MINTO NO LONGER ALL IN THE FAMILY
Roger Greenberg and new CEO Michael Waters talk to James Bagnall about the transition
Roger Greenberg never made any secret of his desire not to die in harness. He was just 35 when he was thrust into the role of president of Minto — the real estate company founded by his father, Gilbert, and multiple uncles. The year was 1991. Canada was in the throes of an economic recession, and Uncle Irving — one of the last of the first generation of Greenbergs — had, like other members of the family, suffered a fatal heart attack.
“There was no succession plan,” Roger recalls, “Boom. I was made president. I had no training, no business plan, nothing.”
Little wonder then, that he devoted so much effort to making sure his own succession plan was not only timely, but rock solid.
This month, Michael Waters — a 42-year-old native of Kamloops, B.C., with no family connection to the Greenbergs — took over as chief executive of The Minto Group, the first time in the 58-year history of the firm that an outsider has done so. The story of how and why the Greenbergs picked him says much about the style and the oppressive health history of one of Ottawa’s most prominent families.
The need to select an outsider was imposed early on Roger. When he took over from Irving, he told the family he was prepared to lead Minto until 2005, when he would be 50. But that target proved too early for a host of reasons, so Roger pushed it out to 55.
But even at that age, it was apparent he would not be able to keep the position of president in family hands. The third generation of Greenbergs — his children and those of his siblings — was too young for such responsibility. Even today, the eldest has yet to turn 30.
Add to this an unusual family requirement: No member of the third generation — now 17 strong — can join Minto until he or she has earned respect elsewhere. “They must work outside the family business for a number of years and gain a promotion outside, so they have the experience,” says Roger, who recently turned 58.
In 2005, the year he had originally picked to step aside, Roger turned his attention to restructuring the firm to make it more like a public enterprise.
It was a lengthy process. Eventually, he collapsed five divisions into three and put non-family members in charge of each of them. Another major change was to create a seven-member board of directors, including a majority who could be considered independent of the Greenberg family.
Roger’s promise to create such a board was one of the keys to convincing Michael Waters to join Minto early in 2007, initially as chief financial officer.
“There’s an element of uncertainty if you’re joining a firm that’s run by just one person,” says Waters. “But if you have a board of directors in place, it gives you confidence. And it’s not just an advisory board. It’s real, and there are fulsome debates.”
The decisive factor for Waters was Roger’s personality.
“He flew out to Vancouver and arrived at our house in a plain Jane rental car,” Waters says. “He connected with my kids, my wife, my in-laws. It was more on blind faith based on the connection with Roger that I came to Ottawa.”
Waters at the time was a senior financial executive with Intrawest Corp., a vacations conglomerate that owned ski resorts such as Whistler Blackcomb and Mont Tremblant. Roger’s approach proved timely. It came just a few months after a New York private equity group, Fortress Investment Group, had acquired Intrawest then aggressively cut management ranks.
“It was nasty, nasty,” says Waters. “I opted to leave of my own volition.”
He was initially cool to the idea of moving to Ottawa. But the more he thought about the Minto job, the more he liked it. At Intrawest, Waters had been top financial executive of a single division. At Minto he would have the same responsibility across multiple divisions of a sizable enterprise.
Minto has 1,360 employees, including about 850 in the Ottawa area. It also manages more than 17,000 rental units in addition to more than three million square feet of commercial holdings. And it maintains real estate interests in Toronto, London, Ont., Calgary and Florida.
As chief financial officer, Waters attended meetings of the board and other key strategy sessions.
He also had a superb view of an industry on the verge of a meltdown. Waters joined Minto just a few months before the global real estate bubble burst.
Nearly three decades earlier, Roger’s father and uncle had led the expansion into Florida real estate, which became one of the most overpriced markets in the U.S. What saved Minto during the 2007-8 collapse was the innate conservatism of the Greenbergs and the fact that Florida accounted for less than 10 per cent of the firm’s holdings.
“People were underwriting deals in Florida with significant inflation built in to the homebuilding prices,” says Waters. “It was the only way they could make the math work. But Minto had stopped doing deals there in the 12 months before I arrived. As a result it was not overextended”.
The process that made him Minto CEO was somewhat “opaque.” What Waters might not have known is that Roger was increasingly convinced by 2009 that Waters had the right stuff. “He’s smarter than me, and he’s better with people,” Roger observes. “He’s very patient.”
It took Roger two to three years longer than planned to install non-family members at the head of the firm’s three new business units, which is why the handover didn’t take place until this month.
“I did not anticipate how much work was going to take place,” he says, “and the need not only to transition myself, but my siblings and a couple of other long-term Minto employees whose loyalty was clearly to me and my brothers.”
Of course, the Greenbergs still control Minto’s privately held shares. And Roger has created for himself the position of executive chairman.
“It means Michael and I will partner on strategy and major acquisitions and dispositions,” says Roger. “But day-to-day operations will be 100 per cent the responsibility of Michael.”
Given the circumstances, it’s easy enough to speculate that Waters has been hired to keep the CEO chair occupied until one member of the Greenberg’s third generation is ready to claim it. Roger maintains that’s the wrong way to read this.
“There’s nothing interim about Michael’s appointment,” he says. “He is the CEO.”
Rogers adds that he hopes the next generation of Greenbergs will become active shareholders in Minto, with perhaps one or two serving on the board.
“If we get really lucky,” he adds, “some of them will want to work in the business.”
Meantime, this is Waters’s show. The Wharton University business grad talks about developing the base he’s inherited.
‘He connected with my kids, my wife, my in-laws. It was more on blind faith based on the connection with Roger that I came to Ottawa.’
MICHAEL WATERS New CEO of the Minto Group talking about Roger Greenberg, who convinced him to join the company
Minto has been expanding, judiciously, in all its major markets, confident that its diversification in both geography and type of real estate property (rental versus owned) will protect it if the property market does take a tumble. Last weekend, Minto unveiled a new eightstory development underway in Ottawa’s Beechwood district. The company is also building condominiums as part of the redevelopment of Lansdowne Park.
Roger says he’ll be spending considerably more time in his role as chairman of the Ottawa Sports and Entertainment Group, which is leading the development of the Landsdowne site with the City of Ottawa.
“I don’t call it retirement,” says Roger, “I call it a transition.” As for the concern about the family’s faulty genes, “I want to exercise a little bit more. I can’t hide from that.”
Nor did he shrink from the possibility that the family’s health curse would visit him. Whatever happens, the Minto Group is in the hands of professionals.
Michael Waters is Minto’s new head. He says it was Roger Greenberg’s approach that convinced him to join the firm.