Courtesy of Prime Resi
Faisal Butt is a man on a mission to change the property industry, and, with James Caan by his side, he might just have the vision, backing and financial firepower to do it.
Caan and Butt, who met when Caan gave a talk to Butt’s MBA class at Oxford’s Saïd Business School, launched Hamilton Bradshaw Real Estate with the aim of building a portfolio of 20 “disruptive” start-ups that will challenge the established giants – the Foxtons and Rightmoves – of the UK property industry. From his Mayfair den of equity, Butt has already made a strong start, investing in four new businesses – and their founders – that span the industry.
HBRE’s first investment, 90 North Real Estate Partners, is a property investment advisory firm and fund specialising in Shari’ah-compliant investments. The company, which is run by founding partners Philip Churchill and Nicholas Judd alongside Butt and Caan, has done £90m worth of UK deals in last 18 months, with another £100m in the pipeline and big plans to the breach the £1bn mark within five years. After 90 North came Accouter Design, an interior design business run by PrimeResi columnist Alec Watt, which turned over more than £500,000 in its first three months’ of trading, and The London Management Company, a property management company run by Rupert Collingwood (also a PrimeResi columnist). HBRE’s latest venture, Jason Tebb’s London estate agency Ivy Gate, launches in May with the idea of bringing a US-style realtor approach to selling homes to West and Central London.
At what stage do you invest in a business?
Since human capital is my main driver, and I am a firm believer that strong individuals and teams will go on to do great things regardless of idea and sector, I invest at the team formation stage – when an all-star team has come together. This could be pre-revenue and pre-pilot. I also invest in already formed early-stage companies looking for the “rocket fuel” to scale up their business.
What was the first business you invested in?
I invested in and actively ran a tech start-up back in 2003, and that’s when I first made the plunge from corporate to entrepreneurship and learned the ropes of start-up life. But I come from a family of entrepreneurs, so evaluating, investing in, and launching new ventures is definitely in my DNA!
Since co-founding HB Real Estate with James Caan, the first business we co-invested in together was 90 North Real Estate Partners, which remains today one of our shining stars and is a great case study for future ventures we aim to invest in.
Are there any specific areas in the property sector that you are looking to invest in?
I am quite open and opportunistic in terms of sector – my people focus, however, is the common thread in all my ventures. I back experienced and ambitious super stars – the future movers and shakers of the property industry. I do gravitate towards sectors that have a “tail wind” behind them, so for example, when James and I backed Accouter Design, we understood that the projected growth of the private rented sector would be a key source of demand for interior design services. Importantly, I need to be convinced on how the venture will scale up over a five-year period.
Are there any property sectors that you would not invest in?
I’ll answer this question indirectly! By not being from the property sector, I’ve been able to take a “helicopter view” of the sector as a whole. My investments to date cover prime London residential, Shar’iah investment management, residential interior design, property management, and estate agency. That is a pretty broad spectrum, and the only way I’ve been able to do that is because I look at the sectors with no preconceived notions. I’ll be as bold as to say because of my sector-agnostic approach, I’ve been able to establish myself as one of the most active property focused VC investors in London over the past year, both in terms of volume and diversity of new ventures launched and in the pipeline.
How involved are you and James Caan in the day-to-day running of 90 North and your other businesses?
When you back experienced Founders who know their space and have that “switched on”, go-getter attitude I look for, you don’t have to be involved in the day-to-day. I want to let my all-star founders get on with creating and building the businesses, while James and I keep our heads above the parapet and focus on strategy and scale.
James acts as Chairman of the company, and he is involved as a mentor, advisor, strategist, business coach, and importantly, as a co-investor in our deals. James’s role in building the profile of 90 North, and in acting as a figurehead has been instrumental in enabling us to achieve the traction we have in such a short time span. His ability to inspire the Founders to “think big” and “outside the box” has allowed us to create a truly scalable platform.
Has the nature of 90 North changed significantly from when you first pitched it to James Caan?
Yes, and all new businesses need to be nimble and fleet-of-foot and should have the flexibility to “pivot” to respond to market forces. When James and I first set up 90 North with Founders Philip Churchill and Nick Judd, the investment focus was predominantly going to be commercial property and student accommodation. I am proud to say we have broadened our investment spectrum and have closed our first residential development deal earlier this year where we are developing 21 luxury flats in the heart of London. This is the first of many development deals for us in prime London, so watch this space!
Is there a particular property business that you wish you had been involved in at the start?
I think there is a lot to be said about the way Foxtons innovated, leveraged technology, created a unique culture, and rapidly gained market share in the early naughties leading up to the eventual exit of its Founder for £375m at the peak of the market.
Rightmove is a great example of a technology-enabled property services business that has achieved exceptional commercial success and scale.
I am now looking for the innovators within the sector who will launch the next “challenger brands” in the market – the founders of the future Foxtons or Rightmove.
Which investment are you most proud of so far, and why?
90 North. My fellow co-founders have been exceptional in their commitment to the overall goal, in keeping their eye on the ball, and achieving enviable traction in a short time span. We have completed £90m of UK real estate transactions in just 18 months, and have an active pipeline of another £100m on the go right now. 90 North is an investment management business with a nimble business model – our partnerships with several Gulf based institutions have allowed us to deploy capital quickly and invest across a far broader spectrum than conventional fund management businesses.
Do you anticipate better returns from property service investments, or from bricks-and-mortar property investments?
The two feed into each other in many ways. Some of our property service companies have the opportunity to service our property investments. My strategy in building the platform is one where inter-group networking and cross-pollination is encouraged. To answer your question more directly, venture capital (i.e. investing into property services ventures) and property are very different asset classes, in terms of risk/return profile. Because of the higher risk associated with VC investments, I would expect higher returns.
What is the five-year plan for 90 North?
Each business James and I back has a focused five year plan. The five year plan for 90 North is to grow our investment portfolio from £90m up to £1bn of assets under management, across multiple property sectors and geographies.
My overall five year plan for the HBRE platform as a whole is to have around 20 businesses that span the property sector, including investment management, property services, development management, technology, consultancy, etc. The common thread across all of these will be innovation, scalability, and most importantly, an all-star founder team.
What is the best way for entrepreneurs to get in touch / pitch to you?
I am quite good with emails. People can get in touch with me at email@example.com, look me up on LinkedIn, or follow me on twitter at @FaisalButt_