It takes passion, dedication and integrity to make it in
property. Possessing all these qualities, along with a keen eye for
opportunity, Jason McCormick is a refreshing voice in the real estate industry.
We sat down with the CEO of newly-listed Exemplar REITail
and managing director of McCormick Property Development (MPD) to find out what
makes him tick.
McCormick was born in Centurion in 1987, attending
Waterkloof House Prep School and Michaelhouse High School. His childhood was,
at once, ordinary and unique. Growing up in a family of property developers, he
explains that he’s been exposed to business his entire life.
“Growing up we were always somehow involved in the goings-on
of the family business which is located on the same
property as the family home and has been since its inception in 1983,” he
explains.
The family business, MPD, has been at the frontier of rural
retail developments, introducing the first BB-BBEE
scheme in Giyani in 1987. McCormick is acutely aware of his father’s continuous
influence in his own business dealings and philosophy: “My father always saw
property development as a means to help right the wrongs of the political system,
that he abhorred, which existed in South Africa upon his return to the country
following his MBA at Stanford University in the USA. As an intensely liberal
person, he became socially, politically and commercially marginalized on the
basis of his English-speaking background and then-politically discordant views
on equality. It is from this background that he built a property company to
take “the town to the townships”, saving people travel time and taxi fares to
get the most basic goods and services.”
He explains that, playing witness to this from a young age
left an impression: “It is little wonder that I remain completely committed to
my father’s founding principles of creating economically inclusive developments
that fundamentally shift the livelihood of their communities for the better.”
The decision to create Exemplar REITail was a natural one.
Rather than being a capital raising initiative, McCormick explains that it was
the outcome of a process of restructuring of MPD. The move allows the established
development company to take care of its growing pipeline of projects without
having to dispose of assets in order to make capital available for further
developments.
Since its inception, MPD has raised finance for each retail
development on a ring-fenced basis. McCormick explains the decision: “We have
been looking to restructure our activities for some time now, although to begin
with we were not necessarily looking to list. However, with the cheaper cost of
capital and the interest-only profile that is really only available to a listed
entity because of the high levels of compliance and transparency that funders
are assured of, it became clear that this was the best way for us to
effectively grow our portfolio and roll out our substantial
pipeline of new developments, recycling capital into the business. It made the
most sense to list.”
A true advantage for Exemplar is the fact that the assets in
the portfolio will continue to be managed by the experienced team at MPD. Given
that the management team has a combined tenure of 238 years at MPD, this is
good news indeed. “I have always been a committed team player in sport and in
life (I still captain my own cricket side, who incidentally won the Tshwane
Premier League in 2017) and am an ardent believer in allowing my team members
the space to shine, giving them the direction they need but without inhibiting
their space to perform and grow. For us to have achieved what we have –
currently developing between two to seven new malls a year in the development company,
as well as listing the only REIT of our size on the JSE in the past 18 months,
given the
current market, is a testament to the vision, drive and energy of management as
well as to the team that we have built over the years,” McCormick says.
He continues to explain that the team is more a family than
employees, insisting that he doesn’t have people working for him, but rather
with him. “Life is all about partnerships. I know that sounds cheesy, but
without partnerships and like-minded people, we are nothing.”
These partnerships extend beyond the company. Speaking about
his personal highlights throughout his career,
McCormick zooms in on the launch of Atteridge Plaza in 2011. The first
development he had taken on from its
negotiating phase to eventual project management, it holds a special spot.
Despite the obvious satisfaction gained from a successful
development, McCormick explains that what made this deal special to him was the
way in which it allowed them to help the surrounding neighbourhood. MPD took a
49% equity position, with the majority 51% going to a consortium of 41 local
Atteridgeville business-owning families. These families are now fellow
shareholders in Exemplar.
The development was not only a commercial success, but also
showed the value of building good relationships
with communities. “It’s funny – my early days were filled by an unyielding
desire to roll out what my commercial
education had taught me…but this was quickly surpassed by the reality that one
needs to search for more than profit and that reputation and doing good yields
far more in the long run. As property is a long-term game, I value
relationships and reputation far more than I will ever value short term
profit. In fact, I have a complete disdain for anyone who only values short
term gains at the expense of longer-term and wider-reaching socio-economic
benefits,” McCormick says.
Upon completing his B-Comm (Hons) in Economics and
Management at the University of Stellenbosch in 2001, McCormick decided to take
a gap year. This, he explains, is where he had possibly his biggest learning
experience. Deciding to put his qualification as coastal skipper to good use,
he went to work in the yachting industry in Antibes, the south of France. “It
was there, as an unemployed South African without any local currency or
connections that I learned some of my most important life lessons on the
networking, dedication and hard work needed to break into an industry from the
outside,” he explains.
McCormick’s timing wasn’t great. Arriving in the
Mediterranean shortly after the 9/11 tragedy, he found himself to be one of
many people in the same position. The majority of US yacht owners chose not to
send their boats due to the Med’s proximity to the Middle East, leaving
McCormick with little choice but to improvise. “Having walked the docks of the
various ports daily for 6 weeks, until I wore through the soles of the only
pair of flip flops that I owned, I was down to the last €100 of my savings when
I got my first break – sanding toxic antifoul off the hull of
a boat in Cannes.”
This opportunity, along with his willingness to work hard,
earned him referrals that set him up for the rest of his time there. Reflecting
on the experience, McCormick says it was a key learning moment: “Having come
from a protected youth at the incredible institutions of Michaelhouse and
Stellenbosch University, I can say without a doubt that this time of living
hand to mouth in an alienated state of desperate survival realigned me to a
world that I never knew before and one that I believe was one of the major
factors that ignited a fire within me that has burned relentlessly ever since.”
JM: Without a doubt, the worst experience was the
development of one of our malls in a coal-mining town in Mozambique.
It was a “perfect storm” in which we could not have planned
our timing to have been more ill-placed. We had bought the land at the peak of
the “coal rush”. Soon thereafter, China’s previously insatiable commodity
hunger and the oil price crashed.
The coal mines that had been planned were placed on hold
(including the 65 000 expat worker applications that had been registered). Renamo
then started their low-level banditry attacking the supply chains from Maputo
(scaring off many of our potential tenants), and as if this was not enough, the
“Hidden Debt Scandal” followed, where the government of Mozambique bought “tuna
boats” (and frigates and munitions to counter Renamo’s insurgency) with
commercial loans backed by government guarantees, without informing the IMF as
was required.
The IMF subsequently pulled its funding, the USD went from
Mt35 to over Mt80 overnight…all whilst we were building and trying to lease the
development.
Whilst the situation has stabilized since then, I have never
spent so much energy trying not to lose money, rather than making a difference
and a profit to boot!
The experience aged me a decade in two years, but taught me
more than most would take two lifetimes to learn!
Fortunately, as a company we had been incredibly financially
stable due to the somewhat conservative structuring that my father had
historically implemented, ring-fencing each development from the rest and we
were easily able to come through it all with nothing more than wrinkles and
grey hairs from the experience.
REIM: What were some of the most important lessons you
learnt from the experience?
JM: So many, that I can hardly mention all of them here
now. Simply, though:
Don’t invest in a foreign country with a thinly traded
currency whose anticipated growth rates are based mainly on a single primary
commodity (hydrocarbons in this example) unless there is sufficient support and
economic diversification to weather a fall in demand for such commodity
Never invest on the basis of projected growth rates. “Follow
the roofs” and “follow the money that actually EXISTS” rather than the promise
of profit.
Invest where there are sufficient quality tenants already
in-country, rather than trying to act as a marketing ambassador for the country
to convince tenants to navigate the oft-murky regulations to enter the country
to support your development
REIM: And tell us a bit about your first investment in property
JM: My first investment in property was buying a
semi-detached unit in a new housing development in Stellenbosch off plan in my
first year. From an initial purchase price of R183 000, we sold it for R1,050m
5 years later when my brother had completed his studies at Stellenbosch.
It was a fantastic return on the initial investment, however
more a function of good timing than as a result of astute investment analysis!
REIM: What are your top business and investment tips?
JM: As I have never been a passive investor in anything, I
am sorry to disappoint by saying that I have no tips on how to “get rich
quick”, how to pick stocks or otherwise. However, what I can say without fear
is that relentless dedication and belief in one’s end goals is what has driven
me on over the course of my business career.
I have always felt driven to play a part in equalizing the
inequality in our beautiful country. I have, over the past decade and a half,
willingly worked 80-100 hour weeks, networking, deal making and listening to
the needs of our people and doing all in my power to deliver on their needs and
desires.
REIM: And what makes a great property investment in today’s
market?
JM: In our game of retail, it is all about the property’s
accessibility to the market it is meant to serve and its ability to dominate
that market into the future. Thus available bulk, additional land and the
ability to leverage the skills of our asset management team to create
additional value uplift are all factors that I consider when looking into a
property investment.
That the road is long and people don’t forget – “Treat
people with respect and dignity, for you never know when you may need the
return of a favour.
Second, real estate is a long-term play and one requires
incredible attention to detail if one is to make a true success of it. The
third thing would be to never break a promise of go back on your word. Nothing
is more important than your reputation and a lifetime of hard work and
dedication can be evaporated in a single wrongful act.
Finally, the three most important things in property we all
learned in university still ring true today – location, location, location!
The rest is an alchemy of art and science to ensure one is
able to extract the greatest value from that location.”
These lessons will come in handy over the next few years,
with McCormick planning to continue growing the portfolio with world-class
shopping centres. “I want our portfolio of malls to play a part in the social
regeneration of our communities, providing more than just the normal goods and
services but education and skills development that uplifts the entire community
leaving it in a better space than we found it,” he says.
Speaking about Exemplar, McCormick keeps it simple:
“We’re looking at a number of exciting acquisitions which we
believe will add significant value for our shareholders. We’re not far along
enough on these to provide any details, so all I can say is…watch this space!
It’s going to be exciting.”
Over on the development side, he’s enthusiastic about MPD’s
upcoming projects. The company is currently expanding Kwagga Mall to 35,000
sqm, Modi Mall to 24,000 sqm, finishing off Mahlakung Plaza, and are about to
commence construction on Mall of Tembisa, Mabopane Square, Riba Cross, and
Katale Square.
“Things have never been more exciting with a significant
pipeline of exciting projects coming together,” McCormick explains.
The company is also in the first phase of developing Capital
Mall in Pretoria West, and the project will be MPD’s largest development to
date. Leratong City Mall, a 30,000 GLA development on the West Rand is also
finally coming back online. In partnership with CalgroM3, MPD will be adding
approximately 15,000 housing units to the land surrounding the mall
development.
“The total retail development opportunities that we have
secured in our pipeline exceeds 500,000sqm GLA and so yes, all in all, there is
a fair amount for us to get excited about and it’s great having the team that
we do to ensure that it is rolled out to the same exacting standards that has
become a hallmark of our company over the decades.”
As a specialist in the retail property market, McCormick is
excited for the future. He highlights the opportunities to be had in logistics,
the utilities space, and in the possibility of smarter malls and retail
solutions. “With the threat of online retail upon us, how we embrace and
integrate with our built environment with the “internet of things” will define
who wins and who loses out in the malls of the future,” he explains.
02 Oct 2024
20 Sep 2024
12 Sep 2024
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