Taking Stock and Gaining Perspective: A Q&A with Paul Brundage, Oxford Properties

Senior Advisor – NED, Oxford Properties, London, Singapore

Executive in Residence – R-Labs Real Estate

Venture Studio, Toronto

Senior Advisor – FORE Partnership, London

International Leadership Counsel / Real Estate Advisory Committee – University of Toronto

Past President British Property Federation

Former Member Commercial Property Advisory Committee – Bank of England

Former Member Henley Business School Strategy Board

Paul arrived in London 1 September 2008 to open Oxford Properties’ London o ce as the company’s first ever employee to work outside of Canada. Little did Paul know what was to come only several weeks later with Lehman Brothers filing for bankruptcy kicking o what we now refer as the Great Financial Crisis (GFC). A mere 15 years later we find ourselves in a not too dissimilar economic and geo-political situation. Following his recent return to Canada, Paul o ers a unique global perspective on the theme of this year’s 2022 CULS Magazine, which we seek to unpack in the following Q&A.

Tell us about Oxford Properties and the growth of Oxford Properties Europe?

Oxford are active investors, developers, managers and builders of businesses. The competitive advantage has always been combining access to capital, global platforms and expertise with local teams and experience to diversify risk and create outsized returns. Paul refers to this as “levering your capital, levering your assets, levering your platform”. Oxford ultimately serves parent company Canadian pension plan OMERS representing 500,000 municipal (local authority) pension plan members. Through the Oxford real estate platform, OMERS partners with a select group of leading, like-minded global institutional investors to execute allocation strategies across the asset class, geography and risk spectrum. The original plan for Oxford Europe had 5 components: follow a macro-economic thesis, meet internal cost of capital >10%, lever Oxford’s global business, balance focus with a broad enough “investible universe” and finally be do-able! This approach helped Oxford to establish a strong reputation and team in Europe and exceed the capital deployment and investment return expectations during Paul’s tenure.

What do you see as the greatest challenge in our industry at present?

We have been very fortunate over the years to progressively improve the way things are done in the property sector at our own pace but have not experienced the amount of disruption that we are facing today. Business cycles, past recessions and the GFC did change aspects of the industry and created opportunities for new participants to enter markets and take advantage of downturns (like what we did at Oxford in Europe following 2008) – however today we are facing unprecedented change that is much more fundamental in nature where COVID, technological disruption, climate change and geopolitical uncertainty are forcing us to assess our sectors, geographies, capital structure and business models. Investors, governments, customers and employees and requiring us to innovate at a pace faster than ever before and those who choose to ignore this reality I fear will face dire consequences! The flip side of this is that “necessity is the mother of invention” and “adversity creates opportunity” and for those who are prepared this may be one of the most exciting and greatest opportunities of our generation. I am seeing things happen all around our industry in places like R-Labs venture studio where new businesses are being formed to solve problems in real estate in ways we could never have imagined only a few years ago!

In terms of our industry’s growing awareness of its impact on people and community, what stands out to you?

When I was BPF president we were facing the pending consequences of Brexit and trying to get the attention of national government. We all knew that there was no more diverse a sector than real estate, be it life at home or life at work, healthcare, infrastructure, social services, or recreation but failed to be able to get the attention of No 10 versus other sectors. The reality was that we had a credibility problem as the composition of our industry was not diverse enough and we had failed to connect with government in a constructive dialogue to help work through the problems. Today, as a result of strong leadership from my successors and programs like Pathways to Property at the Henley Business school we are making great progress and much better equipped – in a world of growing polarization where our industry has significant impact on people and communities we must use “diversity as our strength”!

What is your view of the ongoing ESG conversation?

Oxford adopted “sustainable intelligence” as a commitment to the environment almost a decade ago and today is a global leader in this space. Although Europe has been talking about “reduce, reuse, recycle” for even longer I am pleased to see government and corporations finally making commitments to net zero. The road to this target is going to be very challenging particular in the current economic environment however there is more than enough evidence the climate change is real and we must do everything we can to save the planet! I am encouraged to see many organizations make commitments and have the RICS require that ESG is factored into valuation methodology. Early evidence also exists that these commitments are also translating into asset pricing and a number of “green financings” have been funded at reduced costs in exchange for these commitments. I have also had the opportunity this year to work with FORE partnership, one of the UK’s leading thinkers in this space where the combination of design, construction, procurement and management has resulted in the first true carbon net zero o ce project. A good start but there is much to do!!!

Is the UK perceived as an innovator on the global stage?

London has led innovation in fintech for many years and today COVID has accelerated the awareness and need for the same leadership in the biotech and life science sectors. Despite Brexit, education is still one of the UK’s greatest exports with “Oxbridge” and Russell group university graduates leading innovation at companies and organizations around the world. I have recently had the opportunity to spend time with Professor Jerry Engel from The University of California, Berkeley who is leading research on identifying the key elements that make cities successful global “Clusters of Innovation” – the likes of Silicon Valley, New York, Toronto, London, Berlin and Singapore all share the combination of Education, Government, Capital and Corporations that propel them to attract, develop and retain the talent necessary for successful and sustainable innovation economies.

Any concluding thoughts?

COVID has been the great accelerator and anything that was not “fit for purpose” before is now exposed. There is nowhere to hide, and we are clearly seeing a flight to quality with a third of companies flourishing, a third hanging on, and a third faltering if not already out of business. I continue to be concerned that the e ects of Brexit are only now just beginning to be felt and as evidenced by the revolving door at No 10 this year clearly requires strong collaborative and inclusive leadership to help steer the ship through the choppy waters ahead. I remain an eternal optimist and consider the real estate industry to be a key part of the solution. I look forward to seeing our young people and next generation leaders listening, learning and adapting as we take stock and develop perspective on the way forward during the interesting and challenging period ahead.