Praxis expands third-party management business
Praxis Real Estate, the UK specialist investor-manager, today announces expansion plans to build AUM by offering asset and property management services to third-party clients.
Founded in 2008, Praxis was originally established as a proprietary asset management business to exploit opportunities arising from the GFC, but has since grown via a multitude of institutional and family office mandates to become one of the UKs largest privately owned property companies. Praxis has built a reputation as a superior stock-picker and highly effective asset manager, and over the last decade the company has delivered significant market outperformance for itself and its investors, transacting over GBP1 billion of workout or value-add type situations across traditional and alternative sectors.
Praxis attributes its success to its unique business model. The company is virtually unique in the industry in operating a full-service, vertically integrated platform that delivers the full range of asset, property and facilities management services in-house. The company says it is this alignment of the various components of the real estate management process that translates to measurable outperformance, and Praxis cites its near 20 per cent IRR over the last decade as clear evidence that its model works.
Praxis has enjoyed particular success in navigating the highly volatile retail market and is now one of the largest owners of convenience shopping centres in the UK. In spite of the prevailing headwinds in retail and the challenges posed by BREXIT and COVID, the company has consistently managed to unlock value in its centres where others have previously failed, whilst also maintaining occupancy levels and, crucially, collecting rents.
Gary Roberts, Praxis COO, says: “There is no doubt that 2020 has been a challenging year, and our management capabilities have been tested like never before. But our fantastic team have excelled themselves, and we have proved to ourselves and our partners that the model works, and we get results however tough the conditions.
"We recognised very early on in the pandemic what the issues were likely to be, conceived a strategy that was focused on stability and cash flow and got into a battle rhythm very quickly. The fact that our asset and property management functions speak with one voice was tremendously valuable, not least for our tenants who appreciate the direct communication and clarity of purpose and action.”
Roberts went on to say: “We have collected - by which we mean cash in the bank - 88 per cent of our rents for Q2 and Q3 and at the same time cut our irrecoverable’s by some 30 per cent. Our business is not immune to Covid-19 but our cashflow has remained strong and that is testament to our approach, and the intelligent hard work of our team”.
In terms of launching the third-party management business, Roberts says: “We’ve been repeatedly asked to manage real estate on behalf of third parties for years, and have so far resisted but we now have a management platform and a retail track record that is crying out to be levered. We have studied the market very carefully over the last five years and have analysed in detail more than 300 schemes nationally; what became abundantly clear is how poorly managed many of these schemes are.
"In almost every situation we looked at, we felt we could do a better job than the incumbent managers, to change the trajectory of the scheme and create value. Given the status of the capital markets, it’s highly likely that we and many other ‘owners’ are going to be holding these schemes for years, so we decided the time was right to offer our expertise and help others navigate the journey”.
Praxis have recruited Knight Frank’s Capital Markets Partner Mark Smith to spearhead business development for the third-party management and advisory business. Mark joined Knight Frank from CBRE in 2012 to develop the retail team, and latterly he led the firm’s strategy to advise both Local Authorities on regeneration, and lenders in recovery situations. Mark has worked alongside Praxis for several years including on their acquisitions of Blaydon Shopping Centre and The Grove in Witham.
Smith says: “I have been at the forefront of the retail market for the past decade and as a result I have seen first-hand the successes and failures of different management approaches. The industry is in a perilous state and the effectiveness of management has never been more important. In my opinion Praxis are hands down the best at what they do; they are very commercially savvy and just get things done. I’m delighted to be joining such a dynamic and entrepreneurial team and can’t wait to get started”.
Charlie Barke from Knight Frank adds: “We'd like to thank Mark for eight years of hard work at Knight Frank. This looks an exciting client-side move for him and we look forward to working with him in that regard going forward.”