Real Estate Investor Magazine South Africa July 2018 | Page 12

MASTER INVESTOR
MASTER INVESTOR
JM: In our game of retail, it is all about the property’s accessi-
bility to the market it is meant to serve and its ability to dominate
that market into the future. Thus available bulk, additional land
and the ability to leverage the skills of our asset management team
to create additional value uplift are all factors that I consider when
looking into a property investment.
reputation far more than I will ever value short term profit. In
fact, I have a complete disdain for anyone who only values short
term gains at the expense of longer-term and wider-reaching
socio-economic benefits,” McCormick says.
Learning the business
While he grew up in a family of businessmen, McCormick ex-
plains that his most important business lessons came before he
joined the working world. “At university, I worked two jobs – as
a waiter and later sommelier at Tokara, and as a barman at the
local student pub “The Terrace”. As part of the “A-Team” that
ran the front of house at Tokara, I learned so much about sched-
uling (read: juggling) tasks, biting my tongue in the face of some
pretty adverse situations and learning to restrain my otherwise
spontaneous nature to protect the goals of the institution.”
Upon completing his B-Comm (Hons) in Economics and
Management at the University of Stellenbosch in 2001, Mc-
Cormick decided to take a gap year. This, he explains, is where
he had possibly his biggest learning experience. Deciding to put
his qualification as coastal skipper to good use, he went to work
in the yachting industry in Antibes, the south of France. “It was
there, as an unemployed South African without any local cur-
rency or connections that I learned some of my most important
life lessons on the networking, dedication and hard work needed
to break into an industry from the outside,” he explains.
McCormick’s timing wasn’t great. Arriving in the Mediter-
ranean shortly after the 9/11 tragedy, he found himself to be one
of many people in the same position. The majority of US yacht
owners chose not to send their boats due to the Med’s proximity
to the Middle East, leaving McCormick with little choice but to
improvise. “Having walked the docks of the various ports daily
for 6 weeks, until I wore through the soles of the only pair of flip
flops that I owned, I was down to the last €100 of my savings
when I got my first break – sanding toxic antifoul off the hull of
a boat in Cannes.”
This opportunity, along with his willingness to work hard,
earned him referrals that set him up for the rest of his time
there. Reflecting on the experience, McCormick says it was a
key learning moment: “Having come from a protected youth
at the incredible institutions of Michaelhouse and Stellenbosch
University, I can say without a doubt that this time of living
hand to mouth in an alienated state of desperate survival re-
aligned me to a world that I never knew before and one that I
believe was one of the major factors that ignited a fire within me
that has burned relentlessly ever since.”
Getting to the point
REIM: What has been your worst experience in investing?
JM: Without a doubt, the worst experience was the develop-
ment of one of our malls in a coal-mining town in Mozambique.
It was a “perfect storm” in which we could not have planned our
timing to have been more ill-placed. We had bought the land at
the peak of the “coal rush”. Soon thereafter, China’s previously
insatiable commodity hunger and the oil price crashed.
The coal mines that had been planned were placed on hold
(including the 65 000 expat worker applications that had been
registered). Renamo then started their low-level banditry at-
tacking the supply chains from Maputo (scaring off many of our
potential tenants), and as if this was not enough, the “Hidden
Debt Scandal” followed, where the government of Mozambique
bought “tuna boats” (and frigates and munitions to counter Re-
namo’s insurgency) with commercial loans backed by govern-
ment guarantees, without informing the IMF as was required.
The IMF subsequently pulled its funding, the USD went from
Mt35 to over Mt80 overnight…all whilst we were building and
trying to lease the development.
Whilst the situation has stabilized since then, I have nev-
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JULY/AUGUST 2018 SA Real Estate Investor Magazine
The big picture
Jason, John, and Matthew McCormick
er spent so much energy trying not to lose money, rather than
making a difference and a profit to boot!
The experience aged me a decade in two years, but taught me
more than most would take two lifetimes to learn! Fortunately
as a company we had been incredibly financially stable due to
the somewhat conservative structuring that my father had his-
torically implemented, ring-fencing each development from the
rest and we were easily able to come through it all with nothing
more than wrinkles and grey hairs from the experience.
REIM: What were some of the most important lessons you
learnt from the experience?
JM: So many, that I can hardly mention all of them here now.
Simply, though:
Don’t invest in a foreign country with a thinly traded curren-
cy whose anticipated growth rates are based mainly on a single
primary commodity (hydrocarbons in this example) unless there
is sufficient support and economic diversification to weather a
fall in demand for such commodity.
Never invest on the basis of projected growth rates. “Follow
the roofs” and “follow the money that actually EXISTS” rather
than the promise of profit.
Invest where there are sufficient quality tenants already
in-country, rather than trying to act as a marketing ambassador
for the country to convince tenants to navigate the oft-murky
regulations to enter the country to support your development.
REIM: And tell us a bit about your first investment in property
JM: My first investment in property was buying a semi-de-
tached unit in a new housing development in Stellenbosch off
plan in my first year. From an initial purchase price of R183
000, we sold it for R1,050m 5 years later when my brother had
completed his studies at Stellenbosch.
It was a fantastic return on the initial investment, however
more a function of good timing than as a result of astute invest-
ment analysis!
REIM: What are your top business and investment tips
JM: As I have never been a passive investor in anything, I am
sorry to disappoint by saying that I have no tips on how to “get
rich quick”, how to pick stocks or otherwise. However, what I
can say without fear is that relentless dedication and belief in
one’s end goals is what has driven me on over the course of my
business career. I have always felt driven to play a part in equal-
izing the inequality in our beautiful country. I have, over the past
decade and a half, willingly worked 80-100 hour weeks, net-
working, deal making and listening to the needs of our people
and doing all in my power to deliver on their needs and desires
REIM: And what makes a great property investment in today’s
market?
Asked about insights he’s gained during his career so far, McCor-
mick emphasises four points: That the road is long and people
don’t forget - “Treat people with respect and dignity, for you never
know when you may need the return of a favour. Second, real es-
tate is a long term play and one requires incredible attention to
detail if one is to make a true success of it. The third thing would
be to never break a promise of go back on your word. Nothing is
more important than your reputation and a lifetime of hard work
and dedication can be evaporated in a single wrongful act. Finally,
the three most important things in property we all learned in uni-
versity still ring true today - location, location, location! The rest is
an alchemy of art and science to ensure one is able to extract the
greatest value from that location.”
These lessons will come in handy over the next few years, with
McCormick planning to continue growing the portfolio with
world-class shopping centres. “I want our portfolio of malls to
play a part in the social regeneration of our communities, provid-
ing more than just the normal goods and services but education
and skills development that uplifts the entire community leaving
it in a better space than we found it,” he says.
Speaking about Exemplar, McCormick keeps it simple:
“We’re looking at a number of exciting acquisitions which we
believe will add significant value for our shareholders. We’re not
far along enough on these to provide any details, so all I can say
is...watch this space! It’s going to be exciting.” Over on the devel-
opment side, he’s enthusias tic about MPD’s upcoming projects.
The company is currently expanding Kwagga Mall to 35,000 sqm,
ModiMall to 24,000 sqm, finishing off Mahlakung Plaza, and are
about to commence construction on Mall of Tembisa, Mabopane
Square, Riba Cross, and Katale Square. “Things have never been
more exciting with a significant pipeline of exciting projects com-
ing together,” McCormick explains.
The company is also in the first phase of developing Capi-
tal Mall in Pretoria West, and the project will be MPD’s largest
development to date. Leratong City Mall, a 30,000 GLA devel-
opment on the West Rand is also finally coming back online. In
partnership with CalgroM3, MPD will be adding approximately
15,000 housing units to the land surrounding the mall develop-
ment. “The total retail development opportunities that we have
secured in our pipeline exceeds 500,000sqm GLA and so yes, all
in all, there is a fair amount for us to get excited about and it’s
great having the team that we do to ensure that it is rolled out to
the same exacting standards that has become a hallmark of our
company over the decades.”
As a specialist in the retail property market, McCormick is
excited for the future. He highlights the opportunities to be had in
logistics, the utilities space, and in the possibility of smarter malls
and retail solutions. “With the threat of online retail upon us, how
we embrace and integrate with our built environment with the
“internet of things” will define who wins and who loses out in the
malls of the future,” he explains.
What drives this property mogul? At the end of the day, he
hopes to be able to halt humanity’s fixation on wealth and money
over love of humanity: “Whilst the primary focus of all our devel-
opments remains their financial sustainability and economic suc-
cess (with us having local BB-BEE shareholders in almost all our
developments, profitability is non-negotiable) the secondary aims
of socio-economic upliftment is really what drives us and keeps
me inspired to work at the somewhat insane rates that I do to
create the positive change in our glorious nation that I believe in!”
CAREER HIGHLIGHTS
The establishment of the “project development”
division of MPD in 2008, where I undertook to start
actively pursuing development opportunities set
me on the deal-making path that provided the
foundation for much of what I have been able to
achieve to this day.
• The launch of Atteridge Plaza in 2011. This was
the first development that I had taken from
negotiating the deal on a greenfields site, to
designing, building the financial model, leasing,
raising the funding and project managing 100%
on my own. We built it in 5 ½ months, within
budget (and obviously within the timelines)
despite the tragic passing of our QS mid-proj-
ect, metal worker strikes, riots and a plethora
of other issues that kept me doubting whether
I would ever get to deliver the project. This
remains the highest trading density supermar-
ket in our portfolio, trading at around R85 000/
sqm/a.
• It was soon after the Atteridge deal that I was
appointed as Managing Director of MPD, a
position that I have held until this day.
• Every new shopping centre that we open is a
highlight – especially in the more rural areas
where one gets to see the impact that bringing
such developments into areas previously devoid
of investment has on people’s psyche and lives.
• Whilst I’ve never been one for accolades, I
suppose that my receiving the inaugural “Young
Achiever Award” from the SACSC (South African
Council of Shopping Centers) in 2016 for inno-
vative successes in a short space of time” should
make the list.
• Overall, I think that the listing of Exemplar REIT-
ail should rank high up the list of achievements
as much as the overall process of building up
our portfolio of shopping centres from (shares
in) 6 small centres when I joined the company
to over 500,000sqm GLA in the management
portfolio, with over 365,000sqm currently
owned within Exemplar, with me having built
a development pipeline in excess of 500 000
sqm GLA
• Earlier this year we were the first developer in
the country to ban the use of non-reusable plas-
tic straws in all developments going forward.
We have prohibited the use of plastic straws
across the entire portfolio including grocery and
fast food outlets. We will also be encouraging
the use of paper bags and cutlery made from
recyclable material.
• Finally on a personal level, I think that the build-
ing of the team of people that I now work with
is a highlight. We are all like-minded, intensely
focused and driven and have a level of synergy
that I have not seen elsewhere.
SA Real Estate Investor Magazine JULY/AUGUST 2018
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