The LCN Property Interview: Ken Ford

Ken Ford, founder of Beyond Retail, talks to LCN Property about the changes he's seen in his 50-year career, how he sees high streets developing over the next phase, and his interests outside of the property world.

Ken Ford is a property veteran with over 50 years’ experience. He is the founder and owner of Pacific Shelf 360, which specialises in mixed use development and the repositioning of distressed retail property.

How did you get into property in the first place?

You have to go back to when I was 17. Over 50 years ago. I was fortunate enough to be relatively successful in my exams, so I had choices as to what I might pursue as a career. I had no inclination whatsoever, other than the fact that I was very keen to continue with my music. But my mother was very keen that I had a profession to back up my limited musical talent. (My mother is a very wise woman, now in her 93rd year.)

 

My school organised careers events: I looked at metallurgy, and at geography, from Glasgow University, University of Strathclyde. Then one day this chap turned up from Paisley Tech. He screams up in his Jag, he’s wearing an expensive suit, and he’s quite an elegant guy. So he gives his talk on Land Economy, which is the course at Paisley Tech he was flogging. And what he said was (more or less), “It’s a lot of fun. You’re not chained to a desk. You’re out and about, real estate is exciting, and you’ll get a job.”

 

I had the entry level qualifications, so I persuaded my parents that this was the route I wanted to go down. I went to Paisley and met the people. And I thought, ‘I’d like to do this.’ So I turned down my offers at Glasgow and Strathclyde, and went to Paisley Tech.

 

It was a four-year course accredited to the RICS, one year of which was actually out in the field. So you are getting practical experience, and getting paid: it ‘ticked all the boxes’. On graduation in 1974, I started working for the local authority in Glasgow. After a couple of years there, I joined Scottish Metropolitan, which at that time was the only Scottish-based quoted property investment company. I then became a retail agent before joining – in 1981, I think – my best client, Caltrust. And I’ve been a principal ever since.

 

The Council was a very good grounding, because there are technical aspects to property, like measurement, valuation and the law. It was hugely valuable to get an understanding of those fundamentals.

 

My specialism has always been retail: even when was at the Council I bought and managed shops for them as part of their comprehensive development programme. I invested in shops at Scottish Metropolitan and got exposure to development with Scot Met as well.

 

By the early 1990s I had a JV, with C&R joining their board in 1997 when they bought me out.

 

The way that Capital & Regional was structured financially was quite innovative, wasn’t it, with Aviva and others involved?

Well, at the time it was. C&R became a ‘co-investing asset manager’, leveraging our management skills by seeding institutional partnerships initially with our wholly owned assets… and expanding from there.

 

In the mid-90s C&R were buying shopping centres and retail parks… a contra-cyclical play at the time. We went to our shareholders’ capital well to fund this expansion. We raised equity at a premium to NAV, which was very good. But you can only do that so often.

 

We saw the benefits of scale in retail investment and management, looking very much to the US operating model, and were able to seed an investment vehicle. That became the Mall Fund initially, with our wholly-owned centres together with four from Morley Fund Managers (now Aviva). We each owned 50% of the fund, which was effectively managed by C&R.

 

We then rolled it out to other institutions, who participated in this limited partnership structure. Eventually we had three funds: The Mall Fund, The Junction, which was retail warehouses, and an entertainment one called X-Leisure. We ended up, I think, with a total value across all these funds of over £5 billion.

 

Did the global financial crisis cause a big problem?

Well, clearly it wasn’t great. The valuations effectively halved and with gearing the funds were not in a great place. However Aviva and ourselves knuckled down to manage the situation, with some investors who wished to exit, recapitalising with new investors, and also with the debt providers.

 

We were very fortunate, because we had a big bond issue. We didn’t really have that much debt collateralised against individual assets. It was a balance sheet exercise. We were able to work with the bondholders and our clearing banks to trade our way through most of it. It took a long time, and indeed Capital & Regional suffered. However, they survived – and today have a portfolio based on the old Mall assets.

 

That’s more than many property investors could say after 2008.

The quality of the assets was quite good and we were determined: we had a plan to trade our way through it, which was good.

 

Tell us more about what you’re doing now.

Well, when I was 65 I felt that being in a public company was becoming more like social work than actually acquiring assets and trying to extract maximum value from them. But I didn’t want to retire from business generally.

 

So I started this business called Beyond Retail, a business that buys redundant retail assets and repurposes them, in a demand-led way. It’s really a development business, very similar to what I was doing 40 years ago when I was at Caltrust. Caltrust took high street properties, redeveloped them for retail purposes, and sold those shops to institutions.

 

Now what I’m doing, ironically, is buying those now empty shops back from the institutions and introducing hotels, high street health, residential, food and beverage, that sort of stuff. Some of my BR co-investors were also shareholders in C&R, which is great.

 

There’s an ever-increasing supply of redundant retail property and, fortunately, there are also alternative occupiers. These days the planning regime in most of the towns and cities we work in is more favourable to ‘beyond retail’ uses, as councils want to see their high streets re-enlivened.

 

Clearly, in the last two years funding has been a bit of a challenge. However, the supply is there at realistic values, necessary to encourage development. The occupational demand is there. It’s just a question of matching the funding. The institutions we originally targeted as long-term investors in these products have understandably been a little reticent to invest in hotels etc, but with the hoped-for pandemic recovery that’s improving now, and there’s a lot more interest in what’s happening.

 

So it looks like the high street isn’t doomed. It’s just going to have to change.

Indeed. Physical real estate is a clunky thing. It takes time to actually do stuff. But we’re in a 50-year cycle here in many ways. (Fortunately, I was there at the beginning of it, and it looks like I’m here at the end of it, and a new beginning…)

 

Historically there’s been a lot of retail-led regeneration, as retail was the highest value use. With the consumer boom, every town and city wanted a shopping centre. Then along came retail parks – convenience and free car parking, which compromised the high streets. And the fragmented ownership in town centres often makes it very difficult to have a comprehensive plan to move things forward.

 

So it’s been quite interesting to see how these things evolve. Clearly, retail is suffering. It’s a structural change now. It’s not a cyclical one. Generally you can no longer buy retail cheap with the expectation that just with the passage of time it will become more valuable. You have to have a plan. You have to be close to the occupiers. You have to have the capital and the expertise to invest in the assets. And that’s the way that they hopefully increase value.

 

And also the base entry valuation of the asset has to be at a sufficient level to attract investment in the first place. So there are some fairly savage write-offs required for people who bought this stuff historically.

 

Looking back on your career, have you had role models and mentors who have helped you and shaped your career?

From the early days, I remember the Chief Estate Surveyor for Glasgow Corporation, Remo Verico, and his cohorts. In those days there was a vision, and they were very pro the redevelopment of the regeneration of Glasgow City as a whole. So those guys were good for me.

 

I then worked for many years with David Lockhart: I was in partnership with him and Graham Toms. They were great guys to work with. Very smart. Graham, actually, was also a Paisley Tech alumni, so I’d known him for quite a while. Very bright, very courageous and innovative guys.

 

Then Martin Barber, the erstwhile chief executive at C&R. He was also a very smart guy, a big financial brain. And very supportive of the real estate initiatives that we were able to bring forward. He was a huge influence.

 

And then, of course, you meet investors along the way. A true force of nature is Louis Norval from South Africa. Together with his then business partner Neno Haasbroek, he was a big investor and hugely influential in C&R, and also now in Beyond Retail.

 

One of the great things about property is you meet a lot of interesting people. There’s no real hard and fast playbook for success, so real estate does give you the opportunity to bring your particular slant and your relationships to it. And I think that’s what’s kept my enthusiasm for it over these 50 years. It’s great fun! And the property business is, of course, notorious for people being able to enjoy themselves – MIPIM and MAPIC. But the reality is that there’s a lot of serious work underpinning it. And why shouldn’t you enjoy your work?

Is property investment an art or a science?

Well, there’s an art to it, but it’s supported by lots of science. There’s a lot of money involved, and like all businesses you have to be properly capitalised.

 

The right money will never make a bad deal good. But it can certainly make a good deal better. So it’s also important to be able to match the opportunity to the right quality of money.

 

What achievement in your career are you most proud of?

Building a good business with C&R. Being able to deliver on what you said you would do, employing and working with the right people, and enjoying yourselves while you’re doing it.

 

What would be your ideal job if you weren’t in property?

I’d be playing drums with your dad. (Full disclosure: since the early 70s Ken has been a close friend and musical collaborator with the interviewer’s father, Jerry O’Regan.) I like all music. Actually, one of the great things about this phase of my career is I’m sitting here in my office in Soho. I work on my own and I have Spotify and I listen to Miles Davis, Dave Brubeck, Duke Ellington, Johnny Cash , Bonnie Rait, Puccini… my taste depends on my mood.

 

What do you do to relax?

I enjoy eating out. I enjoy the theatre. I enjoy the opera and concerts generally. One of the great things about living in London (even though I’ve been living here for 25 years now, I still view it as missionary work and I’m still a tourist) is it’s a real privilege to be able to enjoy all the culture that London has to offer. That’s great fun.

 

Describe yourself in three words.

Old, happy and young.

 

Who would be the guests at your dream dinner party?

Paul McCartney. Billy Connolly. Marilyn Monroe. And your dad.

 

That’s very kind. He’ll be thrilled to attend. Finally, what advice would you give your younger self?

My mentality is not one of regrets.  In so many ways I’ve been luckier than Ringo. I don’t look back on stuff in an ‘o me miserum’ sort of way. So I regret very little in my life. I’ve been hugely fortunate to have made some good choices. But the privilege of my life is actually being in a position to have choice. So many people just don’t have that, often due to circumstances out of their control. So I would just say, “Work hard to get yourself into a position where you have choice.” And that is a genuine privilege.

 


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