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Managing the managers

Investment & finance
Many people were surprised when JLL announced last summer that they were pulling out of property management in Europe and selling up their operations to Dutch property manager MVGM. We talked to Maarten de Haas, the chief commercial officer Europe of MVGM International, and Virginie de Baere, the managing director for Poland, to find out exactly who they are and what they are planning for Poland

Alex Hayes, ‘Eurobuild CEE’: Can you tell me a little of the history MVGM?

Maarten de Haas, chief commercial officer for Europe, MVGM International: MVGM was established in 1956, which was the time property management first began to appear on the market. We expanded for a few decades and then also around the beginning of the 21st century, when there was a lot of outsourcing going on. At that time we were still part of a Dutch insurance company called Aegon. The insurance business and the property management business were separated in 2007 with a management buyout and that was really the beginning of MVGM focusing on property management. Since then – a good 12–13 years ago – we’ve focused on increasing our service offering, delivering quality and expanding, both organically and through acquisitions. MVGM completed a number of acquisitions early on, mainly in the Netherlands, but they’ve since also taken place on the German market. And finally there was also the acquisition of JLL, which has given us European coverage.

Virginie, What’s it like to suddenly start working for a different company?

Virginie de Baere, managing director for Poland, MVGM International: It happened in a very natural way, MVGM is at core a property management company. So this transaction gives us a lot of coverage. Additionally, both sides concentrated on the transaction, so it went really smoothly. Basically they bought the team and the clients, so nothing changed. Added to this, we now have a partnership alliance with JLL, which gives us the comfort of continuing to work together. Basically, JLL needs to work with us when it comes to property management, and the same is true the other way around – we need to work with them when it comes to brokerage and capital markets. My team and I now have the opportunity to become much more specialised than we could be in an agency, because MVGM is really focused on people and on innovation – and in property management today technology is vital.

Can you tell me what the basic rationale was for this deal?

MdH: If you look at property management at a basic level, the more scale you have, the more healthy the returns are, which effectively means the more you can invest back into your company. Also, MVGM had the ambition to expand significantly. We had already done acquisitions in the Netherlands and in Germany and we were actively looking to grow our business. We spoke to a number of parties, including JLL. We couldn’t have even dreamt of an expansion that was this rapid. Obviously, we spent time assessing it in detail, but it was definitely something that aligned with our ambitions and that we wanted.

What kind of synergies can you expect from having a greater scale?

MdH: People always say property management is a people business; the number of employees you need to run certain mandates is quite high. The more mandates you have – especially when you have mandates from a single client across Europe – the more you can leverage your scale and use your knowledge with your clients. Our clients benefit from our scale, our knowledge and innovation as well as our European coverage.

VdB: You become much more effective and can optimise the business. If you don’t have the scale, it’s a pretty tough business to be in. Besides that, our scale also allows us to optimise the quality of our administration for our clients and to ensure we get the basics absolutely right.

MdH: To add to that, we invest a lot in staff and IT and it’s fair to say that if a property manager doesn’t invest and innovate then it’s much harder to be competitive. Besides, our way of working at MVGM is that our clients reap the benefits of the investment we make in innovation, in the quality of our administration and in our people.

I was talking recently to a property manager who was trying to provide a system that would allow property owners to view all their buildings anywhere in the world from one website, but who admitted that there was a problem with the standardisation between different countries and different legal systems...

VdB: This is the first property management company I’ve encountered that thinks differently. MVGM says: “We understand that Europe has different currencies, different languages, different legal systems,” so it’s then impossible to add, “My dear property managers, this is now the platform that we are going to use in Europe.” Such an approach just doesn’t work. If you look at Poland, for example, the legislation is moving so quickly that no system can change that rapidly and keep up. That’s one thing. The second point is that we always talk about local databases and about a central database – and that’s something that MVGM has understood. MVGM has a platform that we are now developing further together with a few clients – big funds – to create a data warehouse where all the local businesses will be able to transfer their data. And from this local warehouse we can then support the client with a dashboard view. That’s the key. You don’t push something when it’s always going to be a stretch to make it work seamlessly. At MVGM we have chosen a path where we keep our knowledge close to our clients, and a central database will help our clients with the information they seek and need.

MdH: There are two aspects to your question: Like all property managers you look for a software solution you can use across Europe, but that doesn’t mean you don’t want to localise or keep your business local. MVGM’s vision is, yes, obviously we want to look at a system we can use across Europe, but we will have local databases where we can use the system locally in order to serve our clients best. Then there’s the other aspect: the data warehouse – and that’s the tool that will give you the dashboard, but can also give you the insights into what’s happening on certain markets and benchmarking. This allows us to respond effectively to our client’s needs and improve the accuracy of our administration for our clients.

I understand, property management is a low margin business and best done by a company that specialises in it rather than a large corporation. But how do you differ from a corporate?

MdH: MVGM differs from corporates in terms of our people, our IT and our business, which is property management. Another difference are the asset classes we want to be in. In the Netherlands we are the biggest residential property manager, but not only that, we’re also big in retail and offices. It’s fair to say that we are the number one player and our mission is to also do the residential part of property management in all the other European countries. We talk to many clients and they can see the experience we have in this field. And to meet the demand from clients, we’ve already started to roll it out across Europe. We are using our experience from the Netherlands and starting with residential in countries like Germany, Poland and Spain. In addition, we’re also actively assessing other markets, such as Portugal, Belgium and Luxembourg as well as some CEE countries, on the viability of building up a residential property service, whether organically or through acquisitions.

The PRS market here in Poland seems to only just be starting up, but everyone’s diving into it.

MdH: Having said that, there’s a clear focus from investors wanting to reallocate some of their funds more into the residential area. Some investors are starting up residential funds as we speak, so there’s definitely going to be movement in the market, most likely from retail into residential.

So you’ll be approaching big residential funds and saying: “Buy these properties and we'll manage them for you”?

MdH: We’re in talks with a number of big investors about this. We’re looking at how we can partner with them and at how we can best use our expertise. We can build up a residential management portfolio very quickly. You asked what differentiates MVGM from the rest of the market, and one difference is that it’s a very flat organisation, so investment and other decisions can be made very quickly.

Did you lose any clients after signing the deal with JLL?

MdH: To my knowledge, we haven’t lost any clients to date. I might add to that that all the clients we have are happy with our services and virtually all of them are very interested in our residential expertise.

VdB: It’s important to admit that sometimes you hear people on the market asking bluntly: “Who’s MVGM?” But in the Netherlands MVGM works with the biggest funds operating in Europe, so we already have the knowledge and contacts. And a few of our clients there are really happy that MVGM is now going to be operating in Poland.

As I understand it, agencies like property management not because they can make money out of it, but because they have captive clients to whom they can cross-sell their other services. You’ve got an agreement with JLL under which you’ll always use each other's services. How long is that agreement going to last?

MdH: Two years at the least; but having said that, the intention of the parties is to continue this alliance much longer.

AH: But there may come a day when you and JLL part ways and JLL will lose all the opportunities they’ve gained...

MdH: You need to see that differently. Our ambition to grow the business is not through cross-selling. If clients come by and ask for support on a transaction, we can work with JLL to do so. Having said that, I want it to be very clear that JLL doesn’t have access to our client base and data; nor do we have access to JLL´s. Our business is property management, not cross-selling.

VdB: Some of our clients are really happy now because there are no potential conflicts of interest. We have always had different databases to JLL, but there were always clients who used to say: “Yeah, but are you not giving some of the leasing data to the agency?” There’s also a large part of the client base that says: “This is what I like.” It’s straightforward, we have an alliance agreement with JLL. If the client wants leasing services and property services, we can continue to work with them. I think there are two kinds of clients: you have those who want a one-stop shop, but there are also a lot of clients who now say that data is the most important part of business, so they want it to be more secure.

Who actually are MVGM?

Virginie de Baere managing director of MVGM Poland. Prior to MVGM Virginie de Baere worked for advisory firm JLL where in 2009 she helped to set up JLL’s property management teams including in Central and Eastern Europe. In 2013 She was appointed head of property management. Over her career she has worked with some of the most active RE Funds in the CEE region including Deka Immobilien, Deutsche Asset and Wealth Management, Balmain, Heitman, HB Reavis, CA Immo, AXA Real Estate, Rockspring, Pradera, WP Carey, Invesco, GLL, Standard Life, SEB, Aviva, GE Capital and Immofinanz. In December 2019, after the transition of JLL’s property management business to MVGM, Virginie was appointed as managing director of MVGM in Poland. At the moment her team manages a portfolio of almost 1.4 mln sqm of office, retail and industrial space owned by 25 clients. She is now focusing on developing the company’s business in Poland and giving more added value to MVGM’s clients by implementing technology solutions for property management and focusing on residential properties.

Maarten de Haas, chief commercial officer for Europe at MVGM is responsible for the commercial side of the business in Europe, which covers all clients and markets. Prior to joining MVGM he worked as the chief customer officer for the EMEA region at Cushman & Wakefield and was also responsible for the commercial side of the asset services business. He was responsible for all key clients and worked with top investors at all levels to create long lasting partnerships. He started his career with consultancy Deloitte before moving to Ernst & Young, where he led major restructuring projects and ran key accounts. He was a key member of Global Strategy Group, which supports the businesses of clients in areas ranging from change management to operational excellence and feasibility to design and implementation. Maarten lived in Singapore and Shanghai from 2010 to 2015, which has given him a unique experience in serving clients and multinationals, working with people from different cultures and backgrounds.

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