When Simon Cooke’s wife died of cancer a few years ago he realized something would have to give. His role as chief executive of Deutsche Property Asset Management was demanding and he didn’t have enough time for his two young children.
In an attempt to achieve more flexibility Cooke initially tried to convince Deutsche Asset Management to allow him to restructure the property business as a separate boutique. Senior management would take a 50% cut of the profit in an attempt to improve the performance of DePAM by linking managers’ goals to fund performance. But DeAM turned him down.
“I launched the business in 1990 and increased it to just over £1 billion of assets under management,” says Cooke. “We had delivered a profit every year since it was launched and the business was unblemished.” He believes that DeAM was more interested in increasing the size of assets under management than improving performance. “There’s no hope for such organizations because anyone with talent or ability would walk out,” he adds.
Cooke left DePAM in May and is using his property expertise to act as a consultant. He spends up to two days a week at Hotbed, a private-equity network he joined in June as head of property. Hotbed caters to the smaller end of equity financing, bringing together private investors and venture capitalists in need of less than £5 million in equity capital. The investors can invest in units of £25,000 and there are 230 members, each paying £495 a year to be involved.
Hotbed was set up by Gary Robins and some of his colleagues from private-equity firm 3i after they left in March 2002.
Hotbed members are mostly UK private investors interested in both private equity and property. So Hotbed decided to launch a commercial property investment arm in November 2002. “Big private-client banks have been pushing that around 10% to 20% of an investment portfolio should be targeted at alternative investments,” says Robins. “[We thought] If we can offer both [private equity and property] we’re onto something.”
Property completion So far Hotbed has completed one property deal, which was wrapped up in January this year. It was a £2.1 million deal for a central Bristol office block with a blue-chip brewer as tenant. The deal was funded with both debt and equity. There was a £500,000 equity requirement which was raised by about 20 of Hotbed’s member investors.
Since Cooke joined Hotbed, he has been working on its four current property deals, which are in the late stages of completion. Two of these involve buying office buildings worth about £10 million each. Hotbed is raising about £3 million to £4 million of equity for each deal. A third deal is for a £4 million site and the fourth is a £2.5 million deal for a local shopping centre. “Hopefully by September we’ll have £30 million of property under management,” says Cooke. Robins adds that he expects Hotbed to do another six to eight property transactions over the next year.
Cooke spends one day a week on an investment in a lodge in Zambia which he took on with a group of rugby club friends in November 2002. The lodge comprises eight luxurious tents with en suite facilities and a swimming pool on the Zambezi, 4km from a game park.
He spends another day each week on Cooke Real Estate (CRE8), his own property investment business, which focuses on UK commercial property and investment. He is also a consultant to Octopus Communications, an event management and creative design business. He promotes their business and provides contacts and leads. “I hope that in three to six months we’ll land a major property conference,” says Cooke.
Since leaving his role as CEO at DePAM he still works long hours but they are flexible enough to enable him to spend 30% of his time with his children. He still wishes it were closer to 50%. He’s also seen a big change in his income. “If I earn £10,000 next year I’ll be happy. If I earn that the year after I’ll be concerned and the year after that I’ll look for a new job,” he says. “Money cannot be the ultimate goal.”
