“The saying goes it is better to be born lucky than smart,” Dr Seek Ngee Huat tells PERE. “But I guess, at the same time, you need to be able to seize opportunities when they are there and to work those opportunities.”
Seek, whose name has become synonymous with the growth of GIC Real Estate, one of the world’s most sophisticated sovereign wealth fund real estate investment platforms, is happy to acknowledge he has been blessed with good fortune during his three decade-plus career. And you would be hard pressed to find someone in the private real estate sector that would challenge the man’s acumen. A seasoned professional of 65 years of age, his track record is for the most part now crystalized. As such, it would be fair to state with confidence that the man has a knack for taking advantage of the good luck that comes his way.
So it is of little wonder then that Global Logistic Properties (GLP), the increasingly international logistic property company he helped set up while at GIC, appointed him chairman when previous incumbent Ang Kong Hua turned 70 and stepped down last June. And after losing co-founder and guiding light Jeff Schwartz to illness five months later, the Singapore-national’s presence at the company has taken on extra significance.
Schwartz’s death left co-founder Ming Mei in charge of the $27 billion business just as it embarks on a next phase of growth that will see it extend its global reach to beyond its first markets of China, Japan and Brazil. At the end of last year, GLP announced it was acquiring IndCor Properties, an $8.1 billion US logistics property company via its fund management platform (GIC is an investor in the fund making the acquisition). The company’s portfolio had been assembled for sale by New York private equity real estate powerhouse Blackstone. It was one of the biggest private property deals on US soil since the global financial crisis.
And Seek suggests that Europe could be next up. He says: “GLP is always open to exploring new markets, including Europe.”
He is open-minded about his own future too: “life is unpredictable. Who would imagine Jeff would go so young?” he explains. But, judging by the enthusiasm still exuding from the man during our 90 minute sit-down together – the first of two back-to-back interviews with PERE here in Hong Kong – it would be a worthwhile bet that, even at his age, he will play an important part in overseeing that final major regional piece of GLP’s jigsaw fit into place. “My targets are aligned with management: to make GLP one of the most profitable logistic property companies globally,” he declares.
We are behind closed doors in the business center at the Grand Hyatt Hotel in Hong Kong’s Central the day before he will go onstage and reiterate his and GLP’s broad targets to 400-odd private real estate professionals at the annual PERE Asia Summit.
As with IndCor, a scalable move into Europe would be a big call, although it would unlikely faze Seek. Like Schwartz, Seek’s career can be signposted by the big calls he has made, particularly those made to grow GIC’s real estate business from a 40-professional, US-centric direct investment business to a 200-strong global operation able to invest across, strategies up and down the risk spectrum and across the capital stack.
And, just as Schwartz played an instrumental role in introducing some of the private real estate investment structures that are today taken for granted, Seek’s GIC Real Estate is widely lauded for instructing other state investors as they approach the asset class. Certainly former colleagues and business partners think so: “In my view, Seek changed the way sovereigns invested in real estate. He was at the forefront of what became the model today,” says GIC Real Estate’s former head of investments, Michael Carp. “He is highly respected for building the organization into what it is today, one that most sovereign wealth funds view as the benchmark for a successful model,” says Leon Bressler, partner of Perella Weinberg Partners, a European private investment manager and one of GIC’s fund managers.
The epiphany moment
Seek’s first big call, however, was personal. Destined for a career in academia, it was while compiling his thesis for a PhD at the Australian National University (ANU) that he had a change of heart about his vocation and decided to switch the world of theory for a life as an investment professional.
On reflection, Seek admits the writing was probably on the wall years before he made the change. Just weeks after finishing exams for a degree in estates management in his native Singapore, a then 22-year old Seek was already working for CH Williams, a prominent property consultancy firm that would later merge with CBRE. “I was desperate to earn some money so I took on the job very quickly,” he regales. “Soon after that, my scholarship to do a masters in business administration at the University of British Columbia came through. At that stage, I still thought I might become an academic so went on to do the PhD.” That saw him relocate to Canberra and enroll at ANU.
The epiphany moment came midway through completing his doctorate. “It was too lonely,” he confesses. “Yes I finished it. Once I start something, I have to finish it. But I did decide that academia wasn’t for me.” Having enjoyed an early taste of employment with CH Williams, it was not long before he returned to the market with JLL precursor Jones Lang Wootton (JLW) in Sydney and so started an illustrious career in property.
He recalls JLW’s leadership back then: Frank Charnock was the managing partner, although Seek worked directly for Richard Luscombe, another partner. “My job was to run the research team. At that time, research in property wasn’t a big thing like it was for equities. But there was a growing feeling that an equivalent was needed.” JLW recognized how a stronger grasp of market data would lead to a competitive advantage and in Dr Seek they had just man for the job.
First came the “bean counting stage,” as Seek puts it. Recognizing there was an abundance of market data across JLW’s network of offices, he recalls: “we set up a process to ensure we laid enough traps around the data to catch it from within the firm. JLW was the largest agency in the world at that time so the information was there.” Then came the analysis. “And it was critical, for it to have credibility, that it was very neutral, not to say the market was always looking up.” The approach worked and ultimately led to Seek’s ascent through the company’s ranks. “By the time I left I was senior partner,” he says. By then, he was a full-signed up senior board member with as much responsibility for growing out its operations as for its research.
One of his unfinished works before leaving the firm in 1995 was to grow out a separate investment management business. “By the time I left we hadn’t quite got there,” he recalls. “The merger with LaSalle happened a few years later and LaSalle Investment Management was already running. The objective was ultimately achieved from the merger.” By then, however, Seek’s impact on global real estate was already being felt more directly as he made his first plays as a principal investor.
Perhaps surprisingly, Seek’s decision to accept GIC’s invitation to lead its real estate business was not automatic. “Actually I was quite surprised when they asked me to join and I really had to think very hard about it. At JLW I was at the highest level of partnership one could get to. I was having a good time and enjoying the challenges.” Ultimately, a mix of the allure of “operating on the buy-side” and of running a global portfolio, prevailed.
When he started at GIC in 1996, its real estate business was a microcosm of what it is today, its team far less sophisticated and its leadership less stable – Seek was actually the fourth real estate head. Further, practically the entire portfolio and the 40-odd staff managing it resided at the state fund’s office in San Francisco. “Seek came in when GIC Real Estate was really a fledgling operation,” notes Chris Morrish, GIC’s current head of real estate for Europe, who worked with Seek for nigh-on 11 years. “The portfolio was essentially American and it was office focused. He redirected it to be more global.”
First impressions
Morrish joined GIC in 2000. By then the team already had adopted a research-driven approach clearly influenced by Seek. “He introduced a framework against which to think about appropriate returns from the various parts of the world to reflect risk. He recognized the need for such a framework to make global decisions.”
Choy Soon Chu, one of Seek’s first lieutenants in Europe, adds: “Before Seek came, GIC was not being run in a systematic way. He streamlined our processes and made things more systematic. He was particular about getting the team to formalize a more structured approach to investment.”
Meanwhile, on the practical side, Carp recalls how GIC’s real estate platform had its own way of doing business. “When he joined we were doing everything ourselves: buying, holding and managing buildings.” He recalls a prevailing attitude at the time among the team that deals would come knocking on account of the state fund’s enormous coffers. “We didn’t think we had to develop relationships because we had a lot of capital and people would come to us.” He adds: “We were a smart group, but we didn’t know how to negotiate to do another deal. We negotiated instead to get the best price possible.”
Carp believes that convincing the team to change tack was among Seek’s first notable achievements. “Seek engrained in all of us to focus on partnerships and people who could do things better than we could. He used to talk to us about our negotiating style. His view was that you negotiate to do another deal. If you weren’t able to function like that, you weren’t able to move up in the company.” Carp recalls how Seek’s focus on strong partnerships even resulted in greater emphasis on social engagements, for example golf days. “You needed to be social. Before him, that wasn’t really heard of at GIC and perhaps even the sovereign wealth fund world.”
Contrarian positions
If a research-led approach to investing, more efficient protocols and greater congeniality with partners characterized Seek’s leadership while at GIC Real Estate, it was the big deals he led that truly defined him as one of the markets most savvy investors. Confident they would stand up to the scrutiny of the underwriting guidelines he had installed, Seek was not afraid to take what seemed to some as contrarian positions on deals – occasionally, even to the surprise of his team.
As Carp reflects: “He did a humungous deal in Japan on which he risked his entire reputation.” In 1997, approximately one year after joining GIC, Seek instructed the $1 billion acquisition and speculative development of Shiodome City Center, a 43-storey skyscraper in the Minato ward of Tokyo, alongside developer Mitsui Fudosan. Such an outlay in one of the most tightly-held property markets in the world today might seem a no-brainer. But at the time Japan’s economy was so sluggish that big-ticket real estate deals were unattractive propositions even for the country’s conglomerates. As Seek recalls: “There was only bad news from Japan back then. There were many questions about the state of the economy.”
Seek recollects how the investment was among the first big property investments in Japan by a foreign investor. “The market didn’t really have any foreigners. It was pretty much controlled by the conglomerates who had a stranglehold over the really high quality assets. But these big boys were in no position to bid on it.”
“We were all shocked,” admits Carp, “But he had the conviction in what he was doing and he was proven absolutely right.” Adds Morrish: “He made a decision, almost personally, to develop a 1 million square foot building in Tokyo when the office market was on its knees. It was a big call and he called it right. That building has been incredibly successful for us.” Unsurprisingly, Shiodome City Center remains a key assets within GIC’s Japanese real estate portfolio.
Similarly, Seek also masterminded GIC’s first major property investments in Korea. He walks PERE through its acquisitions of the Seoul Finance Center, a 30-storey office in Seoul that had just completed development and was barely leased, for KRW1.1 billion (€304 million; $322 million) in 2000. He also mentions the state fund’s 2004 purchase of another Seoul office, Gangnam Financial Center, a 45-storey building reported to have been acquired for as much as KRW1 trillion. The building was renamed from Star Tower not long after a widely reported tax dispute about how the transaction was structured was resolved.
Understandably, Seek choses to focus on the acquisition’s significance in the marketplace. “We were one of the first movers in that market. Subsequently, others came in and the market just opened up for foreigners,” he says.
“Seek made a big call to really expand the portfolio into Asia in the mid-2000s,” explains Morrish, “We really built our presence in Asia at a time of fast growth there.
Partly because there wasn’t much competition, we were able to buy at some really good pricing and those investments have really delivered. And I think that meant we were less impacted by the global financial crisis.”
Seek’s lieutenants cite these early deals in Japan and Korea as among Seek’s biggest calls. So by the time he endorsed the $1.3 billion purchase of ProLogis’ Asia assets in 2008, they were not surprised when he greenlighted the deal just six weeks after it was tabled. Ironically, Seek himself was less resolved at the time. For one, time was not on GIC’s side as choking debts coupled with a plummeting share price was forcing ProLogis to seek a liquidity option and quickly. “That was a situation where we had to make a very quick decision,” Seek remembers. “Fortunately, we had been partners for a long time already so we understood the portfolio well and could make that decision. Looking back, it was an easy decision but, at the time, it wasn’t an easy call at all.” It goes without saying that it was a right call given it precipitated the creation of heavyweight logistics property development and fund management company Global Logistic Properties.
High degree of autonomy
Under Seek’s watch, GIC Real Estate evolved as something of a self-contained operation, complete with its board of directors. That is something that other state investment houses have resisted doing, even today.
Seek says it is a misconception to attribute this independence to him, insisting “credit should go to my bosses” instead. By Seek’s reckoning, the decision by GIC to grant its real estate division with a high degree of autonomy was testament to the humility of his superiors who recognized the merits of such a decentralized approach. A similar view was taken with its private equity business. Seek says: “They recognized that private market businesses are different to the public markets so should be run differently therefore. I had a mandate that did not require me to seek approvals from the main board. Of course we had our approval limits set within the entity. But this was a much more efficient way to grow the business than have approvals at the wider group level.”
Seek’s ex-colleagues recount how the independence GIC Real Estate was afforded played a critical part in its growth. Carp notes: “For us to be able to compete we needed to be responsive.” He adds that there was a “huge line of trust” between Dr Seek and GIC senior management. Morrish contends: “If they hadn’t trusted Seek, I’m sure he wouldn’t have enjoyed the authority he had.”
Despite its independence, GIC staffers past and presence are well-known for honoring its strict policies regarding sensitive information, particularly in areas concerning asset values and returns. Anyone enquiring about its overall assets under management, for example, will likely do no better than uncover guestimates from various external media.
The same is absolutely the case with Seek, even though he left the organization more than two years ago. His and GIC’s reputation remain intrinsically linked. In one indicator of that, he still references the state fund in “we” terms and though he prides himself on the various deals struck while in charge, he speaks equally fervently about maintaining the fund’s strong reputation among peers and partners.
When asked about the biggest pressures of running a platform for a sovereign wealth fund, he replies: “Of course you want to achieve good returns. But for a sovereign like Singapore, we have to be even more concerned about reputation and risk. Sovereign wealth funds have a country image to protect.”
Seek points out how reputation and risk assessment was important for when assessing potential investment partners but crucial too for when determining whether to invest in assets that may bring with it negative political ramifications. “We are flying the country’s flag and so don’t want our investments to be politicized.” Though he will not discuss particular cases, he admits to pulling out of or turning down transactions that had reputational issues.
No big shadow
Though respectful of the sensitivities that come with working for an organization like GIC, Seek is candid enough to give a decent account of his professional life at the state fund and he answers most of the questions posed by PERE through to the time he left in 2011. In the summer of that year he handed over leadership to one of his lieutenants, Goh Kok Huat.
“Seek brought in Kok Huat but has been respectful about the succession,” comments Morrish. “One of the things he did very well was to step away without leaving a big shadow over Kok Huat. Seek was there in the background for a couple of years, and available if Kok Huat wanted to consult with him, but essentially he left him to get on with it.”
Morrish says that today GIC Real Estate looks different to when Seek was in charge. He points out that the change is, on the one hand, a function of the maturity of the platform. But moreover it is also a function of how the sovereign wealth fund is now run following a broad brush change of leadership that extended across the organization.
“Seek took GIC Real Estate through a period of enormous growth. His departure coincided with a particular point in the maturity of GIC Real Estate,” he says.
Not that handing over the command of GIC Real Estate meant an exit from the state fund. Although the sovereign fund sanctioned the handover to Kok Huat, a man of Seek’s abilities is not easily relinquished and, sensing that, GIC convinced him to remain in three non-executive roles. These included: a seat on its executive committee, a non-executive director role with GIC Real Estate and chairman of its Latin America business.
The subsequent chairmanship at GIC-backed GLP came next. “When GLP IPO-ed, GIC was a major shareholder and that meant naturally I became one of the firm’s directors. It wasn’t something predestined, but I’ll do it as long as we’re making progress.”
That GLP is making progress is of little doubt. When the company was formalized in March 2009 it controlled 20.7 million square feet of property and developments in China and minority interests in Japanese funds controlling a further 27.1 million square feet.
Today the group controls more than 300 million square feet and, as mentioned, expansions in the US and perhaps Europe only infer that the company has much further to grow. In addition, the gradual expansion of its fund management business, a model that will see it share much more of the equity than it historically has, is a further strategic cause that motivates Seek to stick around. “Providing the service of a fund manager and operator at the same time is a very important part of the growth story,” he says.
Nevertheless, there will come a time when Seek steps back from the sector for good. And when that day comes, it will have lost a figure who was both lucky and smart and who will be remembered for the big calls he made.
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