Today, James Quille is in London. But he won't be here for long.
As chief executive officer of Macquarie Global Property Advisors, one of the fastest growing private equity real estate firms in Europe and Asia, Quille spends much of his time on the road, meeting with investors, scouting potential acquisitions, visiting development sites or simply dropping in on one of the firm's far-flung offices. Last week, he was in Kuala Lumpur and Singapore. Soon, he'll be off to Warsaw, Munich and Amsterdam. Trips to Chicago, New York City, Bermuda and Atlanta will follow. And that is just the month of June.
July will see Quille hit Vancouver, Beijing, Tokyo and Seoul. He'll also travel, once again, to Singapore. Eventually, he may even get to spend a few days in Hong Kong, the place he now calls home, in as much as anyone who travels 280 days out of the year can call any place “home.” As Quille himself puts it: “You have to file your tax return somewhere.”
Twelve months ago, Macquarie Global Property Advisors may have been one of the biggest private equity real estate firms you had never heard of. That would have been understandable as two years ago the firm barely existed at all. But in early 2004, Quille and seven of his colleagues initiated a management buyout of the global real estate funds business of Lend Lease. Shortly thereafter, they formed a joint venture with the Australian bank Macquarie, a company that shared their entrepreneurial spirit and global ambitions. And in 2005, the newly renamed Macquarie Global Property Advisors closed its second global opportunity fund, focused on Europe and Asia, on $1.3 billion.
Today, MGPA has become one of the most active opportunistic real estate investors in Asia with a portfolio of assets ranging from mixed-use developments in Kanazawa, Japan to office buildings in Shanghai and Seoul to luxury residential condominiums in Hong Kong. The firm has been equally active in Europe: In the course of one week last month, Quille and his team announced a €250 million logistics joint venture in France as well as the acquisition of a 40-story office tower in Warsaw.
Headquartered in Bermuda, MGPA maintains offices in Hong Kong, London, Luxembourg, Seoul and Tokyo. The firm also has people on the ground in Munich, Brussels, Paris, Beijing and Shanghai. And two new offices, in Frankfurt and Singapore, will open later this year.
All of which means Quille may spend even more time racking up air miles.
OUT OF AFRICA
Though Quille's travel schedule may not be entirely unusual in today's global marketplace, his longevity is. Unlike opportunity fund managers who have recently set up shop in Asia or Eastern Europe, Quille has been circumnavigating the globe his entire career.
A native of London, Quille began his traveling ways in the early 1970s when, as a project manager for AngloAmerican, he helped build a township in the copper mining region of Zambia. “I never stopped traveling from there,” he says.
Following his stint in Africa, Quille went on an extended holiday throughout Asia, eventually landing in Australia, where his UK passport enabled him to find work. An engineer by training, Quille found a job as a project manager involved in developing a power station and a wharf. He later returned to London, where he ran a small development business for several years, until the UK's stagnant economy—and even more stagnant weather—convinced him to return to Australia.
“If I was going to go broke,” Quille says, “I might as well go broke in the sun.”
Back Down Under, Quille joined Lend Lease, the real estate, construction and financial services company where he would spend the next 19 years of his career. After working his way through several different positions in project management and asset development, Quille transferred to the fund management side of the business in the early 1990s.
“I realized that the people who had the capital could call the shots,” he says.
As Lend Lease decided to move offshore in the early 1990s, Quille was responsible for raising the company's first Asian-focused real estate fund. In 1997, he moved to Atlanta to become chief operating officer of Lend Lease's US operations following the acquisition of Equitable's real estate business. Shortly thereafter, he was chosen to develop the company's first global real estate fund, which meant that more moves followed, first to London and later to Hong Kong. Building on the company's experience investing in South America, Asia and Europe, Lend Lease Global Properties closed on $529 million in 1999.
“We saw what had happened with the workout of the RTC and how that, in turn, fueled the early opportunity funds,” Quille says. “And as they were starting to go offshore, we felt we had the same skill set to take opportunistic money and invest it.”
EIGHT IS NOT ENOUGH
Quille's steady rise through the ranks of Lend Lease came to an end when the parent company, beset by problems in its US operations, decided to exit the funds management business and focus on its core operations.
Nevertheless, the cloud had a silver lining for Quille and seven of his colleagues, who were able to negotiate a management buyout of Lend Lease Global Real Estate Advisors, the fund manager of the $529 million vehicle, from Lend Lease in early 2004. The newly formed firm, named Ochtar—which means “eight” in Gaelic—reflected Quille's heritage as well as the number of partners who started the business. (A ninth partner joined shortly thereafter).
“A lot of people in that group had worked with me for a long time, some 15 or 16 years,” Quille says. “From our perspective, we wanted to stay together as a team. [Our investors] wanted us to stay together as a team. And the MBO was a natural consequence of that.”
On the advice of several of their investors, Quille and his team went looking for a well-heeled partner, one that would enable them to maintain not only their global footprint, but also their independence. Macquarie, one of the fastest growing financial institutions in the world, seemed a good fit given its entrepreneurial spirit; extensive investment banking, research and capital-raising capabilities; focus on new markets; and, above all, a willingness to give the principals of the firm free rein to set the investment strategy of the new business. Other less critical factors also played a small role.
“They are also Australian,” Quille says. “And there are a number of us in the partnership from Australia.”
With the backing of the Australian financial services firm—Macquarie took a 49 percent interest in the private equity real estate venture—Macquarie Global Property Advisors, as it was now known, went out on the fundraising trail. MGP Fund II, comprised of both a European and Asian vehicle, closed on $1.3 billion last year. A majority of the fund, approximately $900 million, is targeting the Asian markets, an area where MGPA has a long track record.
One of the firm's most notable Asian deals was the redevelopment of 53 townhouses located along Repulse Bay, “probably the best beach location in Hong Kong,” according to Quille. Although the properties “leaked like a sieve” and were “really almost tumbling down,” they were still achieving some of the highest rents in the area.
Given that the publicly traded seller was undergoing liquidity problems, Quille and his team were able to purchase the property for $200 million in 2001, spending another $20 million to refurbish the homes. To date, MGPA has realized just under $400 million in proceeds.
“We have one [home] left to sell,” Quille says. “So if you have a spare $14 million, there is a Hong Kong townhouse with your name on it.”
In addition to MGPA's experience in Asia, the transaction also highlighted a distinctive aspect of the firm's investment strategy. Unlike many opportunistic investors, MGPA tends to avoid the standard operating partner model, preferring to manage most of the day-to-day tasks of asset management and development itself. According to Quille, approximately 80 percent of MGPA's deals will be orchestrated by the firm's principals, while 20 percent, “at a maximum,” will involve operating partners.
“[The Repulse Bay deal] was an off-market transaction that we sourced,” Quille says. “We knew the company. We knew the managing director. We did it principal to principal. We hired the architects. We value engineered [the buildings] with our project management group. We called the tenders. We had our investment managers working weekly on site with the GC and the design team. We put the leasing program together. We commissioned the PR group that did the branding and re-branding. We managed the sales program. From soup to nuts, we did everything.”
One of the primary reasons that the firm has been able to pursue such a hands-on strategy is the experience of its principals. Quille and several other members of the partnership have spent much of their careers as developers or project managers, which Quille believes adds a unique perspective to real estate investing.
“If you think about things from a project management perspective, generally you can quite quickly zero in on the areas that are going to have the greatest impact on your ability to succeed, whether it's underwriting an asset, thinking about what the key drivers are for a return or the structuring of a new product,” he says. “That discipline learned in my early years has stood me well.”
MACQUARIE GLOBAL PROPERTY ADVISORS
|HEADQUARTERS||Michael Wilkinson– Managing director, Investment|
|Canon's Court||management, Asia|
|22 Victoria Street||Moonduck Kim– Country manager, Korea|
|Hamilton, HM12||Shigeaki Shigemasa– Country manager, Japan|
|Bermuda||Brett Straatemeier– Managing director|
|OTHER OFFICES:||MGP Fund II (2005): $1.3 billion|
|Hong Kong, London, Luxembourg, Seoul, Tokyo,||MGP Global Fund I (1999): $529 million|
|KEY PERSONNEL:||RECENT TRANSACTIONS:|
|James Quille– Chairman, CEO||June 2006: Announced a joint venture to develop a €250 million|
|Andrew Wood– Director, COO||portfolio of logistics properties in France|
|Alex Jeffrey – Director, managing director||June 2006: Acquired a 40-story office tower in Warsaw for an|
|Simon Treacy– Managing director||undisclosed amount|
|Ken Curtis– Investment manager|
|May 2006: Purchased a 29-story office building in Hong Kong for|
|Craig Wallace– Managing director, investment partnership|
|Neil Jones– CFO|
|April 2006: Acquired a 19-story office building in Seoul for $125.8|
|Digby Okell– Managing director, Investment management-Europe||million|