British Land: Making big strategic calls

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1:02when did you change your mind? That's what we're going to cover in the new episode of the Business Leader Podcast. I'm Graeme Ruddick. We're going to speak to Simon Carter, the Chief Executive of British Land, one of the biggest property companies in the UK. British Land owns commercial property worth about£10 billion. This includes big office campuses in central London, such as Broadgate next to Liverpool Street Station, Regent's Place next to Euston Station, and Paddington Central next to Paddington. It also owns retail parks across the UK. The biggest businesses in the UK are occupying Britishland's shops and offices.

1:38Britishland has made a couple of big strategic calls since Simon Carter became boss in 2020. At the time, these calls also looked contrarian. Firstly, when many people were claiming that office working was dead, Britishland took the opposite position of betting on the future of the office and that people would return to the office. Secondly, over the last year, it has spent more than£700 million buying retail parks across the UK, despite concerns about the demise of bricks and mortar retail and the rise of online shopping. In this episode, we'll find out why those decisions were taken. Firstly, here is some context and history on British Land from Simon Carter.

2:16British Land's got a long heritage. The company's been formed since 1856. It was set up by two guys, hopefully I get the names right, I think it was Richard Cobden and John Bright, who set it up with a very altruistic vision, which was to give people an interest in land, because back in the 1850s, you couldn't vote if you didn't have an interest in land. So people could buy a share of British land and get the vote. And then when there was enfranchisement and people had the vote, the sort of rationale for the business fell away. So effectively, the company was pretty dormant until about the 1970s, when John Ritplat saw an opportunity to acquire a business with a great name, the British Land Company, to put his real estate holdings into.

3:08And John was known for being a swashbuckling deal doer. He built the business very rapidly with a number of high profile deals. Probably the one he's known best for is his acquisition of Broadgate, where he bought some debt there that ultimately gave him a toehold and the ability to buy all of Broadgate in the city. And John built the company very rapidly from 1970 through to about 2007 when he stepped down. He had a vision that real estate was a real asset, which it is, and it would go up in value. He was in an inflationary environment, did a lot of innovative financing structures. But ultimately, the value of the assets went up with inflation.

3:51The debt remained the same and the net worth of the business increased. So, yeah, a very, very sort of successful period for the business. What did you learn from working with him when he was here? I think the art of the deal. John's a very canny investor, looks at all the angles on the deal, but also really looking at the underlying fundamentals, operating in real estate markets where there's good demand, a limitation on supply, so you're going to see good rental growth. Is that art of the deal something that's still part of the business today in the industry because it's obviously there's so much more data available now is is that sort of swashbuckling deal maker still has it still got a part in the industry yeah absolutely and in british land and the company went through a period then after john of focusing on the customer which was absolutely appropriate so if you went back to the early 2000s hardly anyone mentioned the customer they talked about tenants and steven hester and then chris grigg really focused on making sure we served our customers exceptionally well so gave them exactly the products they wanted and when I became CEO it was really important to me that we kept hold of the best bits of both of those so that reputation for doing smart deals but also really looking after our customer and following our customer.

5:12When you say looking after the customer what sort of things did that mean? Did that mean providing effectively retail space and office space that the businesses that occupied them actually wanted yeah absolutely so today we operate in three main markets two of those are bigger than the third so we're known for our london office campuses so these sit um next to key transport hubs in london so liverpool street uh euston and paddington and what we try to do is provide all of the environment that modern office occupiers want so right next to the transport obviously good public realm good amenity that's retail coffee shops restaurants places you want to go so that it's somewhere you not only want to go to work in but you'd want to spend your free time in and then of course the quality of the real estate and so we found that our customers expectations like in any market were constantly evolving and increasing and if we could really listen to what they wanted we could provide a product profitably that would be good for the business and then the other part of our business today that's quite large is our retail part business and that's a business that's constantly evolving as well but today it's really about meeting the need for convenience we have a lot of retailers in the value grocery convenience end but also servicing multi-channel retail so what we've seen particularly coming out of COVID is the physical retailers have, I think, been having a fight back against pure play e-commerce because I guess the thing with pure play e-commerce was that it's only very few businesses that have been able to do that profitably and you need scale because of delivery.

7:00Delivery is expensive in this country, whereas the traditional retailers with a good store network and a good online offering have been able to use the retail parks to fulfill that. You go in, you do your click and collect, they can ship from store, they can handle your returns more effectively than it going through the postal network. So just seeing how customers are involving and making sure that we're responding to that. Simon Carter initially joined British Land in the early 2000s as part of its treasury team. In 2018, he was appointed as finance director, and then in 2020, he was named chief executive.

7:37Before joining British Land, he was actually a derivatives trader at UBS. This gave him an insight into the fast-moving world of the trading floor and the decisiveness that required. This would be helpful when it came to making the decision about how British Land was going to approach the post-COVID world, while working in the office seemed to be in terminal decline. for a business like British Land that builds and owns offices. This is clearly a key moment. Yeah, the death of the office. In retrospect, it's sort of easy to say it was a straightforward decision, but it wasn't. We had a lot of angst around it and there were a load of views that we had to bring together.

8:18I guess ultimately where we found we've been most successful as a business, and I mentioned it earlier, is kind of follow what the customer's doing. So myself, others around the business, the board, we spoke to a lot of CEOs and understood what they were thinking. And the kind of not so secret secret was that a lot of them wanted their people back in the offices. They felt that to run their businesses effectively, the innovation, the chance encounters that happen in the offices were really important. And that really struck me that there was a disconnect between what many of them were saying publicly at the time and what they were saying privately.

8:58And so it was quite useful to see that. And then, like anything, it's really good to see what you're doing in your own business. And I felt that work from home were far better than anyone expected it to do, which is why we had this narrative like offices are dead and we're all going to work from home going forward. But I do think we were trading on built up social capital in the interactions we had in the offices. And ultimately, I had this sort of saying at the time, which was around sort of energy, that there's far more energy in the room than there is on Zoom. And I really passionately believe that we all know when we've got an energetic team that we're going to do better things.

9:41And Zoom worked really well to a point, but it was no substitute. you and actually one of the first things ironically how this was all linked together one of the first big decisions we had to make was around this level of office investment and you know were we going to exit offices were we going to invest more and we started that debate online but then we started doing it in the office and just the quality of that debate was so much stronger in the office so it almost answered answered itself but we didn't know so you know i'll talk a little bit about retail in the offices we didn't know yeah there was a whole range of different permutations but what i think we did know quite well was that people would return to the office in some format and we felt very strongly they would return to the best offices you know people talked about earning the commute and that really resonated for me and having offices that were closer to the key transport hubs and having a really high quality environment from the public realm to that amenity to the buildings themselves.

10:47So we doubled down on our campus proposition that we're known best for. So these office led environments where you really do want to spend time. So we focus there with an expectation that return to office would be stronger than people expected, but not knowing that and we had to keep looking at the data because we absolutely could be wrong but as we went through time it became clearer and clearer that the trend was the return to the office if if you think today you're not seeing many businesses say well we're in the office three days a week i think we're going to move to two it's more we're in the office two days a week we're going to move to three or four so the direction of travel became clear but i'd love to tell you that it was with complete conviction but it was uh you know we believed that we were on the right track but we didn't know we were on the right track how difficult was it to hold that position because the there was people who questioned that decision and it wasn't instantaneous as you just know it's still going on now this this transition back to the office yeah and it did take resilience and there were you know people that were very critical of offices and the role they played and whether it was going to return to to normal and so i think there was an element of just keeping close to that data and seeing how that market dynamic played out and actually what was a headwind because work from home is very clearly a headwind for the office business ironically now has turned to a tailwind because as i said it's the return to office theme which is stronger than anyone expected and because of that uncertainty that we had two three years ago very little has been built so you've got a classic situation of demand being stronger than expected and supply being constrained and so now people can see that the very strong rental growth coming through in the core city core west end markets that was going to be my next question because your chism wasn't just about holding the assets and not selling it was also about going ahead with building so what is the sort of situation today if you take london i mean how much is london facing a potential shortage of office space yeah we've calculated this statistics it's based on the city and so we've looked at what would be a normal level of demand over the next four or five years and if anything because of that return to the office demand is running ahead of it and then one of the things you can do because it takes time to deliver these buildings is you've got pretty good visibility on the supply pipeline so if you look at the supply pipeline over the next four or five years you can see that coming through and so very crudely you've got sort of 10 million square effort of demand in the city normally over a four or five year period and we think there's only about five million square feet of supply so there's a short fall of five million square feet and so what will actually be taken up is what's available it'll be five million but that will be very beneficial to rents they will grow and and some customers will have to compromise take second-hand buildings or look at other locations if they do want to move what does the office of the future look like?

13:54Always ask this question and always ask this question of our customers. I mean maybe the best way to answer that is to give you a flavour of some of the recent buildings we've delivered. I think the sort of the best or most recent deliveries we're known for are 100 Liverpool Street in the city which sits right above Liverpool Street station in its sister building, one Broadgate. So being right close to the transport nose, both of those buildings will have retail and restaurants at basement and ground floor and then the arrival experience is different these days if i think we've all been into offices of the early 2000s quite a kind of corporate concrete feel to them quite gray we've talked about this hotelification of space so when you walk into a reception nowadays it probably feels a bit more like a hotel lobby more soft furnishings more kind of breakout space a more welcoming feel and we've we've definitely done that at a hundred liverpool street and that's a building that's got great design you look up you see a great atrium customers want more cycle storage uh they want more changing facilities outside terraces have been very very popular hundred liverpool street is a building that steps back as you go go up so it's uh has the terraces on it and i think very of its moment and time it was a building where we took a lot of the previous building um so we kept the carbon very very low and we extended up um so to have a very sort of low embodied carbon in the building and those those would be the type of things that the customers are asking for and then there's what they do on their own floor they're fit out it's less rows and rows of desks it's more breakout space for interaction they like to have larger kitchens these days as we've talked about it's kind of earning the community getting their people back where do you think we are in terms of the process of getting people back to the office how much more do you think there still is to go in terms of businesses up in the number of days yeah we we monitor footfall through our campuses so people going through turnstiles and on tuesday wednesdays thursdays there's uh you know a saying for that which i won't repeat on the on here but uh pre-pandemic levels if anything is slightly ahead fridays are very quiet they were pretty quiet beforehand but i think they remain quiet where we've seen the most movement over the last 12 months on mondays mondays was much like friday 18 months ago but it's increasingly moving to the to the rest of the week and you see that in the transport for london and when we get on trains monday's busy now isn't it friday's pretty quiet So I think we see Monday move to be back to pre-pandemic levels and Friday probably remains pretty quiet.

16:37That's my suspicion. So how are you keeping track of the data? What are you looking at in particular and what things stand out? This is footfall. So this is people either walking across the campus or going through the turnstiles on our buildings. That's the kind of key footfall data we look at. But we also look at leasing data in terms of how long a lease is being signed, how big are they? Because there's been a bit of a trend in the market where you're seeing people taking smaller offices. Increasingly, that will be in a fully serviced and fully furnished proposition. We have our Story brand on our campuses, which is a flex workspace provider.

17:19That's popular with our startup scale up businesses. And I think that trend to have fully serviced will continue to grow at that end of the market. You know, previously it would be the receptionist. You wouldn't have a facilities manager in a small business or the office admin that would have to take do a move for a business. And if you think they'd have to be dealing with all of these things like furniture packages, getting the offices cleaned, dealing with catering. And now that can all be included in one rental check. so it feels like a proper trend and so we we see that those are short leases two three years at a time lots of flexibility fully serviced but then at the other end of the spectrum on our campuses we continue to do and it's the bulk of our business it's 80 of our business we do basically uk headquarters space and that is 15 20 year leases where those businesses commit for for the long run along the lines of the type of offering i just described one of the parts of this story as well is not just return to office but also london's attractiveness as a as a business hub as a financial center what's your reading on that at the moment yeah that was i almost said it earlier that was a big part of our bet yeah we we felt that the trend of the 20th century and going into the 21st century was urbanization the growth of global cities very few people had made money betting against London so we were big advocates of of London and expected that to continue because all that really changed to some extent was there was a pandemic which was a horrible event uh one none of us really expected and we then had the vaccine and it felt as though we'd moved through that so we were comfortable with that pandemic risk but otherwise not much had changed we just had a period of time where we tried another way of working and i felt that people wanted to be together there's the power of city the agglomeration benefits all those things that people write and talk about and we're big advocates about 60 70 percent of our business today is in london um obviously you made a key decision here about return to the office what's your approach to decision making and how prepared do you need to be to be flexible oh you've got to be flexible we we talk a lot about just speaking to the customers looking at the data and as i alluded to on the decision around the office just look at what you're doing in your own life it can be quite impactful so we continue to look in those three things stay very very close to your customer and if they're doing something that is different from your expectation you need to change your direction of travel that's that's absolutely critical in this business when would you be prepared to not necessarily on this point but when would you change your mind on something at the point at which you see you you pick up little indications little noises around the business don't you you sort of think that's that's interesting i'm seeing something there and then if a trickle turns into a bit of a stream and then a cascade i think you've got to be prepared to change direction not always easy to do in real estate because real estate assets are you know particularly the ones british land and others own in commercial property they're big assets they're not particularly liquid but the important thing is if you do see the data changing you've got to move because if you move too late you won't be able to exit those positions and change direction so data is really critical i always think you started off as a derivatives trader i did how much has that helped you with decisiveness but also dealing with a certain pace and also i guess um being able to process data and making decisions based on that rather than letting emotion get into it too much you've pretty much set it out for me there i think um it definitely helped in those areas so i trained as a an accountant i worked in audit which is quite a different job from derivatives trading so i think having the experience of both has been quite complementary because you know with accounting you get time to think about things puzzle through a problem come to an answer whereas with derivatives trading it is much quicker paced activity and you do have to be decisive i think i've told this story before my first day on the trading floor i assumed i was get an induction talked about the markets and then at some point would start trading and they sat me sat me down and a customer had come over the the squawk box or it was a broker relaying a customer's interest and they said well what price are you going to make that customer and i went well what do you mean what price i don't know what i'm doing and i said well you've got to make a price there's the screen look we can show you the bid and the offer but you've got to make a price and i met i made this price i said how do i know if it's right they go you won't but the lesson they were trying to teach me is you've got to move at pace but also the the guy who gave me that lesson said the really really important thing to understand about the markets whether it's equity or fixed income i was in fixed income is you only need to be right 51 of the time to make a profit and lots of people make losses so it's quite interesting look we hope to be right more than 51 of the time in in british land but i think you you do need to make decisions move forward and if you're making more decisions right than you're getting wrong then you're moving you're moving forwards and if you can learn from where you got it wrong but it was really interesting because it was a totally different mindset from auditing where you had to get everything 100 right you know completely different can you just explain to people how you ended up doing both auditing and being a derivatives trader yeah it was um it was probably a bit of a classic route at the time this was 2000 2001 i qualified as an accountant and you either stayed and you worked your way up to hopefully one day be a partner or after qualifying probably 80 90 percent of the newly qualified accountants went off into banks or businesses and one of the routes was to go into a sort of back office middle office function so i started as a product controller so i was effectively a bit like a finance controller for one of the trading desks and then about 12 months after doing that role they said to me oh do you want to come down and work on the trading floor we've got a vacancy and i just kind of got chucked into it and had to do that and it was you know it was a great experience it was great fun you i think you left to come here to work in the treasury team here why did you decide it was time to move on from that from that trading world after i think was it three years was it just a case of you couldn't do any more uh it and a lot of friends and a lot of people on the training floor asking why are you doing this and i really enjoyed trading it was great it was very exciting at times probably a little bit too exciting but what it was was it was in one place you literally turn up at seven o 'clock in the morning and you trade all day till the markets close and then you went home and i'd seen a little bit of corporate life and i liked the breadth of experience that you got and I felt that for a career that I wanted to have for the next 20-30 years the the breadth of corporate life and the the job I do here at British Land was had a bit of a pull to me but you know at the time it was a difficult decision and I moved across because a guy I used to work with at Arthur Anderson one of the partners became the CFO of British land and he was looking for someone who had derivatives and capital markets financing experience to come into the business and so that was a good good avenue of entry.

25:12Another key decision that British land has made under Simon Carter is betting on out-of-town retail parks. At the same time it sold its 50 % stake in Meadowhall the big out-of-town shopping centre in Sheffield. So why? Why is British Land investing in bricks and mortar retail? So many retailers are still struggling and online shopping is still clearly on the rise. What does British Land think is the future of retail? It was a number of things. We had been selling retail. So the headwind from e-commerce was very real from I suppose 2013-14 through to COVID and COVID really accelerated that and so we then were coming out of COVID and the presumption was we would continue to sell retail we were telling investors we were down weight in retail but we'd seen such a big adjustment in rents that we were seeing our customers start to say we've got you know they said well we've got too many stores rents are too high back in 2018 i remember my predecessor chris grigg would have retailers phoning him up you know picking up the phone swearing at him saying you're not listening the rents are too high you need to cut the rents yeah and that was a difficult thing because ultimately the retailers had entered into contracts with us like any other contracts but as i said listening to your customers and clearly the customers were saying we've got too many stores and the rents are too high but then we as we moved through covid we started to see that the retailers wanted to take stores again and that was because the rents were much more affordable and we were benefiting from two themes one of them was the rise of kind of grocery discount and value retail and that was performing well in this country a lot of that is quite hard to do online and then as i mentioned earlier the multi-channel retailers started to really perform strongly and i guess what had been found out a little bit by covid was that problem of delivering to people's homes and pure play e-commerce businesses did incredibly well didn't they during that covid period their stocks went through the roof people were throwing capital at them but they weren't actually growing profitably and with higher interest rates suddenly investors not unfairly wanted profits and there wasn't such a supply of capital to those businesses so the the multi-channel retailers that had the stores and the online operations the likes of m &s and next really did seem to gain market share and they they found the retail parks the best format for multi-channel and that's down to really simple things these retail parks sit on major roads outside towns and cities and there's free car parking lots and lots of free car parking just as it's got much harder on the high street if you think really hard to drive to many high streets car parking charges some are quite downtrodden and you worry about crime whereas people can get to our retail parks very easily so we've now got to a situation where our retail parks have never been as highly occupied as they are today we have 99 occupancy on it so i think it goes back again to kind of following that data hearing what our customers are saying and today i get phone calls from probably the same customers that chris did saying why haven't you given me this store why has it gone to my competitor so you can just see the dynamics of change so the decision on offices was one where i alluded to we just didn't know but we had to weigh the data we had i think on the retail parts as we made that decision we had sort of far more conviction in it because we could see the data more clearly at the point of making the the decision it was a it was a clearer picture how challenged are shopping centres?

29:17The large shopping centres will do really well. There's a place for them and Meadowhall's a great asset, continues to perform well. We manage it for Norge. We are a business that just has to make some strategic choices and choose our bets. And we had a market leading position in retail parks with the biggest owner and operator in this country. I think we've got a key competitive advantage. We could see it was performing well. And so we decided to take capital out of Meadowhall and put it into the retail parts but meadowhall is a good performing asset they're not building any more prime malls just like the retail parks if you're buying a shopping center today you're buying it at a fraction of what it would cost to build so you're not going to get that new supply and ultimately all of the retailers want physical representation and they'll want physical representation in the absolute best mall so i think that market will perform well i think the challenge is the stuff in between so with the retail parks there's more sort of uniformity in performance across all of the assets you can see in the market whereas in the shopping centers there's some shopping centers that basically fall to zero value they just get you they get a big retailer leaves there isn't the investment another one leads and then they just fall down i i grew up in in in devon in torquay and i went through painton which is next to torquay and i haven't been through it for a while in the summer and where there used to be a shopping center there's now a car park you know it's it's been cleared effectively because that probably is the best use of that land so what those shopping centers that have challenges why do they have challenges what is it what don't they have i think it's a number of things i think ultimately we came from a position where we had too much retail supply so retailers were choosing the stores that performed best for them and that would be the out of town or the big malls i think it was also investment into those assets that you almost get into a vicious circle if the investment isn't isn't made but ultimately it comes down to too much supply too much retail supply in this country so good shopping centers are performing well in the retail parks as well you've touched on this already in terms of this fusing of online and physical how with the retail parts that you own and the retail parks that you operate how do you allow the retailers to do that what makes it successful main thing as i mentioned is the ability of the customer to get there really really easily in their car park for free walk to the store and then the store itself because the retail parks are typically bigger boxes so there's more uh room for storage and because it is just effectively that metal box it's quite adaptable so that's good from our perspective in terms of capital expenditure we can if we've got a vacant unit we can adapt it to the extent we need to and if a retailer is already in there it's easy for them to adapt so they can have effectively their main store the front of house that can be set up as you as as you've seen but then some retailers are getting more and more sophisticated in the back of house in terms of how they handle their online some some pit from the rack some have online deliveries that then are put in the front to the store so being able to fuse that all together but the most important thing for retailers to make a success of it is being able to track every single garment of its fashion in anywhere of their store or warehousing knowing exactly where it is and when they can do that and that's linked to their website and their online then they can really get the benefits of that so there's complete flexibility for the customer it's obviously much cheaper to fulfill an online order if the customer comes in and clicks and collect so click and collect i think today is the fastest growing fulfillment channel of online and the retailers want to encourage that they have the stores anyway it's cheaper cheaper to do and there's always a chance and more often than not the customer comes in and then also buys something in store what data and insights do you track on retail so we we track sales we track the proportion of sales that are physical in-store sales click and collect uh footfalls a key metric for us across all of ours and we compare ourselves with with benchmark and on some of our assets we're we're able to demonstrate to store managers they might say look our our store isn't performing very well and we can say to them well actually the stores around you are performing well and in the rest of our portfolio the stores with that particular retail are performing well so it's something that's happening in store and we can get down to it or it might just be that for example you've had roadworks outside of a particular center that's just reduced footfall for a month or something like that so just being able to understand that we also use it in pitching to customers when we've got a unit or a store that we think could work well for them we can show where we think their sales will be based on how they perform elsewhere in the portfolio many retailers if the mix is right is complementary to them if there is like for example if there's a big food store next to a smaller food store that sometimes works these days yeah an Audi or Lidl can can perform very well alongside an M &S and actually they're complementary to one another what's coming next retail what change do you see on the horizon that's that's the that is the billion dollar question i think we are going to continue to see maximizing the value of the store and i think we will see more ship from store because the customers demand to get things really quickly that hasn't that hasn't abated they're just more conscious about what it costs them to get product when they want it and so you're seeing retailers like kingfisher would be in queue screw fix um shipping more and more from the store directly to the customer and short um delivery timescales to compete against amazon who are going to continue to to do that i think we've got to expect the online experience to continue to improve and ai will probably give us another wave of innovation and so we need to be alert to that could that be like the original e-commerce headwind or will that be something that will be complementary to the store i just don't know what it is today but with the pace of technological innovation the customer experience is going to get better you know people talk about these um these kind of uh you can put in your body measurements and these avatars and you can try clothes on and see how they fit i mean i don't do that but people are going to do that our kids are going to do that and the experience is going to get better and better in it because that's the problem isn't it with ordering on fashion online you know you get stuff and most of it doesn't work and if you the return charges then you know it's not good for the retailer it's not good for the customer.

36:17After an eventful first five years as chief executive of a FTSE company I'm keen to ask Simon Carter what has he learned about leadership and management? I think one thing I learned pretty soon it was in the CFO role but particularly in the CEO role was I can have the best laid plans I'm someone who quite likes to plan so you know Sunday night what have I got in the diary this is what I'm going to do this week and in this job it's just the unpredictable that happens and so what you end up doing over the course of a week can be quite different from what you expected and I've had to kind of get a bit more comfortable with that but ultimately my week what will the sort of scheduled things that will be in it there'll be catch-ups with the team I have one-to-ones with all of my direct reports probably every two weeks I'll have a meeting with each of them.

37:10So I'll have those in. Seeing customers is really important. You always just pick up a little bit of insight that you didn't have beforehand. And it's really important to grow the relationship. I go on asset tours. So I see our assets. Some of them are very easy to see. 70 % of our portfolio is, or 60 % is in those three London office campuses I mentioned. But we have retail parks from Plymouth all the way to Inverness. I don't get to see all of them every year but i think i've seen all of them at some point over the last five years so i try and try and get around them i understand how they're performing i'm seeing investors because we're a listed business so making sure you're spending time seeing your equity investors and as i mentioned one of the things that british land does which is quite unique amongst the listed real estate businesses we work a lot with international software and wealth funds and they partner with us on some of our big developments so i will spend time seeing them understanding their priority areas making sure that we're being a good partner and so that's all the stuff that's scheduled and then there's just the like the random stuff that happens and you are you are kind of the last line of defense of ceo if something goes wrong in the business and it's sufficiently serious it's coming up to you to deal with john rippler certainly spoke about the power of doing nothing and sometimes in this industry in general the most important decision is to do nothing how how like as a ceo do you comprehend that that actually sometimes you should just do nothing i love i'm smiling now because john actually reminds me of that uh glorious inactivity he calls it simon sometimes there's time for glorious inactivity and he's right and his point is around when there's massive market dislocation it can sometimes feel like you need to do something and at times you will have investors you'll have other stakeholders who will be like oh we need to do something but actually as i mentioned real estate is not a particularly liquid asset class so i think you have to look beyond the immediate to where things are going to be in four or five years time and make your decisions like that it's really easy to lurch to trying to do something so i think actually you know what john has said there makes a lot of sense at certain points in the sector sometimes though as we were talking about earlier if your market fundamentals move and you see the moving and the the rest of the market hasn't seen that yet you've got to move really really quickly what's your proudest moment so far as a ceo here proudest moment i can i have two is that allowed um so two things one is what we've done with the senior team so um we had a number of retirements There was a natural renewal of the team.

39:55And it's great to see people come through to those management roles in my team and be performing really, really well. I'm very proud of that. And then at a personal level, I think the call we made on retail parks, because it was one where we could see it was changing on the ground. But the investment sentiment was still very, very negative to retail. so it required a bit of conviction i probably split my investor base some people thought it was a sensible very good idea others like why are you going back into retail and i'm proud at how that played out and you know that you know we we focused on fundamentals and actually took advantage of the negative sentiment to to make good money for the business what's been your biggest mistake or biggest mistake probably the other side of that coin i think so where we've kind of followed the herd rather than followed the the data and we look to build a logistics business the timing of that wasn't right i still think logistics has some really good tailwinds uh in terms of you the growth of e-commerce and particularly london focused there's no supply logistics lands being lost to other uses like residential and demands good and growing but it was a reminder to me that all markets are cyclical even the ones with what feel like very strong structural tailwinds behind them i mean fortunately we did that in relatively limited scale whereas the bid on the retail parks was probably five times in terms of investment but that that's one where the timing could have been a lot better what did you learn from that uh i think it is that structural is important but ultimately all real estate markets are cyclical and that's something john would say all real estate markets have cyclicality at some point and so you can have um rents grow grow grow grow and they can still be really good long-term fundamentals but ultimately if affordability is stretched a bit like that example of retail where the retailers were coming in saying we can't afford the rents some of the logistics operators the third party logistics operators were beginning to say rents are quite high in london this is going to be a stretch so i think just just you know listening to the customer focusing on what they're saying is is the lesson really there who do you learn from as a ceo about about management and leadership you learn a lot from the board i think that is um been one of my really good experiences in this job often some ceos will say oh it's about managing the board you know so ceo basically does what they want and they tell the board what they want to hear but i found the exact opposite i think you've got a room full of really smart people who've got a very diverse experience and i think if you spend time with them and listen to what they're saying and seeing it can really help you with decision making and then there's stuff i'm very lucky i've got a coach uh and i've had various mentors and that's been that's been really helpful to help navigate stuff how what value do you find you get from the coach what how can they really help yeah the coach so i'm almost i was trying to distinguished mentor from a coach for someone the other day i think the coach almost well my coach is great at just helping me talk through a problem and by the time just with their gentle probing of questions by the time i get to the end of the problem i kind of know what the answer is they've helped me work through that problem and it can be anything across the business whereas with a mentor it's much more how do you be really effective as a ceo how do you make because your biggest constraint is how much time you have and how do you make the most of the time you have and i'm lucky to have worked with a mentor who's very good at like practical things like simon get get you know one-to-ones in with the board ahead of every board meeting or keep your fridays clear and they're really little things but it makes such a difference if you haven't been there before you don't know it so give me some insights because that's that's fascinating yeah some time management insights yeah so you said keep fridays clear and also one-to-ones with the directors before a board yeah yeah because uh that the idea being that um you want to have a most effective discussion as possible in the the board meeting and you don't want to sort of cover everything off beforehand but equally i think some board directors will feel more comfortable having a discussion with you on a one-to-one basis or just exploring the topic where there's a bit more time than when you're in a boardroom with 10 other people so that works well and i think it gives the ceo a heads up of what's coming so you know if there's something that's on their mind or they disagree with something i've got time to prepare for that i can help my management team prepare for that and then the the friday there is so simple but it's genius it's just like this idea that you just you were talking about you get caught in the day-to-day fighting the fires the crises uh that you don't spend enough time for that strategic thinking or just reflection or even just you know sometimes just some time for yourself and by we work to keep a friday morning or afternoon free it isn't free by the end of the week but the idea is you start off at least a couple of weeks out that friday morning will be free and that's when you can have that urgent meeting with a customer you might need or you can think about strategy and i would that's probably been the thing that has been most effective advice for me so i'd really recommend that how many direct reports do you have i have six direct reports and how much time do you spend with them do you is it uh so it's as i say one-to-one uh once every two weeks with each of and that's normally half an hour to an hour depending on what we've got to cover sometimes if there's nothing absolutely pressing we might cancel it but that that would be the sort of formal interactions but we're a relatively small business here we're from a head office we're all in this building so we'd kind of wander around and interact with each other and then we have the more formal executive committee meetings which is me and my direct reports and we'll have those once every two weeks but the beauty of real estate is the informal interactions um you touched on this already but what's the best advice you've ever had i think it's not a business thing per se but it's linked to it really good advice i had was from a tutor at school and i'm only talking about this now because my son's 18 he's just thinking about university options and i was at school and had pretty much decided i did not want to go to oxbridge i didn't really know why i didn't want to go i think i was a bit daunted by the prospect of work and whether i would fit in or not because i came from the state school background so i dismissed it and the day before the submissions were due in a teacher mrs frost came to find me and said simon i think you should apply and this is why and so i applied and did an open application and you know i think that's been one of those kind of sliding door moments in my life is that right expression sliding door you know it's been quite a big thing because i only raise it because my parents reminded me they were up this weekend because we celebrated some family birthdays and said do you remember when mrs frost said that i couldn't actually remember it was mrs frost i remembered someone did it but my mum remembered you went to cambridge i did went to cambridge uh and it worked out it worked out i loved it and i did you know of course you fit in you find your tribe don't you and it was hard work but it wasn't quite as hard as i'd probably built myself up to think it would be we are we ask interviews about um best book recommendations or any any other sort of type media that you'd recommend to people is there any recent books that you've read or anything further back that you'd like to recommend uh a book that i read recently um is a book that chris hoy has written and i thought it was excellent um i was very lucky that um i went along to an event at the beginning of the year that he spoke about and we were given a copy of his book all that matters and it's just it's a very inspiring book and just how he's dealt with the the challenge of his cancer diagnosis and just how he's put that back to what worked for him as a as a sportsman you know how he dealt with adversity and like how he reset and he used all of those things and i just yeah it's just uh he's just a really phenomenal guy and a great book so i'd recommend that

48:51You've been listening to the Business Leader Podcast with me, Graham Ruddick. Our producer is Anushka Tate. To get more of Business Leader's content straight into your inbox every week, please sign up for our newsletters at businessleader.co.uk forward slash newsletters.

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