“There were no consumer facing brands in the residential space globally, it just didn’t exist as an category and you had it in rental cars and you had it in airlines and obviously you had it in hotels and it was interesting because it’s all the same thing where you have this, essentially a commodity product and then the branding was really the wrapper that created trust and recognition and ultimately premium and demand. And so that’s sort of the idea for the brand, was how we take a hotel approach to these apartment buildings that we’re building and build some consistency and equivalent of brand standard.”
Susan Freeman
Hi, I’m Susan Freeman. Welcome back to our PropertyShe podcast series brought to you by Mishcon de Reya in association with the London Real Estate Forum, where I get to interview some of the key influencers in the world of real estate and the built environment. Today, I am delighted to welcome, Ryan Prince, Founder and CEO of Uncle. Born and raised in Toronto, Canada, Ryan moved to London in 1998 to study at the London School of Economics. Shortly after graduating, Ryan Co-Founded his first venture, iGabriel, one of the UKs first early stage tech venture funds backed exclusively by CEO’s and entrepreneurs including Brent Hoberman, Lord Myners, Peter Grabriel an Harvey Goldsmith. After successfully merging with Pi Capital, Ryan went on to establish the UK arm of Realstar Group, a privately owned Canadian property investment and management company with over 9 billion dollars of assets under management. Realstar focuses on hospitality and residential rental assets. Since setting up Realstar’s UK and Ireland ram in 2002, it has acquired and developed over 3.5 billion pounds of assets in the hotel, student housing, healthcare and BTR sectors. Currently it owns and manages over 2.5 billion pounds of property including the consumer facing rental housing brand called Uncle. Built on a promise to take the Lord attitude out of being a landlord, Uncle aims to create places where residents feel respected. Uncle currently operates over 6,000 homes across London, Manchester, Leeds and Dublin. Realstar has recently sold the UK and Ireland residential platform to QuadReal. Ryan is also a member of the Leadership Council of Facing History and Ourselves, a not for profit organisation that works with students to take an active role in society inviting racism and intolerance.
So now I’m really looking forward to hearing from Ryan Prince about building the UK arm of Realstar, how Uncle came about, the sale to QuadReal and learnings from running a property company through a number of economic cycles. Ryan, good afternoon it’s lovely to see you.
Ryan Prince
Nice to see you Susan.
Susan Freeman
We’re speaking on the day after the budget so I thought before we get going, I would ask you if you have any particular thoughts that you would like to share?
Ryan Prince
To be honest I think that there was so much noise about the budget in the lead up to it that in the end it, it sort of felt like a bit of a damp squid. I think there’s not a lot to write home about in the budget. From a property point of view there is some press around property taxes, certainly the council tax bands and so but I don’t think there were any huge swooping things in the way that we saw national insurance or other things. So I think it was a relatively muted budget compared to what they kept floating in the run up over the last month but at the end of the day, I think the growth story isn’t there and there’s not a particularly optimistic story and there’s a lot of great memes going around in terms of what election promises and promises that were made over and over again in the prior budget and clearly those have all been broken and I don’t know if you saw Kemi Badenoch’s presentation in the Parliament but that was fairly devastating.
Susan Freeman
Yes it was quite strong wasn’t it. I mean there wasn’t anything there really to incentivise residential development?
Ryan Prince
No, I mean I think generally speaking there was a lot of positive talk the run up to the election and since about growth and pro-business. I would say that generally not just for property, uh, the Government has been all stick and no carrot. Uh, there have been some very minor things like some minor extensions in expansions on the IS but beyond that I don’t think there’s been anything that’s remotely pro-business, certainly not pro-property or property development.
Susan Freeman
Yeah, hopefully though now that we have got it over and done with, we can actually move on and all the people that have been sort of sitting and waiting for the budget hopefully can make, can make some progress but at least there, there seems to have been some very good news today, JP Morgan planning, um, a 3 million square foot tower at Canary Wharf and the Earls Court development plans have been approved so, you know, that, that all seems a bit positive.
Ryan Prince
Hopefully.
Susan Freeman
Okay, let’s start as we always do with just a little bit of background about you because I know you grew up in Toronto and you still have a lovely Canadian accent and I just wondered what, what first drew you to, uh, real estate and business. Was it something that you grew up with?
Ryan Prince
I mean it was. I, I, so I grew up in Toronto, I was born there, raised there, went to school there, did my under graduate degree there and after I’d finished my undergraduate degree, decided I wanted to leave home and I decided I didn’t want to go to the States. My french wasn’t quite good enough to go to Paris and so I decided London sounded like a good idea. So in a sliding doors kin of moment where one job didn’t appear and an acceptance letter to the London School of Economics did, I came across to do a post-grad degree at the LSE in 1998 and then just really enjoyed the city. If you think about where London was in ’98 you were kind of the YBA’s of art and the beginning of restaurants and the beginning of hotels and really a big shift in Cool Britannia and what was going on in the city and it probably launched in ’95, ’96 but we were really in the heart of that era and it was a pretty exciting place to be.
Susan Freeman
So you hadn’t originally intended to stay?
Ryan Prince
No, zero plans to stay, I mean I was 21 years old when I moved here. I didn’t know a soul, in fact I remember, uh, looking at mobile phone shops as they were at the time, Car Phone Warehouse going and thinking about getting one and then I realised I didn’t need one because I had no one to call, um, so that’s what it was like for a while.
Susan Freeman
I am sure all that changed very quickly. And you co-founded iGabriel at a pretty young age, I think you were still 21. What sort of business was that and how did that come about?
Ryan Prince
You know my whole life has been some weird version of sliding door moments that aren’t that well thought through and organised in some ways. Coming here was because the guy who was supposed to hire me for a job in Canada got fired and the new guy didn’t show up for the interview and that’s how I ended up here. iGabriel was the flat-mate of, uh, one of the girls I went to LSE with turned out to be one of the very early stage successful entrepreneurs in the first dot.com boom, more in the telecom space and we got on very well and he wanted to start an early stage venture fund. His first company had gone public and he just asked me if I wanted to do it with him and I just thought, at the time I was working in a structured finance business, a job I’d gotten coming out of LSE and been there for seven or eight months. The internet was just taking off and I thought it sounded like a fun adventure so he really pulled together the original group of investors. That group of investors were only founders and CEO’s of businesses and they were the great and good of the UK scene at the time, you know, Brent Hoberman from Last.Minute.com, Harvey Goldsmith, well-known impresario, Lord Myners, Paul Myners at the time so loads of amazing people and that really became the crux of my original group and network of people in those early days in 1999, 2000.
Susan Freeman
That’s a pretty impressive, uh, network?
Ryan Prince
Yeah, it was an amazing thing and, and a lot of those people, you know, are still the core of a lot of my friend route today, I still have a big attachment in the tech community through a lot of those times.
Susan Freeman
So you, you moved on very quickly from, um, the person that didn’t have any, um, any contacts to go into a mobile phone.
Ryan Prince
Yeah, life changed over that time and, and, and the world change. The internet went crazy, you had the dot.com wreck in kind of 2000 and 911 in 2000 and one, for me, we were investing in very early stage companies at the time and we were taking small stakes, 5%, 10% and what I worked out over that time is that you were really a passer-bystander when you were in that seed investing business and I didn’t really enjoy the lack of control and so when we looked at raising a new fund, um, which incredibly, given everything that was going on, we had some opportunities to do, I decided that it was going to take an awfully long time to know if those things were going to work out and I wasn’t really going to have control over the outcomes and so I took a decision to take a step back from that space. My daughter today still tells me that was a terrible mistake on my part, um, maybe it was. So I was floating around with a view that I knew a lot of people through that experience, um, we got on very well and I’d find something to do and going back to your question about, was I ever always going to be in real estate. I didn’t really think so but my dad happened to come visit me for my 25th birthday and asked if thought it would be a good opportunity to go look at some real estate opportunities here. I knew absolutely nothing about real estate, wasn’t my network, wasn’t anything I’d spent time in. I thought building societies were like construction companies and he convinced me that it wasn’t as hard as I thought and I made him promise that he’d come over here once a month and try and explain things to me. It was me in a room in my old iGabriel office and that’s how we got started. And that was back in 2002.
Susan Freeman
Was there a vision for the company?
Ryan Prince
No, I mean I always say I was strategy less, you know, everyone always talks about goals and plans. The nice way of saying that is being opportunistic but the truth is I didn’t know enough to know what an opportunity looked like at the time so what we really identified was we were looking for very long-term income streams. If you think about back in 2002, it was all brothers, you had the Livingston brothers, the Changes brothers, the Zaki brothers, they were all buying big sale lease-backs levered 95 or more percent and so it was really to try and put our toe in those waters where you could buy long leases, leverage, uh, was a plenty and that was how you were going to create an opportunity and so in wandering around and doing a meeting, whoever I could quite frankly. I remember doing all these follow-up notes with letters to everybody, still early days of email almost and I stumble upon an advertisement in the Estates Gazette for something called GP Surgeries which I had no idea what that meant and it described a portfolio which had 35 year, fully repairing, insuring leases and you could buy for 6.5% yield and at the time you could borrow in the fives all in and so that sort of got my thought process going and I really went down a big rabbit hole in trying to understand the Dr Surgery space and what I worked out was, the British Lands and the Land Securities of the world, you know, we’re not interested in that space. It was very niche, it was a little too big for the small high net worth individual but way too small for anything institutional. At the time, if you think about it, there was no real private equity funds of any size in the real estate space so they weren’t really a factor. And so I spent a lot of time researching the NHS Red Book and learned all about the NHS, uh, these surgeries were dotted all around the country. I got in a car and went as far north as Southport and as far south as Deal and everywhere in between and learned the UK and scoured the markets and that ended up being our first transaction. So I was probably six months that was September of 2002 I official opened the door and put up a shingle in April 2002 and then we were in business.
Susan Freeman
And how many of these, um, surgeries did you buy?
Ryan Prince
We probably bought about twenty before what happened was essentially our, our investment hypothesis was true was that the yields were mispriced, you were really buying quasi-Government credit but they were priced like individual doctor credit and so you had these great long rent to growth profiles. At the time the Tony Blair Government was still building new surgeries so there was rental growth and you had decent rental growth and decent yields and then yields came in, interest rates actually moved out a little bit at that time and so the spread was gone and our model didn’t really work as well and so we held what we had for quite a long time but we couldn’t buy much more and it started to become competitive so there was a fund that was raising the public market. I remember was called Medical Property Investments Funds, MPIF, uh, which eventually rebranded itself to Assura, which I you’ll know because that just was part of a whole hostile takeover story that ultimately PHP acquired. And actually we ended up ultimately selling our portfolio to PHP in 2015. Harry and I, I mean I met Harry in the very early days of that because in 2002, there weren’t a lot of people in the primary healthcare space.
Susan Freeman
No so you must have been competing with each other.
Ryan Prince
Yeah we were in a way, um, he was more advanced than me but we would, you know, find our way through and find things to pick up and ultimately, you know, 15 years later almost, we sold the portfolio to him.
Susan Freeman
So after GP Surgeries, what attracted you next as a, as a sector?
Ryan Prince
So GP Surgeries kind of ended itself for me, the maths stopped working. When I started looking around to what to do next and the company in Canada had been in the hotel business in the past and so largely what I was trading off in meetings was telling people stories about Realstar in Canada and what we had, the company, we would have been a grand way of describing it, but what the company in Canada had done and hotels was something with a space and again it was more alternative, it wasn’t mainstream at the time in a way retail shopping malls were or office buildings were and the thing that I saw here was that what had happened in the US post-the recession of 1991, 92, 93 hadn’t really happened here in the sense that they called it the ‘separation of bricks and brains’. You had hotel ownership and hotel management companies split apart and here you still had all of these big leisure companies, Bass and Whitbread and the like, Ladbrokes and they hadn’t really, they were still big conglomerates and they were just at the front end of specialising in breaking themselves up and so I thought there would be an opportunity to acquire hotel assets either from them or some other smaller listed hotel companies, likes Queens Moat and others. And so I started essentially doing some research, trafficking the spaces, looking around. I tried to buy a listed company called Thistle Hotels, it’s the first thing I tried to do in that space and then I became closer to the guys at the Lehman Brothers private equity business. We tried to buy Queens Moat Hotels, ultimately unsuccessfully and after two or three failed attempts at various portfolios, we struck on a portfolio which at the time, uh, it was Six Continents, it’s now IHG were selling which was essentially most of their UK owned real estate, um, that were non-intercontinental, non-five star hotels. So it was mostly Holiday Inn, Crowne Plaza, a couple of Express by Holiday Inn and they wanted one buyer and so we managed to get ourselves into that process and ultimately ended up being the buyer of this large portfolio of 73 hotels, 13,000 hotel rooms, pretty much every market in the UK in a very, very complicated sale and manage back agreement which hadn’t really been the case in this market up to that point in time. And so that, that transaction transpired in about 2004. We closed in 2005 and so we opened the door in April 2002 and two and a half years later we were probably one of the largest hotel owners in the UK. We set up an asset management platform specifically for that portfolio and I started to focus on that.
Susan Freeman
Well that must have been challenging?
Ryan Prince
Well the deal was very challenging. Ultimately we were partners with Lehman’s and we brought in a third partner which was GIC Real Estate at the time. GIC was less active and it was the early days of them entering the market. This was really the first large transaction they did and so the three of us formed a consortium. We were the operating partner and yeah, it was a complicated deal to do. It got more complicated. We did everything that you would think of in that era, we had commercial mortgage backed securities, we were in the hotel space, IHG decided to rebrand and do a re-launch and then, um, the first two or three years were incredibly fun and successful. Yields came down, interest rates were stable, the commercial mortgage backed security market was incredibly efficient. I still remember our triple A bonds traded at 19 basis points over LIBOR. I mean I don’t think we’ll ever see that again. And then two or three years in the GFC hit and then five minutes’ after that, linked to that, Lehman’s went bankrupt and we were, you know, pretty quickly in a very different environment.
Susan Freeman
Okay and I’m sort of try… I can’t imagine what that must have been like, you know, everything was going really well and then you get the global financial crisis which in itself is bad enough but then to have the problem with Lehman Brothers, I mean how did you unravel that?
Ryan Prince
I think it’s like every, you know, it’s like everything in life you, you put one foot in front of the other and figure out what you need to do today. In the case of Lehman’s it was a bit odd because we were partners with Lehman Brother’s real estate partners which didn’t technically speaking most of the money was third party limited partners and actually the general partner of the fund didn’t go broke. So we didn’t get quite as swept up in the bankruptcy as some other real estate deals so that was less bad let’s say. The bigger problem was what was happening to the wider economy trading and so on and so what we, what we really spent out time on was how are we going to get our arms around the operating performance of this portfolio, re-organise, re-structure, save costs and survive what was, you could see was going to be a down turn in the economy. And so that’s really where we focussed in 2009, 2010. It took a lot of cost out of the business. We ultimately ended up re-negotiating the management agreement and flipping it from a management contract to a franchise arrangement and taking total control of the portfolio and then re-negotiating all of our debt with all the various layers, um, in those days you could get hedge funds buy into parts of the capital structure, try and squeeze you so all those fun and games took place the same time, all the while having a trading business with 7,500 employees and, and all the, the operating challenges that come with that. I think I’d just turned, I guess I was, I was probably 32, maybe when that all happened so.
Susan Freeman
And was your father, had your father sort of, uh, kept his promise to come over once a month to actually?
Ryan Prince
Yeah, he, he kept up his promise until maybe like 10, 15 years ago but no, he was great for that and he was really very involved as we got into that portfolio, his expertise from the hotel space really played a large part in what we were doing there and he remained involved in that, yeah.
Susan Freeman
And had they been through anything like that in, in Canada?
Ryan Prince
In a way yes, I mean if you think about it, 91, 92, 93 and the Gulf War and what happened in real estate in many ways it was worse, um, so yeah, there were a lot of battle scars that he had personally come through and come on the other side of and that was certainly helpful in terms of seeing there can be light at the end of the tunnel which ultimately there was in that transaction.
Susan Freeman
And then you, um, you subsequently sold the portfolio, I think, what 2014 and 2015?
Ryan Prince
Yeah we, you know, we survived those, that was a survival mode in ’10 and ’11, by ’12 the tide had started to turn and ’13 we did a big re-financing of all of our debt. It was the first, probably the largest hotel transaction in Europe from a lending perspective at that time and then once things were stabilised and a new debt was in place, we started a sales programme in 2014. It was still a very large portfolio liquidity wise in that market and so we actually sold it in three different transactions and so we did a couple of deals in 2014, we sold the portfolio to Goldman’s and TPG, we sold another portfolio to Cerberus and we sold the lion’s share to Apollo. We closed in December 2015 and that brought, uh, what was a rollercoaster ride and a saga to a conclusion. Fortunately for all of us it ended up, you know, being a profitable venture in the end, uh, but certainly a bumpy ride along the way.
Susan Freeman
Yeah and then you didn’t have to continue the rollercoaster through Brexit and Covid and lockdown.
Ryan Prince
No incredibly, if you think about, when we closed in the middle of December 2015, the word Brexit hadn’t even been invented yet so fortunately, uh, we missed that part of the cycle.
Susan Freeman
So how did you decide what was going to be next? I mean, by that time you obviously established your real estate credentials. What was your thinking then?
Ryan Prince
Well, you know, as it happened, the run up in values in the hotels were so extreme that our deal was so fantastic in 2006 that I actually would have loved to have sold the portfolio and I learned the lesson at the time that we weren’t the general partner, we were an operating partner and it wasn’t really our decision to do that. And so, when that happened I decided that in the next things that we did I’d quite like to have a larger say and seat at the table on not just a buy decision but the sell decisions as well and so in 2007 I went out in the market and started raising what today you’d call a commingled closed end fund and so we, speaking of sliding doors and craziness, we closed that transaction with a first close of the fund the day or two days before Lehman’s declared bankruptcy and I remember because we, we put out the press release that we’d closed the fund and I got a phone call from the Today programme asking if I wanted to come on the programme and I’m not the earliest of risers so I had to ask my wife what that was. She had to explain to me that 15 million people listen to it a day and it’s like probably worth getting up for. So, you know, in the world of luck, um, always better to be lucky than smart. We, we closed this fund and had a pool of discretionary capital to invest just at the time, uh, liquidity was going to zero. Um, the challenge with that was because we weren’t buying public companies, buying private companies, everything just froze at that time. So really through 2009, even some of ’10, it took a while for the market to re-start and even be able to go put money out and buy things. We probably didn’t do a deal for over a year with that fund, um, but eventually things started to get going and we started to buy. That’s how we started to make our way into both the student and the residential space with, with those funds and that capital.
Susan Freeman
So Realstar in Canada already had quite a track record in multi-family rental and sort of 2012 onwards we were just beginning to create a build to rent product here?
Ryan Prince
Yeah that’s right. I mean one of the reasons why when we opened up the lion’s share of Realstar’s business in Canada as a multi-family owner and operator and we never entered that space here because it really wasn’t a sector in 2002, you had house builders or what we would call condo builders for the high rise buildings and they were all for sale product which really wasn’t our thing. And so, it was only in the aftermath of the GFC where you had the first kind of chapter of that which wasn’t even PRS, what became to be known as PRS, Private Rental Sector or BTR later. It was around buying existing buildings that mostly went bankrupt through the GFC, getting taken back the lenders, buying those buildings, renting out the units for the purposes of paying, servicing our debt and then ultimately when the market came back we’d sell the individual units. And that was really the first two or three thing we did in resi, wasn’t to hold for the income but rather to break them up on a capital value basis and we did that for a few assets in 2012 and ’13. And then that really morphed into, um, the idea that you could build assets and hold on to them and we started at the same time to formulate investment funds which were more evergreen in nature. So those strategies didn’t work great if you were an opportunity fund and you were chasing short duration IRR but if you were a longer term investor looking for multiples of capital, then the idea of building these buildings and holding them started to make sense as an investment and it also started to make sense for us to manage them ourselves which up to that point in time, we hadn’t done. So around 2013, ’14 was really another transition in the business to both building buildings, holding them for the longer term and also managing them ourselves. And the first one we built, and the first development I was ever really involved in from the ground up was a 45 storey tower in the Elephant & Castle, um, that was originally designed by Richard Rogers Partnership. We sold on today, it’s called Uncle Elephant & Castle and so yeah, my first development was a, a big 45 storey tower so it was definitely a baptism of fire.
Susan Freeman
Yes you don’t do things by halves do you? You just go straight in. Was there a moment that you felt that there was a gap in, in the market for a brand like Uncle and, and where does the Uncle name come from?
Ryan Prince
Sure, I mean initially I didn’t think that when we were breaking up assets or they were short of duration and brands, and in fact before Uncle launched, there were some brands that started in the market and launched and my theory was unless you really had visibility of a broader portfolio that could generate some scale, and a longer term hold, it didn’t make a lot of sense. Once we started building buildings and then we were going to manage them ourselves and we originally started just managing them almost like a light labour, we called it Realstar living but it was really not a brand that we marketed. And as we started to develop that, we could see a pipeline developing, I sort of mixed the idea of our hotel experience into what we were doing in the resi space and it occurred to me that there were no consumer facing brands in the residential space globally. It just didn’t exist as a category and you had it rental cars and you had it in airlines and you obviously had it in hotels and it was interesting because it’s all the same thing where you have this, essentially a commodity product, you know, a car is a car and an aeroplane is an aeroplane and then the branding was really the wrapper that created trust and recognition and ultimately premium and demand and so that’s sort of the idea for the brand was how do we take a hotel approach to these apartment buildings that we’re building and build some consistency and the equivalent of brand standards. And so that was what it was. And at the time there were a bunch of names that were getting launched and I just remembered putting them on the wall and saying, if we sound anything like that then we will have done it wrong because I don’t want living in our name and I don’t want it to be anything generic, it has to jump off the page and I had just finished reading a book called Moonwalking with Einstein which was all about how you memorise things, all these memory guides to manage and what the book, one of the things, and the book is people remember images. So if I said like my name is Ryan, I’m a baker, you would picture me with a big white hat on my head. And so I wanted to come up with a name that did that and, and I was literally sitting, and hired a branding agency and didn’t come up with any good names, and I was sat with a friend of mine’s wife at a dinner party and I was explaining this dilemma to them and she was telling me her son was working at Joe & the Juice which had just launched and I said, I love Joe & the Juice, the branding’s great, the name’s great and I said, here’s what I want to do and I want to be a reverend and I kind of want to be like a virgin and rebellious and the Harley Davidson of renting and, and she said, Uncle. I sort of looked at her and said, what do you mean? And she said, well you know, Uncle like, it’s friendly, its reliable but it’s a bit fun and, and I left dinner and I went home and told my wife and we got the name, that’s it. And so it was like that, it was just kind of a bit of a eureka, I really like the feeling of it, I like the emotion of it, I like that it has brought a bit of a smile to your face, it’s memorable and so that, that’s how we came up with it.
Susan Freeman
Interesting, I always wondered, I always think about the Man from Uncle.
Ryan Prince
Yeah I know that wasn’t even anywhere near the thought process. It was more like, your Uncle, everyone’s got an uncle that hopefully they like, they’re trustworthy but also they tell it to you straight and we have the same, we’re not your lord and we’re not your mother either. So the tag line from Uncle was that ‘we take the lord attitude out of being a landlord’ and that was part of the idea of the brand and how we approached it. And if you look at everything that’s just come out recently, we’ll get to I am sure, the Renter’s Rights Act, we really created a lot of the things that are embedded within it, we started doing that voluntarily when we launched the brand with some of those ideas in mind.
Susan Freeman
What sort of things did you do?
Ryan Prince
Well we said, you could move in and you could rip up the lease, no questions asked within two weeks and we said, in terms of flexibility if you want to move around our building from a two bed to a one bed, or from one location to another location, you could do that. We had a repairer’s guarantee where if we didn’t sort out your routine maintenance problem in a day, you’d get a day of rent back. So there was just, you know, at one point in time there were awful things happening from a women’s security point of view and we came up with the idea of women only viewing so that, you know, I thought okay if my daughter or my wife were going to see a flat and it’s like now, the autumn and it’s pitch black, it would be kind of scary, some guy behind a closed door we said, you could tick a box on the page and one of our female staff members would show you around and that may make you feel more comfortable. So it was really trying to be what a friend of mine once told me, was a problem solution brand. Tell me a problem people have with renting and let’s see if we can come up with something that works from a business perspective but that solves someone’s problem and that’s always the heart of what the brand has been about. Is kind of tell me a problem that a customer has, and let’s see if we can figure out a way to solve it for them.
Susan Freeman
We seem to have a problem in this country with making people understand what build to rent is. There was, there was a whole interview recently with Helen Gordon from Grainger, and I think it was the Sunday Times, the whole article about what they were doing and, and talking about buy to let. So they hadn’t quite grasped it. I mean, do you think that there are misconceptions about the build to rent product and how does it compare to what’s on offer in Canada. I suppose it’s an older, it’s more established market so people know what they get?
Ryan Prince
Yeah I mean, I guess there is two things in that. One, is what is it called and part of it is like why. I think I slightly gave up that battle, I don’t know, five, ten years ago now, whatever. We used to be called PRS, I used to say our sector sounds more like a disease than a sector. And I still think that, you know, we’re filled with jargon because our sector is one of the only consumer facing sectors in the real estate market, self-storage would be one but other than that everybody else’s customer is mostly a corporate so it doesn’t really matter. So yeah, I don’t think it sells well but it is not described very much and the reason why it to date hasn’t really been much of a factor is the build to rent sector as a percentage of what’s available for rent is still just a spec. I mean it can’t even be 2, 3, 4% of what the total inventory is. And so the reality is if you compare that to the United States or you compare that even to Canada or Germany, the institutional what you or I would call the build to rent sector, is the lion’s share of what a customer comes to know. I mean the term multi-family doesn’t make a whole lot of sense either. So, you know, apartments make sense, rental apartments makes sense but I think until this sector becomes much more significant as part of what the product category is, it’s more industry jargon chat than it probably matters to the customer.
Susan Freeman
It just seems to have taken an awfully long time to get going. I mean we acted for Delancey on the Athletes Village and so that was the first scale rental product and then, you know, acted for Essential Living and I remember having all these discussions around the table, you know, what shall we call it, we can’t call it PRS, it should be, um, maybe, build to rent and I remember Bill Hughes saying, well that’s great but when we’ve actually built some it’s going to look a bit strange. Will we call it built to rent?
Ryan Prince
Well I, I also say the different thing which is I thought all real estate is built to rent for the most part so where an office is built to rent and an industrial shed’s built to rent, so how do you know that’s an apartment? It made absolutely no sense to me. It doesn’t even have the word residential in it.
Susan Freeman
No, well maybe it needs a bit of a, um, a rebrand.
Ryan Prince
Yeah. Like I say, I slightly threw the towel on that a while ago.
Susan Freeman
Yeah okay. You mentioned the, um, Renters Rights legislation and I just wondered how you think that will affect the build to rent market. I mean you mentioned obviously some of the things you, you were doing anyway but I know there is some concern about tenants being able to go to Tribunals and just sort of holding things up and the whole system getting clogged up?
Ryan Prince
Yeah look I think there’s going to be a number of outcomes and outputs from, from it. I think there was a trend that was started that this will continue which is, the mass acceleration of an exodus of buy to let landlords. So the business case for being a buy to let landlord over the last 5 to 7 years has gone from a case which you could make, to basically no case. There is honestly no reason why if you owned one or two flats it makes any sense for you to do it. Whether that’s interest rates, regulation, Building Safety Act, now the Renters Rights Act, house price inflation, you know, you name it, there’s not a reason to do it. It gets you no return on your money, it’s a terrible asset class for someone like that and it will get a lot worse in the Renters Rights Act because the nature of a bad actor problems that can cause you with your mortgage and with your solvency of your asset, will sky rocket in the newer regime. So I think what you’re going to see is a million of those homes leave the system over time when there’s liquidity and at the same time, on the other side, there’s nothing like any supply pipeline that’s coming online on the institutional sides to back fill that supply. So I think there’s a case to make that rental housing stock could actually not only not grow over the next 5 years but actually shrink and that’s not going to be good for renters, it’s not going to be good for the Government and ultimately that things never end up good for landlords or owners but in the short-term obviously we’ll have to see how all that plays out. I think there will be a lot of administrative problems that have been well documented on the Renters Rights Act. There are things that just don’t make commercial sense to me, you know, the idea that if you don’t have rent controls and you say you want what you think is market rent and you’re ultimately proven right, we can have a conversation about how many months or years it’s going to take to get proven right. You’re not entitled under the Act to get back payment for that. Whether you could or not based on the covenant and how people behave, I just don’t even understand how one even thinks that correct. So there’s a range of things. I suspect what will happen over, um, the next 2 or 3 years, a bit like Gateway 2 and Gateway 3 is, these things will cause a multitude of problems for Courts, for landlords, for tenants, for unintended, you know, and landlords larger you are going to have, you know, nice people where this is their pension fund nest egg who are going to end up going bankrupt and you are going to have enough of those stories because of some of these outcomes that the Government will do something to make some adjustments. But it will take time.
Susan Freeman
Yes. So what is the size of your portfolio these days. How much have you scaled it?
Ryan Prince
I’m always bad at how many buildings. We’re at about 6,000 apartments. The lion’s share of those, um, by value are London, Greater London. We have a building in Manchester, we’ve just finished two large buildings in Leeds, we’ll have nearly 1,000 units in Leeds. A 600 unit building in Birmingham and we have a, a portfolio of a few assets in Dublin. Uh, so that, that’s kind of the complexion of the portfolio today.
Susan Freeman
And has it been difficult to scale?
Ryan Prince
Incredibly yeah. I mean, I have always said that what we’ve done is a deal not a business and what I mean by that is, if you were Pret A Manger or you’re Five Guys Burgers, you’re a business. You have a model, you know what it looks like, you know what sites you need, you know what rents are and then you can go out and genuinely scale. You cannot do that in our business. I could tell you a story with a situation about every single one of our, you know, 2025 properties as how that deal came to pass and the truth is, in the last two, two and a half years, we haven’t put a spade in the ground on a new project because the viability of them just stopped working altogether.
Susan Freeman
That’s worrying because I think a lot of people are in the same position aren’t they?
Ryan Prince
Yeah, I mean if we’re not doing, we’re among the most active forward funders in the market for a number of years and remain very well capitalised to continue doing so. So, uh, the math just hasn’t work.
Susan Freeman
Not even out of London?
Ryan Prince
No, especially not out of London because the build cost when you go high rise actually isn’t that different to London but the rents are.
Susan Freeman
It’s interesting. So, QuadReal have recently acquired Realstar UK and Ireland residential platform and I just wondered what drove your decision to, you know, step back. What was your thinking?
Ryan Prince
Yeah it was, um, it was a weird one for me. I would say it was a pretty personal decision, it was more about a little bit about where we were in the development of the pipeline. So as I said, we’ve, we’ve delivered on all these buildings and looking forward there wasn’t a future looking pipeline that we’ve got in the ground now that’s delivering this year and next year and so forth. So there’s a bit of a natural break in what we are doing. Last year we bought four buildings, so there was things to buy, um, but generally speaking that was a bit of a lull. I thought that where we were in terms of the relationship required Real, they’d always expressed generally speaking a desire to internalise. So that was always hovering around a little bit in our conversations and so through a combination of where we were in the pipeline, where I was in life, I’ve been doing this now for, I mean the resi platform for 15 years and I kind of just thought it might be time for a new challenge. There was nothing that, I loved the real estate, we still have an ongoing economic interest in how it performs so I care. I’m not going anywhere overnight, I’m staying as a CEO for the year and then I’ll become Chairman of the business thereafter. So there was no sort of cut and run, there was no dynamic that, you know, the partnership between ourselves and QuadReal goes back a long, long way with me and them here back to 2007, with our Canadian business back to ’93. So it just, for a whole variety of reasons, felt like an interesting time to think about doing something different.
Susan Freeman
And do you think QuadReal will, you know, carry on with the business as it is or do they, you know, will they expand, do different things?
Ryan Prince
Oh yeah, they have a lot of ambition for the business. I think part of them having 100% ownership and control is it will integrate into the wide QuadReal business and I know that they have a lot of ambitious plans to continue to grow the platform for sure. So part of that too is it’s going to be great for the team and the staff, it opens up a whole new range of exposure to different people, different opportunities, different markets and so on, so I think from a team point of view, there’s a lot of opportunity for the people on the business which I care about as well.
Susan Freeman
Yeah, well that’s great. And then what about you, as you say, you’re staying on, you know for a transition year and then any thoughts about what happens next?
Ryan Prince
The advice I’ve had from all my smart friends is, don’t do anything for a bit, um, you’re going to be tempted to race back into something and kind of resist that urge. We closed this deal just over a month ago so we’re well in the very, very early days but I have a notebook, I make sure I get all the ideas I have out of my head onto a piece of paper, more from a sanity point of view but what I’ll do, I don’t really know. I mean it might be in real estate, it might not. It might be in the UK, it might not. I have a book I’d like to write which has nothing to do with real estate. There’s some not for profit things I am interested in spending some time on. I’m by no means planning to retire, my wife, um, we just had a joint birthday party and we call it my non-retirement party. So, you know, I’ll go do something when and on what basis I am not sure. I’m going to be 50 in just over a year, year and a half, year and a half, um, maybe a little less than that now so that’s kind of a bit of a marker in my mind about what I want to think about for a next chapter, another 10 year plan.
Susan Freeman
Is it likely to be real estate or could it be anything?
Ryan Prince
Could be anything. Obviously I’ve got a, an affinity for real estate, an experience in real estate. I’m lucky enough we’ve had a really good experience in track record over the 25 years of the things we’ve done but I’m keeping a completely open mind actually.
Susan Freeman
Well I, I mean just looking at what’s going, you know, in terms of development in, in the Middle East, it just looks astounding and, you know, there’s so much money being spent, so much ambition, I mean, could you be persuaded to go in that direction?
Ryan Prince
Yeah I actually took a trip to Saudi in the Spring and spent some time in Riyadh. I was actually incredibly impressed with what’s going on there. I would say not just the size of the market, the youth in the market but the seriousness with which they are going about it. I spent time in India, um, almost 20 years ago, I looked at a venture there back in 2007, 2008 and that just looked much more difficult to execute, much more challenging market, way more chaotic. I decided I thought it wasn’t going to be for us. Yeah, some of those markets look very, very interesting. Whether that means I’ll go do something there, I don’t know but it was fun to go look around for sure.
Susan Freeman
Well I haven’t had a chance to go but just looking at the pavilions that they have at MIPIM, you know, compared to the sort of European pavilions, it’s all on a completely differently scale of ambition isn’t it?
Ryan Prince
Well it’s one of my real estate claims to fame is that I’ve never been to MIPIM so I can’t, uh, I can’t say I’ve seen their pavilions.
Susan Freeman
Oh. Well you’ve missed the pavilions.
Ryan Prince
I’ve clearly missed out, yeah.
Susan Freeman
So I was just wondering, you know, having, having been through various economic cycles, having done some like amazing large deals. What are the lessons that you’ve learnt and is, is there anything that you wish that you’d done differently?
Ryan Prince
I have zero regret as a matter of policy so no, there’s nothing I wish I’d done differently, um, because how I got to where I am today and would think about what I would have done differently by definition those two things are integrally linked. Lessons I would say my father gave me the best lesson that I remember when we were starting and I still think about it today in real estate, he said, the only rule in real estate is don’t go broke. That’s like rule 1, 2, 3. And he said, there’s only two ways to go broke, too much supply and too much debt. So if you can stay away from those two things you’ll be okay. Now the first few deals we bought had like 95% leverage so maybe we, but the doctor’s surgeries were bulletproof income and they were never, ever going anywhere. The hotels maybe had a little more volatility. But generally speaking I think we’ve adhered pretty strongly to that. I mean our portfolio in Canada has I think about 20% lever. So there are some simple things that in a world of a lot of spreadsheets and a lot of complexity and a lot of derivatives and a lot of numbers, there are, I still think there are some guiding principles that if you stick to them, you know we’ve been very, very lucky and it is lucky, I mean it’s not, there’s a lot too that, um, you know, we’ve yet to lose money on a, on a deal and that’s not only because we’ve tried really hard not to but you need some luck along the way. Um, but that is a primary focus. Our, our under rights were looking at the returns are as much about what needs to happen for us to lose money, as they are about, how much are we going to make.
Susan Freeman
And I’m also wondering, I mean, you started in real estate at a, you know, pretty young age. If somebody, you know, in their 20s was looking to start in real estate now, I mean could they do it and would they want to? I mean actually looking around, I mean a lot of the entrepreneurial younger people seem to be going, you know, to other sectors and don’t necessarily, you know, just, maybe real estate at the moment is too hard?
Ryan Prince
Well I think you’ve got to think about, so the industry even since I joined 25 years ago, let alone, you know, some of your guests who are 50 years ago plus. It’s changed tremendously in terms of the sources of capital, the cost of capital, what you need, the nature of the returns, how much money you’d like to earn, what the reality of that is and I think those have all gone against the one man band, you know, even when I started you could literally have been one person with a mobile phone. A slightly large mobile phone than we have today and done deals and been in business and had a business. There is just no way to do that today. Through regulation, through the size of the cheques you need to write and so on and so forth. So, I think that has changed dramatically and so the idea of being an entrepreneur for a lot of things is very, very different and much more unrealistic than it was 25 years ago. That doesn’t mean there aren’t some great careers in real estate, but they’re just different careers. So I would say if somebody loved building and they love architecture and they love design and they love work spaces or retail spaces, there will be a world of things to re-imagine and do. Will the economics look the same to an individual as they might have back in the day when one person could just, you know, borrow from a bank and personally guarantee it and have 100% of the profits or go bankrupt. No we are at a very different place in that today for sure.
Susan Freeman
And finally, outside of your business career, what keeps you energised? What do you do when you’re not working?
Ryan Prince
I, well I’m good at hobbies. I love skiing, that’s one of my first loves so I’m a big skier, I grew up ski racing on little icy hills outside of Toronto and had a time where I got heliskiing a lot until the kids came along and I started to get too guilty. I then started surfing so I now love surfing which I don’t hopefully think I am going to die doing, um, but I love learning how to do that, it’s been a great experience, lovely places, warm water, beautiful around. For my sins I’m slightly obsessed with golf. Mostly it’s like a chase of perfection, it’s not so much about anything other than trying to chase something that is ungettable to those in addictive nature to work off and it’s almost a therapy, I often just go out by myself and take the dog, go for walk, spend some time outside, um, so I do like doing that. And then I’ve got three kids so the kids I wouldn’t call a hobby but they’re something that I like to do outside of work. Uh, I’ve been married for a long time so I get to spent a lot of time with my wife and, um, I’m a pretty decent reader and these days it’s mixed, I would say listening to audio books I don’t consider reading but digesting that content, um, so I still do a reasonable amount of that.
Susan Freeman
I hope you listen to the occasional podcast?
Ryan Prince
And that, yeah of course. Well only, only yours on speed dial Susan.
Susan Freeman
Okay, well Ryan that’s brilliant and thank you very much and I will be watching with great interest to see what the next chapter brings.
Ryan Prince
Thanks for having me, I’m just as curious as you are.
Susan Freeman
Thank you so much Ryan for some great insights into your sliding doors and opportunist approach to running a business.
So that’s it for now. I hope you enjoyed today’s conversation. Please join us for the next PropertyShe podcast interview coming very soon.
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