CEO Weekly Update

Until recently, I was fortunate to mentor a remarkable man called Caleb Meakins. Born in Ethiopia, Caleb moved to London after his father died in the 1998 Ethiopian Airlines hijacking. After graduating, Caleb turned down endless job offers from Goldman Sachs, Ogilvy and Mather and others and set up various not for profit organisations in the UK.

Caleb and I plotted a return to the land of his Father, and three years ago he moved back to Ethiopia with the aim of setting up and investing in social impact projects in Ethiopia and East Africa. I regret little in life, but I do regret not taking Caleb up on his offer to join him on that journey back to his homeland on a motorbike. “Easy” he said – “Across the Channel, down through France and Spain, over the Med, turn left when we hit Morocco, avoid Libya, floor it through Sudan and down through the Ethiopian Highlands.”

In the three short years that followed we worked together on setting up the first car plant in Africa and installing chemical loos in rural villages (and selling the by-product to fund it). Last year, he opened Bake and Brew – a coffee shop in Addis Ababa which doubled up as a drop-in centre for budding Ethiopian entrepreneurs and returned all of its profits to Ethiopian coffee farmers.

Caleb died in a car crash in Addis Ababa in February. Caleb was an inspirational guy, one of the smartest, bravest and most unconventional people I have ever met. He was 31.

Before he returned to Ethiopia we worked together on a project called 40 Days of Failure. It’s a long story, but he wanted to know what failure and rejection felt like. Caleb set about doing 40 things that he was guaranteed to fail at. We laughed and learned as he worked his way through challenges including taking a lecture at Imperial College, trying to persuade KFC to fry a chicken we had bought in Sainsbury’s, trying to test drive a Lamborghini (he dressed up as a sheikh) and gatecrashing a party being held by Sir Paul Smith. 

The systemic failure of Intu has been coming for more than 40 days. Owning or running a Real Estate business with shopping centres at its core did not make it onto Caleb’s list of things that would likely end up in failure. Changing demographics and behaviours, as well as underinvestment all presented significant challenges. COVID-19 was the final straw.

Last week, we mustered a team to work through some of the challenges that the administration and a chronic lack of service charge cash presented at some of the schemes. Closure was a real threat. Thankfully there will now be a more managed transition. 

Shopping Centres are not my natural domain. Apart from the superchargers at Westfield which are occasionally useful/needed, and being the mobile wallet and concierge for four teenage/nearly teenage daughters as they indulge, I have not ventured into many over the last few years. I will however be spending a little more time in them over the next few weeks and months as we hopefully take on the management of some of the schemes. The challenges have not gone away but some hard work, a fresh pair of eyes, market realism and pragmatism will hopefully bring some much needed stability. 

The June Quarter might also have made Caleb’s list of things that we were destined to fail at. Not so quick though. The numbers will firm up later this week as we finish off reconciliations and reporting, but the very early and crude figures suggest June is not going to be as bad as we thought. 

The headline data shows that we have recovered 54% of rent and 49% of service charge by the 26th June.

Our numbers are only 13% down compared to June 2019 (although the totals are not adjusted for growth in the amount billed), but for the March Quarter we were 46% adrift of the March 2019 data. Cash volumes are 17% up compared to March 2020.

There are of course significant variations at client and sector level. In some cases prime office portfolios are seeing collection rates of 95%, but secondary retail are down as low as 15%. 

Caleb rightly thought that failing made us more resilient and more understanding. Concessions have now been agreed, most businesses have returned or will return to something approaching normal this quarter and the MAPP team and our clients have worked incredibly hard to get to that position.

Maybe we are more resilient and more understanding after what we have all been through together over the last few months.