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Deep Dive with Michael Turner of Oxford Properties

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Michael Maduell, President of SWFI, conducted a deep dive interview with Michael Turner, President of Oxford Properties.


MICHAEL MADUELL: Oxford Properties has grown immensely since 2010 – from a C$ 16.9 billion business that invested almost exclusively at home, to a C$ 50 billion business today, with nearly half of your portfolio in the United States and Europe, and an average annual return on investment over the past decade of 10.2%. You put yourself on the map in some of the world’s premier real estate markets – London, New York, and Washington D.C. By going big, and landing it big on standout projects like Leadenhall and Hudson Yards, you’ve made a reputation for yourself.

Now in your first year as President, interest rates are creeping up, and OMERS isn’t expected to clear its funding gap till 2025; the pressure is on. What kinds of markets and properties are you looking at to help preserve and grow what you’ve built so far?

MICHAEL TURNER: Oxford Properties is one business with four parts. First, we have a platform of high-quality assets in global gateway cities. Second, we deliver great experiences to our customers. Third, we add value through leasing, management, and development; and fourth, we attract investment partners through our asset management platform.

Markets are going to go through cycles like always, and we have tools in our toolbox to address these changes. We cannot do the same things and expect the same results. So, as interest rates start to creep, we are adjusting.

We just opened a Singapore office as a beachhead into the Asia-Pacific region and landed our first development opportunity in Sydney. We expect to invest more capital into this part of the world going forward.

We have a greater emphasis on what we call sheds and beds, logistics and multi-family rentals, and will significantly increase our global investment and development activities in these businesses.

Again, we have a broad range of tools in our toolbox. We can directly invest, asset manage, develop, and we also have a credit business. These four to five tools help us generate alpha.

MADUELL: Can you elaborate more on the credit business?

TURNER: OMERS is a large investor in private credits. Private real estate credits are managed through Oxford, where our team identifies and structures private credit opportunities, taking advantage of our deep on-the-ground knowledge and market expertise. Oxford’s credit business has quietly done some very impressive transactions that have been great for our business.

MADUELL: Earlier, you mentioned third-party platforms. For example, we see other asset owners such as the QIC managing third-party assets.

TURNER: This is part of the foundation of the Oxford business model and has been for decades. We manage C$ 20 billion in capital from other institutions through a range of partnership ventures. We have real skin in the game and are completely aligned with our partners, which gives them a high degree of trust in us. As we expand our balance sheet, we will find more opportunities alongside a handful of global partners.

MADUELL: Both you and your predecessor have talked about identifying cities that have “the fundamentals”? What are they? What cities in today’s market come to mind when you think of these qualities?

TURNER: We don’t plan on significantly expanding our geographic focus, but rather to continue our current focus. We are in global gateway cities because they attract capital and talent, and we believe they will continue to grow. These markets are also transparent, have rule of law, and sanctity of contracts. We operate in places like Berlin, Sydney, Boston, and Vancouver, as well as traditional financial markets like New York and London.

MADUELL: Adoption of technologies like artificial intelligence and big data analytics are already fundamentally changing the investment world. Can you talk a little bit about how these changes are affecting the real estate sector and construction industry specifically as we start to see more “smart cities” being developed?

TURNER: We have meaningfully invested in the underlying technology at our properties. We have invested heavily in our smart and fiber strategy. All of our office buildings and shopping centers are connected with a base network and deliver connectivity to our customers that is second to none. We are able to make adjustments to how we run buildings and manage space through analysis enabled by the data these systems can generate. We can experiment in real time.

We are also seeing new platforms in construction tech that are making a material difference. We use a product called Honest Buildings that is changing the landscape and we like the platform so much we invested equity in the underlying business as well. The platform will transform how owners operate their own projects.

MADUELL: We’re also starting to see how changing consumer preferences and ideas about health are transforming what we think of as livable spaces in the modern era and how these have led to the development of more wellness lifestyle communities in both urban and rural areas. According to a new report from the Global Wellness Institute, the wellness lifestyle real estate market in North America alone is worth US$ 52.5 billion and is growing 6.4% annually, while the worldwide industry was US$ 135 billion in 2017 and is expected to grow to US$ 180 billion in 2022. Are these types of communities going to become the next big development in real estate?

TURNER: Health and wellness are important to all aspects of real estate. We are seeing an increasing amount of leisurewear in malls, and changes in the types of food at restaurants at these malls.

When it comes to office space – sitting is the new smoking. Our customers expect their office life to support their health and to help them connect with other people.

Health and wellness is a key lens through which we see our business today and in the future. The trend is not going away and we are incorporating the philosophy into the thought process of every project.

MADUELL: What’s special about the investment team you’ve built at Oxford? What kind of values do they bring to the table, and how do they reflect in Oxford’s culture of diversity?

TURNER: We are constructing a young and dynamic talent pool across all aspects of our business.

With our growth trajectory, we are able to attract and retain an incredibly talented and diverse team. People want to be at a company that combines growth capital, energy and ambition. Our team values what they learn from colleagues from across the business and across the world.

As a business, we are very focused on serving our customers, and that starts with a focus on our team and on taking a progressive approach to our business. We don’t assume that what we did yesterday is what we should do tomorrow, so we expect our team to identify new opportunities, to experiment, and to take ownership of ideas.

MADUELL: In 2012, you launched a customer engagement program in order to get them more involved in your sustainability initiatives, which by a number of measures have been remarkably successful in terms of energy efficiency and waste diversion. What’s the easiest way offices can go green and reduce their carbon impact in a meaningful way that businesses might not know about?

TURNER: In 2008 Oxford launched a sustainability program based on setting specific targets and communicating them publicly. What gets measured gets managed, so a scorecard approach has been highly effective for our business.

Our sustainability program initially focused on things we could control as owner and manager. We invested in more efficient equipment, installed real-time sub-meters to better manage base building systems and continually looked for ways to improve our management practices.

We then shared real-time energy usage with our customers through digital screens and gave easy energy saving tips to encourage everyone to be a part of reducing energy. Our properties have “green teams” where building management and customers work together to find new and innovative ways to improve sustainability practices.

We find that a true partnership between owner and customer is the best way to drive results. Give customers a way to be involved and supported.

MADUELL: You and your predecessor, Blake Hutcheson, worked alongside each other at Oxford through a number of pivotal moments over the years. How does it feel now that you’ve stepped into his shoes? What separates you two in terms of leadership style?

TURNER: I have a huge amount of respect for Blake, and he has always been a great partner and mentor to me. In his eight years leading the Oxford team he made business and people decisions that we will benefit from for years to come.

Leadership is very personal, and one can only walk in his or her own shoes. So I can only be me.

My leadership style is open and transparent. I am action oriented, results driven, and forward looking. Our team can count on me to challenge them and support them, to expect a lot, and to give a lot in return. It is a great time for our business, and we will have a lot of fun while doing extraordinary things together.


This interview was conducted over the phone on July 6, 2018, and has been edited for clarity.

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Deep Dive with Robert Cohen from Benson Oak Ventures on Venture Capital

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This interview is partner content from Sovereign Wealth Ltd.

Many institutional investors are playing more of an active role in the venture capital space, which suits their long-term investment nature, focus on growth, and desire for strategic investments in technology. While many VC funds focus on a “spray and pray” approach, investing in multiple companies hoping that some will be wildly successful, there is one investment manager who believes in the high-conviction, true value-add model when it comes to venture capital.

Robert Cohen heads the activities of Benson Oak Ventures, leveraging deep understanding of the technology market for consumers and small businesses, including operational experience in building global brands and developing and scaling business models through 20 years of early stage investing.

As both an investor and a manager, Robert was the driving force behind one of the most successful venture capital investments in consumer security – AVG (NYSE) – helping it become the global leader in Internet Security, and delivering over 100x return to investors.

In this interview with Rachel Pether, CEO & Co-Founder of Sovereign Wealth Ltd, Robert provides insight into their investment thesis, why doubling and tripling down is a derisking strategy in and of itself, and how the Israeli mindset makes them perfectly suited to entrepreneurship.


RACHEL PETHER: Why don’t we start off by telling me a little bit about yourself and why you started Benson Oak Ventures?

ROBERT COHEN: I’m American, originally from Philadelphia, but I’ve lived outside the US for the last 25 years. I moved to Prague – somewhat accidentally – when I was 26. I was supposed to go for six weeks and ended up staying for 18 years. I moved there in partnership with Benson Oak, before joining Benson Oak a year later. We started investing in the early 2000s and saw there was a gap in the market for start-ups or mid-market funding. My business partner Gabriel Eichler, the founding partner of Benson Oak, had deep management experience, and we focused our investments on consumer brands, companies that already had some revenue but needed additional help. In the early 2000s this help came in the form of finance, marketing and management – bearing in mind this was just a brief time after the fall of communism.

We came upon AVG, which was started in 1989 as an anti-virus company focused on consumers. It was a deal we initially advised on, and then we decided to buy the company in 2004. We saw the global potential repeated the mantra of “there’s no reason a small company from Brno, Czech Republic can’t become a global leader.” Eventually we exited AVG via an IPO on the New York Stock Exchange, returning 100x money to our investors.

There’s no reason a small company from Brno, Czech Republic can’t become a global leader.

I joined management ahead of our IPO and led five acquisitions for AVG of which two were in Israel, so that’s what brought me to Israel seven years ago, with the intention of staying for a much shorter time period than that! In Israel, we invested personal money and that of other family offices, through a syndicate structure. We had a similar focus on the consumer sector, B2C and brands, going after quality not quantity, following on with the winners, and getting involved with the operations of the company. We did three deals in Israel and last year decided to formalize it in a fund structure, taking the approach and the lessons accumulated from 20 years of investing.

PETHER: I want to talk a bit more about why you’re not in the typical “fund management” business, but can you tell me more about the context in 2000 when you started investing? It seems like your style was venture capital focused, but maybe before VC existed as the concept that it does now. Can you tell me a bit more about your approach back then?

COHEN: A lot of the approach I realize now came from those roots, which were steeped in the advisory business. Even when we were advising large corporates, there was a lot of education and training. Remember this was only 5 years into capitalism, so many of our companies had no idea how to access the bond markets, or raise money. We had to educate our clients on what to do, how to do it, but also on basic business concepts. So when we started investing, it was a natural evolution to be an advisor on marketing, finance, management, helping to supplement their skills. At that time Czech and Slovak Republic had high quality technical people, but they just didn’t have the experience of a more developed market. It was part of forming a partnership with the management of our companies, and that’s an approach we maintain to this day.

PETHER: Let’s talk a bit more about this approach. You are vocal about your non-belief in diversification, instead favoring concentration and high conviction. What is your approach to investing?

COHEN: Diversification is definitely appropriate across investment classes and from a portfolio perspective, but in the context of venture capital, I look at the concept of diversification as the wrong way to approach it. People talk about “spray and pray”, but this is really “hope and pray” rather than any real strategy.

People talk about “spray and pray”, but this is really “hope and pray” rather than any real strategy.

Most start-ups won’t make it, but the winners can be 100x. And then of course there’s a lot in between. So the key to VC investing is not just how to assess the winners before you invest, because in the beginning you have little to none real information, but to identify those winners as you invest, along the way, as you see those companies grow. You can then accumulate larger stakes in the winners, which is a form of diversification.

If you’re doubling and tripling down you’re usually investing at higher valuations along the way, but you’re taking less risk because you’ve seen the companies grow, you’ve seen the team develop, you’ve seen the culture. So that’s the real way to win in venture capital – identify the winners through data, through information with your own eyes, and then double and triple down to get the best returns. It’s only by working closely with these companies that you get an unfair advantage – you know the companies better than anyone else.

If you assume there are going to be limited winners, it’s only math to say “I want to own as much as I can of the winners.”

PETHER: So that’s essentially your derisking strategy?

COHEN: Exactly. It is a derisking strategy. Throwing a lot of money around at multiple companies isn’t derisking – it may feel like derisking, but you’re really just hoping and praying. The real derisking is using information and knowledge to make smart investment decisions.

PETHER: Let’s dive into a bit more detail about what that hands-on role looks like, how you get closer to these investments? You’re not in the fund management business, but the “building big businesses” business, which means you place a lot of emphasis on having a hands-on role with your investments. Tell me about your strategy and approach within that.

COHEN: I’ve just listened to a Tim Ferriss podcast interviewing Jim Collins … he talks about the flywheel concept, where one thing leads to another in a virtuous cycle. So I was thinking “what’s our flywheel?”

It starts with being founder friendly – we’re here to help companies, to help them succeed. We take pride in that every company we meet, even if we reject them, we give them feedback. Our approach is to be founder friendly, it’s not shareholders vs founders, we’re all one team.

And that leads to focusing on what you’re investing in. We have a very disciplined focus on where we invest – business to mass market companies. And that covers B2C (classic consumer investing), SMB tech, and then platforms, which combine a business offering with a community. These are companies that have products that can solve real problems, and most importantly, can create brands that scale and acquire new companies. That’s where we’ve always invested.

By focusing on business to mass market companies, this allows us to add value. Whether it’s pattern recognition, to strategic value, to actually getting involved. In a fund structure, I can’t do full-time operations, but the idea behind the fund is that if need be we have people that get much more deeply involved, to work with the entrepreneurs. This helps the companies grow, but it also leads to the next element…

The strategy of doubling and tripling down. In order to make those smarter bets, you need to be involved with the companies. It’s not just showing up to quarterly board meetings. You need to be involved with the team, see the numbers, see the culture from the inside.

The last element is firepower. Brands win by being known… The faster the companies can deploy money, the faster they can scale and the more success they get. It’s common in the VC industry that you raise money and then you have to stop and lose momentum to raise money again. The whole model of our fund is to triple down – we want to use consortiums that have the ability to follow on quickly.

Success breeds success. It also enables us to build up this reputation of really being founder-friendly, encouraging more founders to come to you, giving you the best deal flow. We even plan to do a program where we give carried interest in the fund to our founders, which increases the notion that we’re all working together.

PETHER: Let’s talk about the founder point a bit more. You’re doubled and tripled down in a number of your investments…. What do you think makes a great founder?

COHEN: You know, there’s really no one thing, but even more than this, it’s a combination of things that every great founder has to have:

Passion – it is not an easy thing to be founder. Many times you wonder what on earth are you doing, so you need passion to remind yourself why you started and to keep going and leading

Perseverance – there are going to be tough times, you’ll need to fire employees, have down turns, raise money. You just need to keep going.

Discipline – Start-ups often run in many different directions. You should impose your founder DNA on the company, but then put in place processes that enable execution. Discipline to execute is key.

Surround yourself with A players – people that are better and smarter than you in different areas. The founders that fail are the ones who want to control everything, are insecure about having other people there. This is actually something that Israelis are fantastic at, they don’t care where good ideas come from. Building an A team is not just an ability to find those A players, it’s also a desire to find those people, which many people subconsciously do not have.

PETHER: You mentioned the Israeli entrepreneurs are very well attuned to that. Tell me more about the Israeli market. You went for one year, and you’re still there seven years later. What is it about the Israeli market that attracted you in the first place, and then kept you there?

COHEN: There’s an expression that “start-up founders fall in two buckets, they either want to be king, or they want the cash”. 90% of Israeli startup founders want the cash. There are many founders in Israel who have voluntarily given up the CEO position if it’s in the best interests of the company. In many other countries, the CEO would go kicking and screaming. Egos are the biggest problem in business, and probably in life, and Israelis in general just don’t have the ego that would get in the way of building a business.

There are many founders in Israel who have voluntarily given up the CEO position if it’s in the best interests of the company…. Egos are the biggest problem in business, and probably in life, and Israelis in general just don’t have the ego that would get in the way of building a business.

This is representative of the macro picture. Israel is a small country trying to grow into another market. In their mind, they start on a Monday, and on Tuesday they’re already in the US.

Secondly, the amazing creativity. The whole ecosystem is built on creativity. Digital marketing has become a success in Israel, and that’s been a big step change in the Israeli start-up ecosystem in the last five years – through most of its history, Israel was known as a place that was very good at producing products for enterprises – it was very strong in cyber security, industry, selling to enterprises. Now you’re seeing a new generation that are thinking much bigger, building global brands and global companies, such as Fiverr and Wix – many companies that nobody even knows are Israeli because they’re just another brand.

So you’re seeing a lot of entrepreneurs who have the aspirations to build brands globally from Israel. This dovetails with my passion and skillset of building brands that scale globally.

PETHER: Give me some examples of recent transactions that you’ve closed, the strategy behind them and how you took them to market.

COHEN: Our biggest deal and the one that’s most applicable to the conviction model is Promo. We invested $500K in 2012. It was originally part of slidely, helping consumers create better photos and slideshows and collages. It had 200MM people globally on the platform, but little revenue, so we pivoted to business and ended up creating an industry – enabling small businesses to create marketing videos in 30 seconds or less.

Promo went from zero to $1.5MM monthly revenue in about 18 months. We had funded slidely through 3 different rounds, and then when the time came to pivot into Promo, I was involved with the company almost day-to-day…. Without that hands-on operations I might not have had that inside information. We decided we would support the launch of Promo and did a $6MM financing round. Using that money, the company was able to grow quickly, and for the next two years I was there supporting the CEO & founder in every way I could – including executing on partnerships and even one acquisition. We’ve put in almost $20MM over time and Promo is now the number 1 player in video marketing solutions for small businesses.

This is a great example of our conviction model. Owning a meaningful percentage of a very successful company, adding value, backing a great team, working in tandem in order to help the business grow into a global leader.

We also focus on Business-to-Mass-Market companies, which we have coined as B2M2, the platforms and brands of the Web 3.0 future that are being built as we speak. These platforms will combine communities with business offerings to create new markets and economies at mass market scale. Blockchain and tokenization are innovations used to further attract, incentivize and reward the community. One such example of this is loungebuddy, which was recently acquired by American Express. We invested in the Series A round back in 2015.

In terms of the new fund, one of the three deals was an investment into a Cryptocurrency wallet. I always boil our investments down into 4 basic questions, and this one was a good example of it:

    1. Are you attacking a mass market?
    2. How will you win?
    3. Can we add value?
    4. Do you have a sustainable business model?

In the case of this crypto wallet, they have four amazing founders, three of them are technical guys, and the fourth (also the CEO) is a fantastic marketing person. He’s the one who will infuse the product with his marketing DNA and really be responsible for building the brand. In the seed round – when you don’t have any evidence of traction – having a great marketing person is important.

The last deal to talk about is Spitball. It’s a company we’ve invested in before so again, it’s part of the conviction model. I’ve known the founder for eight years and it’s a company that’s pivoted the business model while keeping the core product, showing the perseverance that a founder needs. Spitball has created a peer-to-peer marketplace for students around academic content, particularly tutoring. The idea is to utilize blockchain as a technology and a database to allow students to transact directly with each other. They can sell notes, they can sell services, they can sell knowledge, they can tutor each other. Any student can become a teacher, and any student can get access to a global knowledge base at a much lower cost and with the actual provider of the service getting the benefit rather than a middle man. The company already has over 200K users on its blockchain based marketplace, and it’s going to be launching its tutoring app next month. This is a huge potential market, disrupting an existing field in an area where we can add a tremendous amount of value.

PETHER: Now let’s take a step back, you’ve been active in this space for quite a while. There’s been a growing role from institutional investors in the venture capital community, in terms of sovereign wealth funds and public pensions. Why are they starting to take more of an interest? What role do you think they can play?

COHEN: They are looking for diversification, which is good. If you think of the top companies in the world, most of them have been started by venture capital. In a lot of those cases, the companies have business models that they didn’t even think of in the beginning. So as an investor in VC, you need patience and a long-term outlook. You have to know that this is going to take 5-10 years, but the reward is going to be great.

Sovereign wealth funds and pension are really built for venture capital investing, because they’re thinking 10, 20, 50 years out in terms of investment horizon. It’s not just about money, it’s about patient money. It’s hugely beneficial for the VC community to have this investor base that has large sums of money and equal amounts of patience.

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Changes at Temasek International

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Dilhan Pillay Sandrasegara, the Deputy CEO of Temasek International, will become CEO of Temasek International Pte Ltd, the wholly owned management and investment arm of its parent company Temasek Holdings Pte Ltd. He is succeeding Lee Theng Kiat. Lee Theng Kiat will become Chairman of Temasek International. In addition, Ho Ching will step down as Chair of Temasek International.

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NSIA Reappoints Stella Ojekwe-Onyejeli and Appoints Aminu Umar-Sadiq as Executive Directors

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On March 9, 2019, the Nigerian President confirmed the appointment of two Executive Directors to the NSIA Board (Nigeria Sovereign Investment Authority). Stella Ojekwe-Onyejeli has been reappointed as Executive Director for a second term. She is also the Chief Operating officer of NSIA. In addition, Aminu Umar-Sadiq, who is NSIA’s Deputy Head of Direct Investments, has been appointed, for the first time, as Executive Director.

In 2018, the NSIA Board established for the first time a Direct Investment Committee for review and oversight of investments in core domestic infrastructure sectors such as motorways, agriculture, healthcare, power, and education.

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