$8bn property boss who refuses to follow fashion
ONE OF the UK’s most successful financiers today criticises the Bank of England’s decision to keep interest rates unchanged at its monthly meeting.
MerchantbankerGuyNaggar—worth an estimated £250m, according to the latest Estates Gazette Rich List — tells JC Business that the bank made a mistake by failing to lower the rate from 5.75 per cent, warning that the economy will suffer as a result.
“I think that keeping interest rates unchanged when the exchange rate is what it is, is the wrong decision,” he says.
“With the exchange rate of around $2.10 to the pound, it has to hurt the British economy — seriously. Sterling is overvalued against the dollar, and so to be at the highest rate of interest is wrong. Companies are suffering.”
Frenchman Mr Naggar, 67, is chairman of the Dawnay, Day group, the property-cum-financial-services company and investment house he bought as an empty shell from Jacob Rothschild in 1981. Today, he runs the company in partnership with Peter Klimt. It is worth an estimated $1.5bn and controls over $8.5bn of assets.
He accepts that investor confidence and property shares have taken a knock of late. “A year ago, property shares were the fashion. Today the property share sector is bombed out because everyone feels that property shares should not be held.” But Mr Naggar is not overly concerned, observing: “We think that some property shares are extremely cheap and that it is beginning to look like there are great opportunities.
“We are long-term investors in everything we do. If we think there is deep value in a sector, we will begin nibbling at it and then we will continue increasing. And that’s what we have started to do with property shares. We go against the trend. Peter and I can’t afford to go after fashion like the major institutions do. So we have to find deep value.”
Mr Naggar recalls that it was only the turn of the century when retail property was unfashionable among investors, the belief being that, because of the internet, “people were not going to go shopping any more but sit behind their computer and do all their ordering online. Peter thought this was rather mad.” Dawnay, Day subsequently bought 16 shopping centres in the UK.
“A few years later, people realised that shopping was still popular and shopping centres became the flavour of the month.” Now the company does not own a single UK shopping centre. “We like to go for situations that have been overlooked and are not flavour of the day.”
He cites the recent purchase of 50 buildings in Harlem, New York, as an example of pursuing deep value. “It is wonderful finding a niche that hasn’t been exploited by other people,” he says. “There are enormous variations in value because of fashion.” Having only himself and Mr Klimt as shareholders is a big advantage. “We operate very fast. The decision process is very quick.”
Dawnay, Day began with two principal arms: commercial property investment, which Mr Klimt runs, and financial services — led by Mr Naggar. Over the past seven years, the company has added a private-equity unit, which has acquired stakes in several public and private companies. There has been a £49m takeover of menswear retailer Austin Reed and the purchase of children’s nursery chain Asquith Nurseries for a reported £95m.
Dawnay, Day has also broadened its operations into fund management, launching four property funds, including the Puma Property Fund and Dawnay Shore Hotels, together with Howard Shore’s Shore Capital.
Headquartered in comfortable premises in Victoria, Central London, the company also has offices in Europe, the Middle East, the US, Australia and India. Mr Naggar attributes the company’s success to two key principles: backing talent, and buying hard assets. He also cites a gifted workforce.
What type of employee does Mr Naggar look for? “Bright, talented people, who have been successful in financial services. You have to have an entrepreneurial spirit. This is fundamental. And you have to be confident that you could leave a major bank and set up a business, which we would back.” Having trained as a merchant banker with Samuel Montagu & Co, Mr Naggar created banks in France and Switzerland, before becoming deputy chairman of Charterhouse Bank in London and establishing Dawnay, Day.
Properties in Harlem, New York, where Guy Naggar’s company recently bought 50 buildings