Real Estate Investor Magazine South Africa Real Estate Investor Magazine - May 2017 | Page 13

MIKE FLAX
M
ike Flax, CEO of Spear REIT Ltd, describes
himself as a creative person, with a flair for
English, drama, sales and marketing. Over
the years, he has masterfully blended these creative
abilities with the analytical skills gained from his
dual qualifications as a Chartered Accountant (CA)
and Chartered Management Accountant to achieve
business success.
Flax kick-started his career as an accountant at
Deloittes. He explains that he felt the lack of creativity
in the accounting industry was very stifling for him,
and so made plans to get out of his auditing articles as
soon as he was qualified.
“I managed to convince my boss at Deloittes to sign
off my articles early,” he explains. This freed him up to
join his cousin, Lawrence Seeff, at his then fledgling
Seeff Commercial brokerage in Cape Town in 1989.
A period of risk taking
From being a highly-qualified accountant, Flax
suddenly found himself working, without a salary, as a
commission-earning investment property broker. Still
being young, however, and with very few overheads,
Flax felt it was the best time to be taking a risk on his
career:
“The knowledge that I had no paycheck made me
work harder and made me hungrier for success. I
ensured I had a few months of cash to see me through,
as I didn’t earn any commissions for at least the first
three months.
“Even with my CA background, I had no clue how to
operate in the property world and it was a steep learning
curve for me,” explains Flax. His time at Deloittes did,
however, give him some necessary exposure to property;
he explains that one of his clients was the Board of
Executors (BOE) ‒ later acquired by Nedbank ‒ which
was quite active in the property syndication industry.
“I applied what I had learned while auditing the
BOE and formed a Joint venture business under the
Seeff banner called Seeff Trust. Our initial strategy was
to compete with BOE and Metboard (part of Investec)
in the lucrative public syndication industry,” explains
Flax.
Flax was now in a position where he could combine
his creative marketing and sales abilities with the
analytical investment advising that the position
required. “My CA qualification also gave me gravitas
with older investors and allowed them a measure of
trust in what I was selling them,” explains Flax.
“The business demanded a good feel for property, as
we had to buy well and ensure decent ongoing returns
for our investors. We became industry leaders within
a brief period, as I built a massive sales force and huge
client base numbering in the thousands. At the time,
www.reimag.co.za
my future colleague and property doyen Marc Wainer,
was my counterpart at Metboard.”
They went on to build Seeff Trust into a large,
property investment management business and listed
Seeff on the JSE in 1996, at which time Flax folded
Seeff Trust fully into the group.
Listing Spearhead Properties Ltd
“Through some corporate action, within a year of
going onto the JSE, Seeff ended up acquired and inside
Brait, which had styled itself as an integrated financial
services business under the leadership of Mark Barnes,
who is currently CEO of the SA Post Office,” explains
Flax.
“Then the financial crisis of the late 90s hit,
causing interest rates to reach 25%. Property became
a swearword for investors. Nobody wanted to touch
it, including Brait. They wanted out of property and
offered us the Seeff businesses to buy back.”
Flax bought back the old Seeff Trust business,
which by then managed numerous prime commercial
and retail properties, as well as a number of properties
owned by Brait.
“To finance the whole deal, I combined all the
properties together into one internally managed
property fund and listed it in late 1999 on the JSE and
called it Spearhead Properties Ltd.
“From a share price low of R4.50 per share in early
2000, we built the business up with a fantastic team
of people and a quality portfolio of properties and,
eventually, Marc Wainer came calling and made us a
friendly offer we just couldn’t refuse.
“We sold out to Redefine Property Fund for an
equivalent R45 per Spearhead share: 10 times more
than the share price seven years earlier. Needlessly
to say, Spearhead shareholders were elated and most
swapped their shareholdings into Redefine where they
had another great ride over the following five years.”
INSIGHTS GAINED AND
LESSONS LEARNED
• Beware your ego. Don’t let it make the decisions for you
– rather use your intellect and always look at things very
rationally.
• Always have an eye out for the worst-case scenario and
prepare for it.
• Your reputation is the one thing that follows you around,
so never risk that.
• Treat everyone in the property business as if they are
equally important – you never know when you’ll need their
help in life.
• If you don’t have too much to risk, risk as much as possible!
MAY 2017 SA Real Estate Investor
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