Morgan Garfield writes for Estates Gazette : Financial Comment

Posted by Estates Gazette on 24th Nov 2015
As such, it is often judged as a financial investment. Success is generally defined in terms of profit and IRR, the dominant players are those with the biggest balance sheet or the largest loan book. 

Yet, commercial property is not critical to the economy or to society more generally for the financial returns it generates. Our industry is important because we deliver essential infrastructure that is required to sustain employment, investment and growth in other diverse sectors of the economy. 

Property also offers a very visible representation of a society and is the backdrop for people's daily lives. Communities with a plethora of boarded-up shops and abandoned office blocks typically have low self-esteem and suffer a self-perpetuating cycle of urban and community decay. As offices vacate and shops close, unemployment rises as opportunity and ambition drains away, the deteriorating real estate a grey, cold embodiment of the local condition. 

The links between investment, infrastructure and opportunity are well researched and understood. Government also appreciates the cause and effect, thus the ambition to invest billions to create a northern powerhouse. Yet positive change also requires a positive and determined mindset. As an industry we need to want to build a better environment, to create building that foster job opportunities and community pride. Rather than focusing on investment or loans that solely generate financial return, we should be aiming to generate a more widely defined "profit" that combines both financial and social gain. 

At Ellandi we buy and manage community shopping centres. Our fundamental objective is to position each shopping centre at the heart of its community and to create a positive impact that improves/regenerates that town. We do this through engaging with community stakeholders and empowering our centre managers to connect with local people through events and charities. We support this with retail best practise, targeted CapEx and close retailer relationships with the driver being to make a better place that resonates with local people rather than to achieve short-term financial gain. 

But we are not a charity, not by any stretch. Our equity partners and investors are leading opportunity funds, private equity real estate investors and hedge funds, all of which want to realise exceptional financial returns. Fortunately, they appreciate that community improvement, regeneration and financial return are not mutually exclusive. In fact, they serve to reinforce and perpetuate one another: Profit is a natural outcome of doing our job well. 

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