Eight years ago at the age of 53, Nick van Ommen was travelling around the world with his wife on a trip which was meant to mark his early retirement from a hectic corporate career. 'I’d always had this plan and we were having a great time,' the outgoing CEO of the European Public Real Estate Association recalls at Epra's office at the World Trade Center at Amsterdam Airport. ‘It was all very relaxing and wonderful to get away from my overfull diary. But then one day, my wife asked me whether I was maybe too young to stop working. 'Is that really what you want to do?' she asked. 'I’d rather have a happy working husband than a grumpy one twiddling his thumbs.'
Eight years ago at the age of 53, Nick van Ommen was travelling around the world with his wife on a trip which was meant to mark his early retirement from a hectic corporate career. 'I’d always had this plan and we were having a great time,' the outgoing CEO of the European Public Real Estate Association recalls at Epra's office at the World Trade Center at Amsterdam Airport. ‘It was all very relaxing and wonderful to get away from my overfull diary. But then one day, my wife asked me whether I was maybe too young to stop working. 'Is that really what you want to do?' she asked. 'I’d rather have a happy working husband than a grumpy one twiddling his thumbs.'
Van Ommen realised that he was in fact still restless and subsequently entered into talks with several head hunters. ‘I had worked at various multinational companies over the years, but I said I wanted to do something totally different. It was around this time that a couple of heavyweights in the European property world, people like Leon Bressler from Unibail and Patrick Sumner of Henderson, started making serious work of their plans to set up a European organisation along the lines of Nareit in the US. These companies and others like Hammerson and Morgan Stanley put some money on the table and I was asked whether I’d be interested in getting Epra off the ground.'
Van Ommen realised that a position of this type for a not-for-profit organisation would contain a number of challenges. ‘I knew nothing about real estate, so I spent a couple of weeks talking with people from the sector. I realised there were actually advantages to being an outsider, I could ask any question I wanted and I also had a fresh take on things.’ Epra’s new CEO started his new post on 1 May, 2000. Since then, the association has developed in leaps and bounds, Van Ommen says - not without pride. 'When I first joined Epra, real estate wasn't really considered a separate sector or even a separate asset class. Now look at where we are! An enormous amount of money is being invested in listed real estate companies while the level of transparency is very high. Regardless of what interest rates do in the short term, for the long term real estate has become a stable asset class alongside bonds and equities. Epra has contributedto that. In fact, our research has shown that real estate does not actually correlate with bonds and equities over a longer period.'
Uphill battle
Van Ommen's face lights up when he talks about the ‘fantastic time’ he had during his Epra era. But he concedes that there were not only highpoints. ‘It was an uphill battle in the beginning to get new members on board. I had said at the outset that the organisation would only carry weight if we could get at least 100 members within the first two years. We now have over 210. But it was not easy. People were interested, but wanted to know exactly what our intentions were.
At the time, we didn’t have anything concrete, only ideas. At times it felt like I was trying to sell hot air! We held many road shows throughout Europe and tried to convince people that, although Epra is a lobby group, we would run it like a business. In retrospect, I think that is one of its success factors.’ It was also difficult, Van Ommen continues, to find people willing and able to sit on Epra’s working committees. One of the first working committees convened to discuss best practices was chaired by Jon Zehner of JP Morgan. Van Ommen: ‘I have enormous respect for him. He drew up a draft of best practices on issues such as transparency, disclosure and accounting standards more or less on his own. Those recommendations have since evolved and become a worldwide standard.’
Other achievements Van Ommen is particularly proud of include the creation of an independent index. At the instigation of pension funds and institutional investors, Van Ommen entered into talks with the Amsterdam Stock Exchange which subsequently merged with the Paris bourse to become Euronext. ‘They were enthusiastic and took up the challenge. Within six months, we had a totally independent high-quality index with clear ground rules which was available real-time and distributable by data vendors.’
The institutional investors were pleased with the new benchmark, Van Ommen notes, but not quite satisfi ed. ‘They said: we invest internationally. Can’t you create an international index? I had to think hard about that. My brief was confi ned to Europe, not the whole world. And I was not familiar with the real estate world in the US or Asia.’ Following consultations with Epra’s executive board, Van Ommen crossed the Atlantic again to discuss the issue with Nareit, Epra’s American counterpart. ‘I had already spent some time with people from Nareit shortly after I joined Epra. Nareit has been around for over 40 years and I benefi ted greatly from their experience and CEO Steve Wechsler.’
Nareit was a natural partner for the creation of a global index, but in Asia there was no such organisation. In Australia Van Ommen contacted Mark Steiner from UBS to represent the region. An independent committee
for the US, Europe and Asia was subsequently set up to formulate the ground rules. The Epra-Nareit Global Real Estate Index was launched, but although the European side of the operation worked well, there were technical problems in obtaining real-time daily feeds from the US and Asia. Euronext suggested that Van Ommen get in touch with London-based FTSE.
'They have a global reach, they’re independent and their sole focus is creating indices,’ he notes. The partnership resulted in the FTSE-EPRA-NAREIT Global Real Estate Index, in Van Ommen’s words ‘the leading benchmark worldwide and an enormous success story’. Since the launch of the new index in February 2005, it has undergone several product innovations to include futures, emerging markets and endless other variations. Van Ommen: ‘Of course we have competitors, but we’re the only independent index. In any case, I’m not afraid of competition, it keeps you on your toes.’ Over the past seven years, Epra’s trailblazer has travelled the world to promote Epra among international invest
Another dutchman at Epra's helm
Dutchman Philip Charls, 59, will succeed Nick van Ommen as CE O of Epra from 1 October. ‘It will be difficult to step into his shoes,’ says Charls in a telephone interview from his holiday home in Italy where he spent the summer unwinding from his previous post as general manager of the Dutch Chamber of Commerce for Belgium and Luxembourg. ‘Nick has done a great job. He started from scratch and has turned Epra into a professional and successful organisation which is widely respected in the industry. That is a big achievement.'
Charls was approached for the job by a headhunter even though he had little experience of real estate. ‘That’s not really what it’s all about,’ he says. ‘What really counts is that I have 20 years of broad international experience and a big network. My previous job was also with a public body. I have learned how to handle this type of organisation.’ Prior to the Dutch Chamber of Commerce, Charls worked for seven years as CE O of RV S-Insurance Belgium, part of IN G group. ‘I worked for 25 years in the financial services industry and during that time worked closely with the real estate departments.’ Charls’ priorities over the next few years will be the tax harmonisation of GAAP and IFRS between the US and Europe, the launch of derivatives on the FTSE/EPRA NAREIT Global Real Estate Index this year and the further expansion of REIT regimes in Europe. Wider cooperation with US-based Nareit and Aprea in Asia is also on his agenda. ‘The challenge will be to add value and stay interesting for our members. Real estate as an asset class is set to increase further in importance.’
New developments that Charls sees affecting the listed real estate sector in Europe include the emergence of Asia as a destination - but also a source - of new investment. ‘Asia is going to be big, it’s becoming more international than ever. The Chinese are looking at strategic logistics locations in Europe such as Antwerp and Amsterdam. And the Indians have been buying up steel companies. Real estate will not be excluded.’ Charls’ predecessor Van Ommen claims it is ‘pure coincidence’ that the new Epra CE O is again a Dutchman. ‘His appointment had nothing to do with his nationality.’ That Charls is a relative newcomer to the world of real estate is no barrier, he argues: ‘That’s good. It means you’re not biased and have a fresh take on things.’ tors, companies, bankers and analysts. He played an instrumental role in the creation of Epra’s Asian counterpart Aprea.
The Asian organisation was founded in Singapore shortly after Van Ommen held a speech for a group of Asian investors during a conference on Australia’s Gold Coast in October 2003. It now has over 100 members. In 2002 Van Ommen and his team in Amsterdam also provided a flying start to Inrev, the European association of investors in non-listed real estate, by giving them in-house accommodation and pointing out some of the potential pitfalls. The non-listed real estate universe is much bigger than the listed sector, but the latter has witnessed tremendous growth in Europe since the beginning of the decade.
Following the French lead in 2003, Germany and the UK have now also introduced regimes for real estate investment trusts (REIT) and more countries are set to follow including Spain, Italy and Finland. Epra is a staunch proponent of a pan-European REIT, but Van Ommen favours a bottom-up approach. ‘A pan-European REIT would definitely be useful. But it’s still five to ten years away. The important thing is to get a REIT introduced in every country in Europe first. Once that has been done, it is much easier to make changes. If a regime is not working well, you can be sure that the government will start thinking about how they can improve things.'
Transitional arrangement
Van Ommen will stay on at Epra for an extra month after Philip Charls joins on 1 September, primarily to oversee the annual Epra conference in Athens. He has offered to be ‘on standby’ until the end of the year. This autumn,
Van Ommen will accompany Charls to Expo Real, Barcelona Meeting Point and the Nareit annual conference in the US. ‘Over the past seven-and-a-half years, I have built up an enormous network. Of the 3000 people we have
in our database, I know half personally. You can’t transfer that in four weeks. But there’s no point in staying on here physically, I would just be in the way. We have a good transitional arrangement. I’m there, but only if Philip wants me.’
After all the travelling and long hours of the last few years, Van Ommen is now keen to slow down and pick up some of his special projects. ‘I had originally planned to leave Epra at the age of 60, but agreed to stay on another year because a replacement had not yet been found.’ Nevertheless, he has ‘mixed’ feelings about his imminent departure. ‘I’ve had a great time here, we’ve achieved a lot together here as a team and with the management board.’ At the same time, he is visibly pleased with all the offers he has received for non-executive positions from real estate companies throughout Europe as well as the US.
'I have already accepted a number of posts with European companies, each one in a different country. This will enable me to stay in touch with the business world and maintain a European perspective.’ Following his definitive retirement from Epra at the end of the year, Van Ommen plans to revert to his original plan of travelling around the world with his wife. ‘That is what I will enjoy most, travelling with my wife and revisiting places I didn’t have time to look at properly during my career. And of course spending time with my two grandchildren.'
This article appears in the September edition of PropertyEU Magazine.