Jason Kow - Loving the Property BusinessThe Times
A London-based chief executive is reveling in his latest £1 billion hotels deal.
Jason Kow insists that we shelter under umbrellas for the three-minute walk from the Mayfair townhouse where Queensgate Investments is based to Scott's restaurant in London. A bit of humidity threatens rain, but it never arrives, but that isn't really the point. The gesture is very much in character for a chief executive who's big on looking out for other people and on building positive relationships, one renowned, for example, for ordering his staff generous food samples when a new restaurant opens in the area.
The 39-year-old's interest in exclusive eateries - and the service that goes with them - goes beyond the clams and caviar that quickly follow in Scott's. Three months ago he became the owners of four luxury hotels in London, completing a near-£1 billion transaction to buy the properties, which have a total of 1,300 rooms, along with the expected restaurants and conference facilities, in the City, Holborn, St Paul's and Tower Bridge. The Grange hotels, which were sold by the billionaire Matharu family, will be rebranded under the five-star Leonardo flag.
It was, Mr Kow realls, "a hard-fought auction. We beat people like Starwood [Capital, one of the world's largest hotel investors], The Abu Dhabi Investment Authority [the sovereign wealth fund] and Aprirose [the property investment firm]. It is a fantastic portfolio. Vacant possession in London, which is completely unheard of. And, apart from the fact it's got fantastic bricks and mortar, it's completely unmanaged."
The deal therefore hit a sweet spot for Queensgate, the property investment company that he co-founded in 2010. It specialises in finding underperforming properties, turning them around and selling at a profit. Take London Executive Offices: Queensgate bought the high-quality serviced offices in Mayfair and Belgravia from Morgan Stanley, the investment bank, for £260 million in 2013 and sold them for £745 million last year.
"We turned what was a £50 million revenue business, £30 million earnings before interest, tax, depreciation and amortisation, into something that was £103 million revenue and £33 million ebitda." How? "Getting into the nitty gritty". In addition to improving management, repairs, maintenance and IT, "we turned the sales office into a true meritocracy. If you do well, you're going to have multiple on your base:; if you don't do well, you're going to get a sdoughnut [a banking term for a zero bonus]. The result of that and the [improved] customer service was that we were able to get 39-month retention rates at some of the highest rents on the street."
Mr Low is very much at home in the exclusive world of Mayfair and its surrounds. He has lived in Britain since the ago of 10, though retains the traces of an international school accent from his early years growing up in Melbourne , Australia. His father, Gabriel Low, who is chairman of Queensgate, is a turnaround specialist who used to travel across Asia for work and decided that his son ought to have a grounded education in the UK. Mr Kow was educated at Westminster School and then Oxford, where he studied economics and management.
After a brief stint as a analyst for Credit Suisse, he went into property via an introduction to the Livingstone brothers, Ian and Richard, who run London & Regional, which has an international property investment and development portfolio of about £9 billion. "One day, Richard Livingstone called me up and took me out for a coffee and said, 'Why don't you join me? Instead of you just being a guy that's just going to be running cash flows the entire time, you're going to be doing sourcing and execution and asset management, cradle to grave, the entire life cycle.'
"I love real estate and I owe that largely to the fantastic experience I had working with the Livingstones at London & Regional. It's very rare to find two entrepreneurs that have such an innate dealmaking ability, the skills to unlock value. Virtually every transaction I worked on at L&R was profitable, If I hadn't met Richard. I don't know what I would be doing.
Branching out to raise funds of his own, he enlisted support of Andrew Williams, founding partner and chairman of Alvarium Investments, a multi-family office overseeing $10 billion of assets. They secured the backing of Peterson group, owned by one of Hong Kong's wealthiest families. Queensgate's ownership is split between the Kow family, Alvarium Investments and Peterson. Next up is the launch of an investment vehicle, which will entail travelling the world "kissing the rings" of high-net-worth families to raise a new fund with more than £2 billion of purchasing power.
Queensgate's existing £3 billion portfolio includes Generator, a lifestyle hostel company that has 15 mainly freehold sites and 9,000 beds in cities from Paris to Copenhagen to Miami. It also owns the Kensington forum, the third largest hotel in London, where it is planning a £1 billion redevelopment.
Future acquisitions are likely to remain in the hospitality sector. "We love hospitality because it's a very deep market, so there are plenty of ways for us to exit. Quite a lot of hospitality platforms are mismanaged and I think hospitality platforms where you can buy the real estate operations and the intellectual property are very scaleable.
He is also interested in the emerging co-living sector, which has been spearheaded in Britain by The Collective, which offers renters four to twelve-month stays with small private rooms and larger shared amenity space than typical rental blocks. "you are getting very sticky income, you are getting fantastic operational margins by virtue of the fact that you don't have a very high turnover of renters and you can synchronise that with the lifestyle element in terms of the services you can provide in common areas."
Contrast that with his scepticism about Wework, the loss-making flexible offices group that a $47 billion paper valuation and has been rapidly expanding in London. "The bubble will pop when they stop raising incremental capital at the valuation they currently have. It's not a question of 'if', I think it's a question of 'when'. Will Brexit make him shift focus away from the UK? "Absolutely not. We are London-based, we still like the UK on a fundamental long-term basis."
If Mr Kow's range of dealmaking vocabulary, which includes repeatedly answering questions with "100 per cent" and phrases like "sizeable delta" and "accretive capex' - big returns and rising capital expenditure, for the uninitiated - points to his banking background, his lifestyle betrays his full assimilation into West End property set. Apart from Scott's, where he is known to the staff by name, he is a fan of La Petite Maison behind Claridge's, which as an "epic wine collection", and is a member of Annabel's, the members' club.
Yet it's people, not pricey venues, that defines his approach to business, come rain or shine. "it's a cliquey industry, but one where relationships are of paramount importance, so we spend huge amounts of time making sure that we stay on the right side of all the right banks, agents and valuers. You definitely need a lot of friends in the industry to do well."
Q&A: Who is your mentor? Richard Livingstone
Who do you most admire? Iron Man
Does money motivate you? Yes
What's your favourite television programme? Billions
How do you relax? Gym, movies, friends
What does leadership mean to you? Giving inspiration to all
What was the most important moment of your career? Starting up Queensgate Investments
Date of birth: April 16, 1980
Education: Westminster School, London; University of Oxford, economics and management
Career: 2001-02: analyst, Credit Suisse 2002-10: various roles, including head of special situations, London & Regional 2010-present: co-founder and chief executive, Queensgate Investments
Family: Girlfriend, no children