to London in 2014. And managed to land a fantastic role with Great Portland estates or GP, ie a blue chip, real estate investment trust here in London. That’s where I fell in love with real estate or at least commercial real estate. And had a sort of got my tech journey underway after after GPA had three years and a San Francisco based technology business but knew I wanted to get back into commercial real estate and and I looked at the market and prop tech and I saw released as one of the players that were really going to, you know, were disrupting the sector, I knew that the sector was a little bit behind, not a little bit quite a long way behind, at least at that time, in digitization and technology. You know, a lot of spreadsheets, a lot of siloed data and information in and I saw our founder CEO, Tom Wallace, doing some fabulous things. And the company that he had built to that date was was really the one I wanted to back. So so that’s why I’m why I’m here. And so you know, that’s why the company is doing so well and the space and helping our prospects and customers. Andy Silvester 3:36 Yeah, absolutely. I think the one thing that’s really interesting is on the website, as I was looking through, the kind of pitch was released is is commercial property management software that makes life easier for property managers and owners. Not much of life has been easy for property managers and owners over the past couple of years, particularly as we all kind of grapple with the implications of anything from zero COVID to working from home to whatever else it might be incredibly interesting space to be in over the past couple of years. What are your reflections on it? I always find it interesting to ask him what were you write about two years ago when he said, you know, this will definitely be the case in two years. And what what’s proved it maybe all those predictions that we all made at the start of this whole period. I’m deliberately not using the pandemic word because I’m just bored of hearing it. You know, what, where were you? Where were you off because I was definitely offer more than a few things. Sam Caulton 4:33 Yeah, look, I agree. I think what what if we, if we go to today, I think what we have learned, and frankly I we sort of knew at the time, but it’s been proven true as commercial, real estate’s an incredibly resilient sector, where you had a lot of other sectors that were really being supported by governments, by their industry. You know, even customers to an extent through the pandemic, I genuinely felt that In real estate, commercial real estate particularly was was very much left behind. You know, I spoke to folks and the space in the early days, March, April, and the the theme was like, what what is really scary is this, you know, this 2000 year old lease document that we’ve all relied on for so long was just shredded overnight, you know, that we never saw that happening. And like, you know, the the tenant landlord relationship was, was really turned on its head. Now, what we have seen is, I think most of the time, landlords taking, taking full ownership and really working with the tenants and owning the relationship, head on rather than sort of waiting for tenants to come and try and negotiate. And what I’ve seen is that it’s absolutely worked, versus, you know, trying to do it the other way around, and really haggle with tenants and make them pay and do all of this sort of thing. I think the landlords that we’ve, we’ve seen to be very successful. I mean, we rent five offices globally, every single landlord was when they just regained our leases, hey, look, we’ll do X, Y, and Zed for you in the early days, but how about we get another couple of years on the lease? Right, so that, you know, sort of a quid pro quo for everyone. But look, going back to my first point, I think, you know, was really scary in those early days, like, what is going to happen? You know, how is how is any sector going to survive this, right. But when you’ve got a sector that relies on people coming into the city, you know, both from a retail and office standpoint, and all of those people have driven out of the city because of the lock downs. It was, it was really scary. But um, you know, two years on one of the predictions we made at the time, which I think is rang true, and even faster, is that flicks is gonna stay. It was happening in 2019. It was a catch word, it was like, Hey, that’s a nice to have you had the British lands and the great Portland’s land sec, they were starting to kick off their programmes, but very small rates. Very different today. I think everyone realises that flex and, and, and high quality office space is super important. Tenants are now being called customers, right? It’s not this financial transaction that last 20 years. So a lot of that was was actually already happened. But what I probably didn’t predict was the speed at which it was changed. It would change, you know, which, which is I think, is actually exciting. I think it’s, it’s helped the industry, particularly from a digital digitization standpoint. Really move into the, into the to the new world. Andy Silvester 7:37 Yeah, I mean, that’s something that’s been true across a lot of industries that maybe we’re a bit slow to digitise, and I say this working in, you know, the media, and the way we do things, you know, being forced into certain circumstances definitely moved you further along the journey that perhaps was always a sort of something he was thinking about, you’re going to do when time allowed. And actually, suddenly, there wasn’t much time to do it. And you just had to go away with it and, and not made perfect the enemy of the good. Let’s talk about that. That resilience point. And I guess where we are now, two years later, you are the people who are on the ground. Right. What What’s the feeling in the in the environment now particularly in London, I guess? Sam Caulton 8:18 Look, you know, it’s been, it’s been super interesting, right? Like, I think in the, in the early days, as I said, very uncertain. But you know, I’ve been, I’m a huge proponent for an office working and I get the hybrid situation that’s arisen. And I think it works. It can work. But I have been back in the office since April last year and trying to be back in as often as possible. We’re in Holborn here. And gosh, it was it was quite scary. Even at that point. This is April 21. And it was it. There was just nothing open. There are a couple of folks couple of business suits walking around. But what was really cool to see is just over that time, the city reaching or, you know, really start to bubble up. And gradually, people just were coming back into the office. You could you got this anecdotal data, when you went out for lunch of how people were returning to Office. And then it was really September, that it was a bit of a bang, right? Yes, we had the Omicron kind of blip in in November, December, which was quite depressing, to be honest, because we were, we were talking internally about the bounce back, things are coming. And then all of a sudden, we had, you know, a lot of people had that had returned and started going home again, because of this uncertainty of Omicron. can bring January through to now I mean, I frankly, it’s anecdotal. I have not seen these areas of the city so busy. But you know, I think it’s the Thursday Thursdays are particularly busy. So it’s a very, very busy day. And look, I think, six months on people what we’re realising people Want to be in the office? They want to be around people. They want to be back around their cafes in the city that they don’t get out and at home. So look like, I’m really pleased to see what’s what’s going on. And I think that has been proved, you know, in 2020, there was this argument which I didn’t buy into, nor that, you know, a lot of the industry that are well, we’re all going to stay at home and work from home forever. But I just don’t see that playing out. Andy Silvester 10:25 No, that certainly, I mean, I can, I can assure you, you and the only people who found that Omicron burst rather depressing as a free newspaper handed out to commuters. Morning, I can assure you, there are a few things in my office that got rearranged quite quickly, that afternoon, when when we were all told to go back home. But how I guess the last question is, how then is the is the sector responding to it? You kind of alluded to it earlier with that flex space, but is it just about bringing this together into a more coherent relationship between landlord and tenant that was formed out of the kind of the real tough period of the pandemic, and actually, that’s making life a lot more easy going forward to have those open conversations about what we might need to scale, we might need some more space and might need less space in those conversations just a bit easier now Sam Caulton 11:11 Yeah look at, arguably, you know, could we argue that the landlord’s property managers should have been doing this pre pre the pandemic, I think, long term 20 year leases made it easier for them to kind of sign those leases up, job done, lock and leave, and we’ll see you and, you know, review. That, you know, what we’re what we’re seeing and hearing in the market is actually this this this better relationship tenants as customers, you can actually extract more value over the long term, offer better space, better amenities? You know, restructure contracts. So yeah, look, I just, I do think it opens up their conversation for a much better relationship, you know, landlords are now seeing themselves as account managers, and really looking after that, that will because they have to ride like you’re going to be signing up to, you know, instead of signing the, you know, even five year leases, you’re probably looking at a five year lease with a two year break, potentially, you want to nurture that customer or their teen and to make sure that they don’t break it to yours. And also having those conversations. I mean, as you know, us here in London, I didn’t I wouldn’t have thought of this a year ago, but we’re already starting to burst at the seams in the London office, and we want to be speaking to our landlord about expansion. You know, where can we expand to in the same building? Have they got another building down the road? So look, that’s it? Absolutely. I think. I think it’s an exciting time for the industry. I think tenants are gonna get there is definitely a flight to quality, right? Like, he’s Andy Silvester 12:39 I was gonna ask actually that was going I promise you, it’d be my last question. But my actual last question is, how important now is it that, you know, these spaces are nice, you know, in a world in which we’ve also, you know, we’ve all seen a world without work, presumably, now, people are looking for an office space that is as nice as it possibly can be just something to work in, is it gonna be good enough anymore? Sam Caulton 13:00 Absolutely. It has to be, I think, particularly in certain sectors. And even in the more traditional sectors, you’ve got to use a huge amount of use out there. You know, the talent market is super tight at the moment, you know, it’s running really hot, and what they’re asking for, what they want to see if they’re coming into the office is a destination somewhere that’s fun like this, you know, obviously, they want to come in and work but they want it to be vibrant and a great place to come and work. And it’s not about foosball, tables and beanbags and things like that. It’s really about having a unique office environment that has good good kid good space, good light, all of the all of the things that should really ring true in any office environment, but haven’t. And historically, right. So you look at it and but but the space has to be top notch. And and tenants are out, you know, are out there looking for really high quality space to be able to bring their stuff into a theatre if they’re going to attract this stuff back into the office. So yeah, look, I do think there will be a flight to quality, which also means that, you know, and like we haven’t talked about it, it’s probably another conversation. But when you layer in ESG, hear those secondary spaces are inevitably for two reasons going to have to upgrade. Right, but ESG, but to make sure that I can actually lease them out. Andy Silvester 14:23 No, that’s true. Indeed. Yes. As both rules change, and also people’s sentiments change, I guess together. Sort of force for force of change. Sam, I’m feeling we could talk for a while longer, but we’ll have to leave it there for now. Thanks so much for joining us. Sam Caulton 14:37 Awesome. Thanks, Andy. Appreciate it. Andy Silvester 14:40 Yeah, thanks, Sam. That was Sam Caulton, he’s the Chief Financial Officer at Re-Leased that’s all from me. This week on off to enjoy the sunshine wants to put this paper to bed tomorrow we’ll be joined by our crack team of tackling crypto wizards. And in the meantime, I’ll see you on Monday.