Weekly Digest

Off-piste

Jackson Franks

18 February 2019

Ljubljana, Slovenia had the dubious honour of being the destination for a weekend ski trip for me and a handful of Momentum colleagues. It had been 10 years since I last skied and as I stood at the top of the mountain for my first run I quickly realised that the fear of falling was significantly greater than it was in my teenage years. After taking in the views and doing what I believe most Londoners do, contemplate why they live in London after seeing such scenery, I suddenly recognised that skiing is not too dissimilar from investing in the property market.

At Momentum we invest directly and indirectly into the property market via global companies and our own African Real Estate Fund, known as MAREF. But how does a real estate investment have any similarities to skiing? Well let’s break it down into three phases;

Phase #1 - Pre-construction or in skiing terminology, the chair lift

The chair lift is the time to plan. You get a bird’s eye view of the resort, where you can strategize for the most successful route down whilst minimising the risk of (let’s face it) death. As with the chair lift, the pre-construction phase of a development is the time to plan. It’s the stage of the process where you minimise the risks whilst ensuring the project is financially viable for your investors. MAREF has strict requirements that must be met before we can move on to developing any asset, these include:

  • Securing land title and zoning
  • Substantially finalise project costing and design upfront
  • The project must be 60% pre-let
  • Debt funding must be prearranged

Phase #2 - Construction or better known as the ski run

As you ski off the chair lift without bringing down your colleagues, family, friends or fellow skier you are presented with the run. At this point you must trust your process to get down the slope successfully. You have envisaged the run, prepared for all issues you may encounter on the way down and planned accordingly. As with a development, you stare at the vacant land as you prepare to break ground and envisage the final product. You may encounter issues during the construction phase but must trust your process. You have mitigated your risks in your pre-construction phase and now you must trust your appointed professionals to deliver a product to the specifications of your tenants within a timeframe and budget. To date MAREF has completed three Grade A office developments on time and on or under budget.

Phase #3 – Post-completion or what skiers call the après-ski

The après-ski, like post-completion is by no means the time to relax. It is the time to collect the kitty, to ensure the day on the slopes remains a success. There may be one or two who try to short change you, or even not pay but the quick reminder of not receiving a Bombardino to drink quickly eradicates that risk. As with a development, the importance of tenants paying their rent on time is key to the success of the asset and the reason for MAREF being tenant driven. MAREF offers residents world class facilities to operate in, with first class services. We deliver international grade A standards to the African property market to enable businesses in growing economies to thrive, because we know that, without our tenants, the lights go out.

MAREF currently sits on the chair lift with the handle bars pulled down, scouting the slopes ready for the next run.

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