“I think about goal orientation, goals to raise the fund, right, the goal is to have strong team. The goal is to perform at the highest level, that fiduciary responsibility to our investors. That’s it. Anything else falls by the wayside. So the focus is on achieving those goals. Now, will I do it, will I not do it? How do I feel one day, how I don’t feel one day? Yeah, okay. Right, great. So, we don’t feel so good? So what. Wake up, focus on the goal and keep going. You learn that in sport, you learn that pretty much everything in life and in work it’s exactly the same dynamic.”
Susan Freeman
Hi, I’m Susan Freeman. Welcome back to our PropertyShe podcast series brought to you by Mishcon de Reya in association with the London Real Estate Forum, where I get to interview some of the key influencers in the world of real estate and the built environment. Today, I am delighted to welcome Keith Breslauer. Born in New York, Keith has lived in London for thirty years. He founded European private equity real estate Patron Capital in 1999 and is the Managing Partner of the Patron Capital Funds. Total capital under management represents approximately €5.3 billion from leading US and European institutions, endowments, pension funds and family offices. The Patron funds primarily focus on investment in companies and assets associated with property and property related activities in the UK and Western Europe. Patron, with sixty people, is based in London with offices in Barcelona, Lisbon and Luxemburg and with asset management platforms across Europe. Patron’s portfolios now include over 90 million square feet of property. Keith manages to balance profit with purpose and is active in many charities. His current and previous roles include Chairman and Trustee of the PTI (formerly the Prince’s Teaching Institute), Vice Patron and lead corporate donor for The Royal Marines Charity, Director on the Advisory Board for the Rustandy Center Social Enterprise Initiative of Chicago Booth, Member of the Chicago Booth Global Leaders Group and Senior Patron across multiple charities. He also pioneered the Women in Safe Homes Fund, believed to be the world’s first gender-lens property fund, is designed as a solution to the lack of affordable safe and secure homes for women experiencing homelessness, survivors of domestic abuse or ex-offenders. With Patron’s initial anchor support, including £1 million of personal investment, £29 million of capital was raised and is now being deployed. Keith has an MBA from the University of Chicago and a BSc from the New York University School of Business. So now we are going to hear from Keith Breslauer about Patron Capital, his view of the European market and how he and his team managed to put so much into charitable and social impact endeavours. Keith, hello, great to speak to you today and thank you very much for making the time.
Keith Breslauer
Sure.
Susan Freeman
So, let’s start off a little bit with your background because as listeners will know from your accent, you grew up in New York but obviously London has been your home for getting I think thirty years now, but let’s start by just hearing a little bit about your background growing up in New York.
Keith Breslauer
Sure, so I grew up in, actually I originally was born in California when my father had a work and I moved at a very young age as a baby to New Jersey actually. Went to school in Jersey, went to High School and to boarding school in New York City because the neighbourhood I grew up in went, became very bad and my mother convinced the head of the school to allow me to dorm so I went to boarding school, then I went to NYU and then ultimately, I went to Chicago for graduate school. So my early years perhaps is growing up as a kid in New York City where I spent most of my time. My dad was a real estate developer who went bust several times and I kind of grew up with that sort of boom-bust lifestyle or experience of real estate developer’s son. So when I, when I got in graduate school I decided I was going to focus on finance instead of real estate. I would say that was a vision when I started my career.
Susan Freeman
So this boom-bust lifestyle, how did that effect your attitude to the world do you think?
Keith Breslauer
I mean the effect it had with me was that I think the, the time that was really bad was I was about sixteen years old and it was, it was pretty dramatic and I realised that we didn’t have enough money to pay for food and I had, you know I was on scholarship and all that and my mother had to go work for the city where she was kind of a local politician but became a big activist especially with housing. You know at that point I realised that I really needed to sort of chart my own path, I had to help my parents out, help my father out and see what I could do. So I set up a small business, made a bit of money then when I went to college where I had a scholarship effectively because I was a fencer, I had work studies so I worked in the computer room and on the back of that came up with an idea to do some programming work with the small business I created and that basically paid for a chunk of my college education and got me to graduate school right away. So how it affected me was kind of a, not quite a rude awakening because it was the second or third time it happened but by the time I was in my teenage years I realised that I needed to get to work and, and, and help out because without it, you know, I was going to continue down this path which I didn’t want and that’s kind of where we’re at. A good perspective of that or a metric let’s say is that my wife and children have never seen the house I grew up in and except for the fact there’s regenerating now and the area’s getting better, you know up until that point they never would, you know that life was a different life, I left it behind and we move on. So that’s, that was sort of the, called the early years of being in New York and that experience.
Susan Freeman
But you learned to ski at a sort of relatively young age, which sort of sounds as if you, you know you might have come from quite a privileged background.
Keith Breslauer
Exactly. Exactly. So that itself is quite funny but you know way back when in 19… I would say early ‘70s, late ‘60s, my dad decided to really start his world and try and be a developer and his first big project is he convinced some farmer to sell an old Segway camp in Upstate New York on the back of Hunter Mountain to effectively build condominiums and that was his vision, my dad’s vision and for whatever happened, it didn’t work. I think buying in ’73 when they had the big oil crisis and he lost the property and banks took it away and interestingly, I’m not exactly sure how this happened but the pledge document was faulty and a small piece of the land was left over which was on the other side of the road which had two small cabins and a pond and my mother effectively figured out a way of to refurbish that to winterise. Dad said hey, you know I’d like to take you skiing and an aunt who left me a small amount of money and she used that money to you know get me to learn how to ski so from the age of five or six years old roughly, I started skiing Hunter Mountain and so I learned how to, you know amateur race, for lack of a better term but you know effectively this is where I started my skiing so despite the poverty or the issues with living in Jersey City which at that time where I lived was a real dump, somehow you know no one knew who I was were like god he must have a ski home, you must be a serious guy, actually what they didn’t realise was you know aunty, Aunty Florence left me the money to pay for skiing and my mother spent a bit of money on winterising the shack. And the funny part about that snippet of story is you know when it got really, really cold some of the pipes, we couldn’t afford burying the pipes so we insulated the pipes, when it got cold the pipes would freeze so there’s, there is an old picture of me somewhere with me shovelling snow outside and bringing a pot and boiling it which we used for water at that moment in time, so it’s great memories and kind of help to set the seed to kind of my passion for the rest of my life.
Susan Freeman
It sounds like a bit of a miracle actually that you were left with that little piece of land.
Keith Breslauer
I still, I still have it.
Susan Freeman
You’ve still got it?
Keith Breslauer
I still have it, I never, I haven’t been back in about thirty years. One of the cabins has fell down and now my kids are old and they live in New York and I said to them hey would you like to go up, they’re like oh why would we do that, so I actually have an architect as we speak preparing a proposal on what’s possible on not on the property and we’ll see.
Susan Freeman
That’s fabulous and we’ll talk a little bit later about how that sparked your love for mountains, skiing, mountaineering. So, you did an MBA so, I mean did you have to pay for yourself through, through college for that?
Keith Breslauer
College, from memory, was paid by a combination of scholarship money… they used to have a very good thing called Progress which was free, plus I had loans, student loans and I did a work study and my dad for a bit as well, and that covered you know the other part of college and I, I actually had a small business that paid for my sort of living and other parts of college and then for graduate school, I got in and they, they accepted me and, which is great, and they provided me both scholarship and loans so, when I finished graduate school, I had like I did well but I had a bunch of loans outstanding from both college and grad school and I had to pay them off, but it was all, you know the US system was very low 9.29 loans and was very helpful.
Susan Freeman
So, I know you described the MBA as a golden meal ticket and that you know it was very important to you know how your career progressed after that.
Keith Breslauer
Yeah I think, I mean you know what happened was depends on why people go to you know Business School. I went to University of Chicago which is now called Chicago Booth because it had the best finance professors in the world at the time, in fact I had three Miller Prize professors who either taught me or sat in their classes and I wanted to learn and I felt there was a great opportunity but Business School generally has three, had multiple facets to it but three of the big ones are it gets you a job, you learn something and you meet a lot of amazing and interesting people so, each person who goes to Business School might have a different set of priorities, you know I wanted all three in that way and I felt that this would help me break into that world and this is exactly what it did, it taught me a heck of a lot about finance and about you know I had, I felt that I was a sort of young entrepreneur, I felt successful there. Taught me a lot about finance, a lot about certain fundamental skills that were good, combined with great people who I met, which was amazing and combined with great opportunities so I was able to get recruited by Goldman Sachs and worked for them in the mortgage finance department which was then newly created that summer and Lehman Brothers recruited me in my second year and gave me an opportunity to work for them in the Chicago office while I was at school so, you know that was really, really fantastic. I never would have had that exposure if I didn’t go to graduate school and largely that still remains to be the case.
Susan Freeman
And it was with Lehman Brothers that I mean they brought you to London, what was the role in London? When did you come and what were you doing?
Keith Breslauer
So this is kind of a crazy story so Lehman Brothers was one of these amazing firms, particularly as a young person, you were given a lot of responsibility and in my very first year working in banking as an associate and a very important man named Harvey Kruger who unfortunately is no longer with us, came to me and about twenty other people and said hey you know I got a project, I was working, I got hired within the, effectively the real estate finance department, you know I was working on mortgages and M&A for banks and insurance companies etc., but Mr Kruger basically asked me and about twenty other people would I help out on some projects and my boss, a guy named John Hopkins, an amazing guy, said sure, Keith you can do it, you know, just get it done and don’t let it affect your business and I worked at that time on a project helping Teva Pharmaceutical buy a generic drug company called Lemon and that was very unusual because you know the Israeli companies couldn’t raise any money, it was very difficult and Harvey Kruger specifically, along with a select number of people at Lehman Brothers said we’re going to change that perception and they did and it was a massive homerun, we did Teva, Scitech, Linedata, LD, many, many companies, raised a lot of money. Cdiscount was in, he disappeared, opened up a Tel Aviv office and then grew that business. I went back to my normal job. Anyway, four or five years later the real estate market goes into the toilet in the US, we end up being active investors in distress real estate, which I’m part of that team and it’s gone very, very well and then Robert Maxwell falls off the boat so, after he falls off the boat it turns Lehman Brothers lent Maxwell a lot of money, along with a lot of other firms, but the particular loans that we lent were secured by shares in which he bought with our money. Turns out one of them was Teva so, Robert Maxwell at the time was one of the largest private shareholders of Teva and we had a collateral so since I knew the management of the company, since I was doing all the distress stuff for Lehman Brothers, my boss, who was a guy named Joe Gregory who 13.07 said hey, you got to go to London to go help get our money back with the British team, so I went to London, I helped get our money back and I was like wow wait a minute, the housing market is down 30%-40%, this is 1992, interest rates are high, this could be a great opportunity, Lehman Brothers had a lot of people in Europe but no one really dealing in principal, principal investing. So I went to my US boss, I say hey let me go over and if I screw up, fire me and if I do really well, you know pay me well and make me a partner and you know see how it goes. So I convince my lovely fiancée at the time that it would be, and my mother-in-law more importantly perhaps, that it would be a two year deal. I actually started work in ’92 in London but moved to London in ’93 and so the rest is history.
Susan Freeman
What was London like in 1993 and did you start focussing on distressed resi?
Keith Breslauer
I get a message from my boss in London or in New York actually, that says hey we got a big problem, can you get on a call? And we were in San Pietro for our honeymoon in Positano in a very beautiful hotel and four hours later I go to my wife who’s downstairs and say hey honey, how you doing? She goes it’s great. You enjoying the honeymoon? She goes yeah. I said we’ve been away for ten days, right, it’s like the longest we’ve been away for. She goes yeah. She goes what’s happening? I said we got to go to London. She goes when? I go tomorrow. She goes okay, off we go. So, she’s very supportive and we go to London and we didn’t have a place to stay so they put us up in one location place at the Chelsea Cloisters but what was interesting is that the mortgage sector was really in trouble because at the time there were quite a few what they call centralised mortgage lenders, these are conduits that were created which used the capital markets to finance themselves, they were getting money from the capital markets and lend it in residential mortgages and secure ties. But because rates were so high, they were relatively volatile, many of these guys were in trouble, they got hurt and their assets were under water. So, the pitch was, let’s go buy these portfolios and/or these conduits, and that’s what we did and it was extremely successful. We basically bought these assets, everyone thought we were going to foreclose on the people, we recut all the mortgage rates, we basically never foreclosed and took to recut mortgage rates, we let it season for about six months and we sold it to building societies and we made a lot of money. Then the question of where to go next so we went looking around and the next big distressor was France and commercial real estate in France and there was a particular sécurisation that was in trouble that we went after, we couldn’t actually get it at that time but it turned out that Barclays wanted to exit their commercial real estate book in Europe which was basically in France and we bought their loan portfolio alongside a few other, a few other co-investors. So that was my, those were the kind of the, let’s call it the epic transactions of the Lehman Brothers era, which is for five years in Europe building and running that group.
Susan Freeman
Must have been pretty amazing experience and what then made you leave Lehman’s because it sounds as if you know there’s an awful lot to do?
Keith Breslauer
It was a great, great firm and I had very, very good bosses. Unfortunately, and the way these things work is I was asked to move back to New York and I went back for a day to check it out, it was good but it was you know it was not the feeling I had for the past five years which was a small band of people doing cool stuff, working in a large organisation. This was, I had to go back and become the head of the group and you know hundreds of people there and you know Lehman was huge and I had to worry about cost control and I wasn’t really in the deal flow anymore and that just was not, I was a young guy, I mean that was not what I wanted to do so, and I loved Europe, the multiculturalism of Europe in terms of you know the different perspectives was incredible, just seeing the languages, everything was amazing here so why do I want to leave this so I had a real think to go on my own, I never did it you know outside when I was an entrepreneur and I really felt there was a great opportunity in real estate and distressed real estate investing. So John Grayken over at Lone Star was looking for someone in Europe at the time, he’s a brilliant, brilliant investor, brilliant guy, I had the opportunity to work with him and I was effectively an originator for lack of a better choice, finding new stuff and co-investing with it. It lasted about a year and a half. It felt economically very interesting and personally I left the mothership of Lehman Brothers and survived which was very important to me and I said okay I think I could do this on my own, so we parted friendly, friendly company let’s say and continued to have joint investments but I went on to set Patron up and that was formed in 1999, so that was quite a few number of years ago. That was a kick on how it got started.
Susan Freeman
So, starting a new business in a new country must have been quite hard, I mean what, what were the challenges then and could somebody do the same thing now in the current environment do you think?
Keith Breslauer
There’s always opportunity, it’s always possible and if you believe and you work hard enough, you will achieve. That is a golden mantra that my mother has beaten into me and my parents have taught me and it’s proved to be very valuable throughout my career. So, you know, back then it was hard, I mean I had, what was the vision? The vision was there was a significant amount of capital in the world, I was looking for investment opportunity. To build a fine investment opportunity, particularly in property in the UK and Europe that I that was interesting and my job was to connect the two so, can I find that capital, deploy any investments, do a good job and if I am successful, then pay me on a performance fee and if I’m not, don’t pay me. This essentially was a 18.39 And we went out to, this is the early years so those types of funds, we went to raise our first fund, it was incredibly hard, we only got about, we got less than half that we hoped to get but we had some great investors, we got particularly the MIT which was run by a guy named Peter Lewis at the time who was an amazing person, but we got other, other great investors who joined him including University of Michigan and Scitech etc. And we did really well and it was really, so, so what was hard about was not whether we could find the opportunity perhaps, it was whether we could actually secure the capital and that such capital was on a discretionary basis. So that was the cue to the model. The model was can we raise discretionary capital that we could then deploy in a fund and raise big enough capital to support the operational team? So that was the vision. It worked, it just took a lot, a lot of effort but that was successful and that led to fund etc, etc and now we’re on Fund 7, to give you a flavour over the 25 year period.
Susan Freeman
Yeah, and Fund 7 I think you raised last year and I believe that you’ve raised €860 million and last year, I mean must have been quite a difficult time to raise, raise money? I mean it was still a lot of uncertainty.
Keith Breslauer
Yes and it still is, I mean we raised, we actually raised 860 like I said but interestingly enough we had a 30 million investor who actually had some discretion. Their team left so they decided they weren’t going to continue so we, we were up to 830, that was in March of last year but we then did a bunch of transactions that we have co-investors who are fantastic and we have better fees on that and that’s now climbed up to 926 million and we have one worth 30 million to possibly 956. So it’s quite a lot of capital that we’ve raised and it was very, very hard, I mean it took us about eighteen months, a little longer than that, to raise the money. I use these statistics which I think is a great example of what it takes, you know I did personally, I did 760 meetings and Zoom calls over the course of that period, of which 580 I think were with new investors and let’s imagine 300 of them roughly were unique investors and I think we closed on 14. Okay, so, so I just came from a presentation this morning with a charity I work with that helps people get back to their work and all that and I was trying to convey to them you know what it takes and I mean this is not an easy role, it’s hard, there’s competition always, markets change but trust and confidence and kind of objective focussed help to raise Fund 7.
Susan Freeman
So you really have to believe in yourself, I mean if you’re, you’re making that number of calls, that number of meetings and you know that you know relatively small percentage of them are going to be successful, you just really have to believe in yourself and what you’re trying to do.
Keith Breslauer
Yeah I think well, I think you may not believe in yourself and there’s always this classic example of imposter syndrome and like what I just want to feel about themselves and I really think a lot about that, you know. I think about goal orientation. Goals to raise the fund, right, the goal is to have a strong team, the goal is to perform at the highest level as fiduciary responsibility to our investors. That’s it. Anything else, falls by the wayside. So the focus is on achieving those goals. Now, will I do it, will I not do it? How do I feel one day, how I don’t feel one day? Yeah, okay, like great, so we don’t feel so good? So what. Wake up, focus on the goal and keep going. You learn that in sport, you learn that pretty much everything in life and in work it’s exactly the same dynamic so, so I would say you know from a confidence perspective, I knew we were a good team, I knew we were good business, I knew there’s good opportunities out there but does that necessarily resonate with a particular investor? Does that investor like Europe? Does they like real estate? Do you like what we do? Were they prepared to take the risk on a small manager like us or do they all want to go to Blackstone for example? You know, those are all great questions and our goal is to navigate that to achieve the goal, that’s the way I see it.
Susan Freeman
I think it’s quite an endorsement that a pretty high proportion of the investors in this fund have been with you for, I mean I don’t know if they go back to the first fund but I think 76% of the investment came from existing investors which is quite an endorsement isn’t it.
Keith Breslauer
I mean I think the math is, I think we got 66%, hopefully I don’t get it wrong, 66% of capital has been with us for at least three funds, we just scored 15+ years and it was 76% but we got new investors so we’re down to 72% of our capital, our existing investors are re-opted. It’s not clear, that’s a great endorsement, it’s not clear that will continue, mainly because many of our investors have not received distributions from their other managers or their other alternative investments they make and it’s not obvious how much cash they have and I have. So in my mind, if we get 35% of the 23.35 fund that will be very successful.
Susan Freeman
And in terms of where your investors are based, I mean has that changed? Are you seeing a sort of change in the profile of the organisations that are investing in your funds?
Keith Breslauer
Yeah, I mean definitely, I mean, the Americans which realised the largest capital pool for discretionary funds, right, so Europe tends to have lots of money for thematic ideas, the Americans are lots more money so they have this general attitude that they need to invest in diversified funds as well. So, in that context, the US remains a very important source for us, we got 61% of money from the States, we’re trying to obviously get more. That being said, you know America, well let’s say for the past year and half, hates Europe either because they think Europe is weak economically or America has greater opportunity or some other version but essentially quite a few of the Americans see Europe as a weak, very weak situation right now and not necessarily attractive. I think that’s changed in the past six months where rates are soon to be coming down or 24.40 are coming and the 24.41 has returned so the Americans see, they’ve also got a stronger dollar so it helps a little bit in their perspective but as of now, I’m not sure but going back the past couple of years the Americans basically stopped coming.
Susan Freeman
And do you think obviously we are in the early stages of the new Trump era. Do you have thoughts as to how that is going to affect the view of the American investors when they look at Europe?
Keith Breslauer
Whatever you think about his policies or his personality or his style, he’s absolutely a leader and he’s very vocal and he his button, he understands a good percentage of the population and what they want to hear. So, will Trump’s policies or behaviourisms or his style ignite an energy that is productive and helpful for US economic growth? Interesting question. Firstly, I think 100% the case. He’s already been in like a day and he’s already, already inspiring, you will see as long as that continues, I think that will be very positive. Now, what does that mean for Europe? You know I think these are two massive questions because Europe, which sees Germany as a dominate economy is heavily dependent on China, what was a slowdown in China, where else are they going to turn? England has, seems to still be dependent on the US so without a trade deal with the US, what’s going to happen? So, it’s possible that if England cuts a very, or the UK cuts a very good trade deal with the US, it could lead to a significant improvement in the economy. Very possible because the US will boom and will help the UK. If they don’t, they will continue to malaise and slowdown, which is what we have in the UK today. So that’s the perspective. I think Trump is net positive but they still have this huge deficit, they still got to deal with this enormous amount of federal debt and therefore they have to grow their selves out of that debt, which is very, very important and figure out a way to just improve the general state.
Susan Freeman
Yeah, so we’ll have to see what happens. So, obviously you invest across Europe so you’ve got a sort of pretty good idea of how, how we in the UK rank in relation to other parts of Europe so, with your new fund you’ve raised this money, what assets are your primarily looking to invest in or is it a real cross-section and across, across Europe?
Keith Breslauer
I mean from our perspective there’s some fundamentals that underly the real estate opportunity and we look at those fundamentals in terms of different products and different countries. So the fundamentals are classically supply and demand, how much supply versus how demand. Interest rates and the impact on valuations and the impact on lenders and how you feel about things and particularly in Europe, the principle of ESG. What is happening in terms of environmental requirements and what does it actually mean in practice with respect to an owner or a piece of property? What does that mean in terms of opportunity? So, if you have, imagine you have a, see a particular building, that building might have been bought in the past ten years or with cheap debt, that building is an older property may now be deemed obsolete from a regulatory perspective and needs to be improved, sorry from the ESG perspective, and the owner might not have the cash. So the opportunity set would be try to buy that particular asset at a reasonably good price, refurbish the building, rent it and then sell it. So, when you think about that dynamic, that’s generally quite attractive but the supply and demand thing is always the most powerful one and right now residential feels like not a lot of supply, good demand, chronic undersupply is probably a better way to describe it and therefore the ability to either build and sell or build to rent is very powerful in many markets. Now the question is why isn’t there a lot of supply? Is it because of interest rates, 28.29, what else has happened? And part of it is interest rates, part of is Covid and the fact that no supply got built, but also a large part is planning so, the planning regulations in the United, in the United Kingdom sorry, are very restrictive and despite the Labour Government you know being very bullish and very positive in what they’re doing and how it’s going to happen and how it’s going to change, it hasn’t happened, not yet at least, although there’s a lot of, lot of chatter and therefore it remains challenging, so we love residential, we love residential, we do a lot in the UK, like in Spain and Portugal because it’s a critical need, we’re not building high end, we’re building mid-market housing for the average person and we believe that being so, by building very good product, we should be able to exit into that middle market and do very well. And that’s what we’ve done in the UK and Spain and Portugal as kind of our primary markets with respect to residential.
Susan Freeman
So the Cala Homes deal I thought was interesting because you actually owned Cala Homes with, with L&G and I think sold it in 2018 and you’ve recently bought it back with Sixth Street and I just wondered why now and what your plans are for it?
Keith Breslauer
So first of all, a little background, so Sixth Street is a phenomenal, phenomenal group, they’re a capital part of ours, we’ve worked with the team in a predecessor group which was then TBG Credit, which in itself is a great firm. They’re just a large capital pool with a lot of smart people there and what happened specifically with Cala is that we all know it was a great company, we were growing it quite significantly, we bought a 30.06 called Better Homes and expanded it, we then added quite a lot of land and grew that and then Legal & General, well we really as a fund had a five year horizon so we need to sell, Legal & General was not, was our original partner, was not prepared to sell so they acquired our interest off of us at a fair value and was great and everyone was happy. Fast-forward a couple of years, they actually kept growing it by adding more land, the current Chief Executive of Legal & General decided that some of those investments are not as important as holding their investment management business so they have, these are the balance sheet business and they have an investment management business and both of them are very good but he wanted to focus on investment management so therefore some of the assets on the balance sheet were available for sale, so we thought that was an opportunity to buy, we think the company is very good, we think it’s a raw opportunity going forward, so we have to buy effectively from L&G and our mission is to grow that company and hopefully exit at a very profitable basis, but we’ll see.
Susan Freeman
And you’ve mentioned our planning system, I mean I think the new Labour Government is trying to press you know various levers and try and unlock things but I mean is there anything in particular you would do if you had a free rein with our planning system?
Keith Breslauer
Right, I think there’s a couple of issues that, I mean there are a lot of issues associated with housing right now and, and depending upon which constituency you have or represent, you might see different things, okay, but from our perspective there are essentially two challenges. The first is many people cannot afford to buy a home, either the deposit is too high or the conditions aren’t conducive for them buying, so if you but into or you believe as a government it’s important for people to own their own homes because it makes better citizens and you accept that as a principle, it’s not always say 100% but that’s what you accept. You need to provide a way for those first time home buyers to afford a house and yet to figure that out and previous governments have done that, the Help to Buy programme was the most recent iteration, that is now gone, are they going to replace, who knows, so that’s a big question mark on addressing and I think you need to address how do you provide affordable housing or how do you make housing affordable to the owner or to the buyer. So that’s kind of the high level point. The second one on planning is it’s like a big mystery, I mean it’s a, it’s not obvious at all at a very localised level who will get approved, who won’t get approved and how it will work. So the Labour Government has made some very good comments about trying to drive planning forward and I think that the messaging they’re really saying is you’re a local council, if you don’t approve this piece of land or a certain number of homes to be built, we’re going to do it for you and you’re going to lose your power. I don’t think that has been expressed in that way to date but that’s essentially what’s going on. So, we own a residual piece of land in North London, it has a lot of good value but it’s zone is agricultural land and the assumption is it will get rezoned and because of the new Labour policy, our original assumption was three years from now but actually we’ve moved it up to the current year. And we’ve owned this property for I don’t know 12-13 years, I mean just to give you a flavour, so you know planning is really challenged and the way to fix this system is to figure out a way to accelerate the planning, however one does that and secondly, it’s how to create an affordable housing or help to buy programme which is attractive and keeps the market robust.
Susan Freeman
Yeah, well it’s interesting what you say because it’s indicative of the fact that perhaps things are, are beginning to change. One of the things that I noticed, I was in New York last year on an Opportunity London study tour, we went round you know various developments and one thing that we found very different from London and the UK was that many of the places we saw had been kickstarted by philanthropy, you know people had put a lot of money in and that had kickstarted the development and I just wondered if you had any thoughts on the, because we will get onto it in a minute, your involvement in charity and social impact initiatives but is there a different attitude to philanthropy in the US or is it tax policy because public sector is short of money and we certainly could do with more philanthropy in this country.
Keith Breslauer
That’s a great question and no one really knows the correct answer, or we don’t know. The normal comment is well the US has a far better tax approach, we could deduct charitable donations and therefore it makes it attractive but in England we have top-ups so, you know it depends upon your version of it, I’m not really sure that that’s it. It is a cultural point, which is the most important point which is that giving philanthropy in the United States is a symbol, is a marker that you are successful and if you are marked as being successful then you will be allowed into certain economic circles which will provide you with future greatness, so because of your generosity the charity is essentially a do, it’s a club do, you want to make money in our country and you want to do great, great, they thank you very much and help us with the underprivileged in our market, that’s the American attitude to its charity and those are certain fates or cultures might already have that inbred in them, you know I come from a Jewish community or Jewish background, we’re trained to give 10% of what we make away to charity every year so, that helps me at least kind of grab how I think about it but going to your question, you know the US cultural respect makes it very, very important. So for example, if you’re going to raise donation in England to build a building, the natural reaction always is well the British guys will want it, or girl, doesn’t want his name on the building. I’ve been in England for 32 years, I’ve been doing charity for 32 years, I call nonsense on that, I mean the reality is everybody wants their name on the building, they might write it a little smaller but they want anything on the building. So, general you know I think there is a cultural challenge and I’m not sure how to succeed in that but the Brits are real good, I mean I think the interesting thing about England is that the grassroots, the average person in the street, will provide support. They might not give you lots of money but they’ll put one or two pound coins so the Royal British Legion raises enormous amount of money in their Poppy Appeal which is very successful because it’s, it calls on the average person to give back to the military, give back to the veterans who have defended our rights and our and our way of life so that’s, that’s why it works. So the differences are the UK tends to have lots of little people, the US has kind of everyone but the big guys give a lot because that’s deemed as culturally very supportive.
Susan Freeman
That’s really interesting actually. So, we should probably now get onto the charity work that you do because as you said you spend quite a lot of your time on the charities that you support and you seem to manage to successfully combine profit and purpose and actually running a successful business and you know putting back in and it would be interesting to know how you manage to do that. So from what you’re saying, the sort of ethos and the attitude to charity is something that you learned from an early age but just taking the charities that you have been supporting, I mean Royal Marines obviously is an important one and I just wondered how that relationship started and how you’re involved with the Royal Marines?
Keith Breslauer
Sure, so let me un-pop this a little bit so first of all there’s a confusion out there, there’s this concept of profit with purpose and a group like Northern Gritstone which I’m investor in is a phenomenal organisation, does exactly that, they invest in spinouts from northern universities which then go on to build businesses in the North and in the Midlands and gives jobs to people and inspires people. Amazing, and that’s profit for purpose, profit with a purpose sorry, very, very specific, does great work. What we do is a little bit differently, we are in the business of investing in property and property related entities and making money for our investors. Full stop. We embrace that world and how we do it, we’re trying, and no one’s perfect, trying to always make sure we’re doing good for the communities we serve and reflecting on our civic responsibility which I firmly believe in for our local markets. So, how do we do that? Well, we try to help those who need help and those who I think are very well deserving and there’s a lot, a lot of people who need help, this is a difficult world and it’s got even worse. The Royal Marines are a really unique situation so, what the back story a little bit was I’m a big skier and I’m very passionate about skiing and my company goes on an annual ski trip every year and a very, very good friend of mine, a mentor named Michael Galvin who’s an amazing person, is a funder of adaptive ski in Vail and on the back of that, I was like wow that’s great, maybe we should be doing that at Patron on our ski trip so we reached out, turned out we had a friend in the SBS, turned out it is a group of people called Mountain Leaders in the Royal Marines, which I didn’t know about, who are amazing and these are people who spend their time in the mountains and we met this group called Hasler Company which was kind of a post 39.30 rehabilitation unit and it was helping really people who have challenges, physical, mental etc try to get back to some degree of normality. So I said these are amazing people, we have to work with them and perhaps we could take them skiing and open their eyes and that started an incredibly beautiful relationship, and that’s probably 15+ years ago. And on the back of that first trip fast-forward I think I’m the largest private corporate sponsor to the British Royal Marines Charity. I was a Trustee for nine years, I’m the Vice Patron of the charity. I’ve met thousands of people in the Royal Marines in the core, they are an exceptional group of people, they do amazing, amazing stuff for the country and while people know about it, they think they’re pretty cool, they don’t really show them enough recognition and there’s a lot of problems so I have been privileged to work with part of a team that has now 22,000 beneficiaries in the Royal Marines Charity and it’s been a very successful relationship and it’s been amazing. So that’s, it’s extremely fulfilling for me and that’s why I did it. The second thing, you know, that I spend a little bit on is okay, where else can we help? And if you think about the communities we serve across the country, whatever we’re doing, there’s two dynamics. One is how you create or how do you inspire education? How do you use that tool to help improve the life of the young person? Well the way to do that is to make sure that teachers are happy and make sure the teachers are inspired. Once again, you find a fantastic mentor, her name is Bernice McCabe, she was a Co-Head of, so she was the Headmistress at North London Collegiate and she came to me and said hey, could you help me out? And I started working with the Prince’s Teaching Institute, who now called the PTI, or Richard King is the, is still the Patron of and we provide professional development for 4000 teachers across the country, about we think we impact at least three-quarters or a million kids a year and I’ve been involved for many, many years, I’ve been Chairman for a number of years. Again, incredibly fulfilling, and it works because it creates this huge multiplier effect for the country. And then the third leg is, is helping local communities. So we did a lot, we try to figure how to drive job employment, we do a lot of stuff with the Prince’s Foundation years ago which was then the Regeneration Institute. So you got, that’s great, but else can we do? And we got approached by an amazing man again named Harvey McGrath who was the Chair of Big Society Capital and I knew him from prior years and he said hey, could you help with this problem of domestic abuse victims and their families need housing. I said well I can’t do any more charity, we’ve got no more money left but maybe we can make an investible product. So we did a lot of work on it, we teamed up with a group called Resonance. We decided to do it pro bono, Resonance does it and gets paid, I put a million pounds into it, I have a great team of people at my office, Kendall Langford and Juan Du and Richard Sykes. They effectively contributed their time and we raised about 30 million quid and we’ve invested in I think 120 homes so far. So it’s been a phenomenal success in its impact from a investible product, work still to be done, but very, very happy. So, in summary, you know I devote ten hours a week call it to charity, 10% to 20% what I make away every year and I hopefully that empowers and helps others and it’s been very attractive.
Susan Freeman
Thank you, that saved me asking lots of questions.
Keith Breslauer
The classic British question is 42.49 honours.
Susan Freeman
Oh okay.
Keith Breslauer
And the short answer to that, I understand I’m an American citizen, I can’t get honours, okay. On a very cellular level, I do it for the direct positive feeling I get and a very, call it a faith level, I do it because I think that’s my mission, I’m part of a community that we’re responsible to heal the world and I think that’s what we do and that’s what I’m doing. And at a company level, it’s been fantastic because people feel they’re part of something and I think that’s important. This morning, as an example, we are hosting Work Avenue. Work Avenue is a phenomenal organisation that gets people who have lost their jobs back into training and retraining for careers. They needed a big space for their annual conference, we’ve done it a couple of years in a row. I think there’s over 100+ people in my office this morning doing break, still there, doing breakout sessions etc. It’s fantastic and what did it really cost me? Zero. Zero, even my office is okay, so somebody will be inconvenienced, what’s the big deal? If some small percentage, not all of them, end up getting back into their careers or work or somehow we’ve inspired them to help improve their lives, home run. So that’s, that’s how we see it.
Susan Freeman
And you obviously you get your team involved and I was wondering how involved they get because I know that for the D-Day celebrations you paddled from Portsmouth to France overnight through sort of fairly inclement weather conditions, I mean is that the sort of thing your team do with you or do you do that alone?
Keith Breslauer
Well, I think the crazy stuff I do alone it’s fair to say but no in general I think the team’s involved and do quite a lot of stuff so, whether they’re, they’re doing a sporting event together, whether they’re helping people, whether they’re mentoring people, for example we do a lot with Young Enterprise or with the PTI where you know my teams are very actively involved with that. So I expect some big work but I do expect and hope that everyone in the organisation does their share. Doesn’t have to be our charities by the way, they can do whatever they want but they feel that it is a civic responsibility they have to give back and they do so.
Susan Freeman
And I wouldn’t have thought you had room for more charities but I mean going forward are there charities that you are planning to support or are you sticking with the same charities?
Keith Breslauer
Well a lot of subjects sit within these three categories so veterans, education and the scholar foundation and we’re doing quite a bit of, bit of stuff in that area. We’ve taken on some new projects. I have 363 veterans who need new prosthetic limbs that I have to deal with so I have 150 children who are from communities that were terrorised or attacked, including I think four released hostages that we’re hopefully putting them on ski trips etc. Across the UK we’re doing lots and lots of stuff for, we’re trying to do lots of stuff with various people and various challenges but it’s hard, I mean the reality is you know a large percentage of the population are suffering and for different reasons and different needs and some of it we can help with, some of we can’t, but we try. So, answer is yes we have loads I can do thing, always but it is very important that it is either has a multiplier effect, so that is important, it’s measurable so you can actually look at the metrics and say okay we made a difference or we didn’t make a difference, it’s transparent, that the organisation we’re involved with understand we’re transparent, reporting as a fiduciary responsibility is. It’s goal oriented, very, very important in terms of thinking about what we’re trying to achieve so it needs to tick quite a few boxes but if it does so, fantastic.
Susan Freeman
And with you doing all the things that you are doing and you are very much involved in the real estate sector, you sort of wonder why the real estate sector has a negative image and certainly, you know when I was in New York, you know the American you know attitude is much more sort of positive, pro-real estate and here it just seems to be a little bit sort of negative and there’s, you know we get labelled as sort of greedy developers, I mean is there, is there anything we should be doing differently to deal with that?
Keith Breslauer
The greedy developer dynamic or the characteristic is very emotive because obviously it’s largely tied to people’s homes and how they live and if you think about the primal needs that we have which is food and shelter and taking care of your family, this directly impacts that primal need and that’s why the perception and the ability therefore for it to be abused given that need, it’s quite high. So you can understand why people have a perspective of that greedy developer and some of it is founded on, on good facts or good information, some of it is completely unfounded. So I think as a general point you know, I can’t address whether what is perceived as a greedy developer and I know what we do, you know we’re in the business of building good quality homes, we’re in the business of selling homes fairly, we try to address complaints and making sure there’s no issues, but it’s a business, it’s not a charity, this is, we’re in the business of making money, we’re in the business of providing and taking risk where others might not take risk but if we’re successful we will deliver great product, great supply into a very healthy demand. That’s the basic premise.
Susan Freeman
And we talked a little bit about your mountaineering and your love of the mountains and one of the things I was really struck by, you were saying that each of your four children, you have taken to climb serious mountains and I just wondered what your thinking was about that and what impact you think it’s had on the children?
Keith Breslauer
The back story of all this is, I have phenomenal children and when they were roughly around fourteen years old and they go into that sort of the teenage years, I was struggling on how to improve or maintain my communication with my children. And it’s not obviously, everyone’s got their own deal, for me it was tricky and I was fortunate that my daughter had an idea that she said hey, let’s go climb Kilimanjaro and she was only fourteen and my eldest is, all my kids are exceptional, and my eldest was really Edina my first one was really like let’s go this and she thought maybe she’d get a friend and her father do it and I said sure, so we went and did it and it was unbelievable, it was incredible, I mean going away with your fourteen year old daughter for a week where she can’t do, there’s no fancy bathrooms, there’s no beautiful hotel rooms, you’re staying in a tent together, you’re on a toilet which is a portacabin, I don’t mean a portacabin, a porta-potty, and you know you gotta make it work, and it’s not easy and you know so technically it’s a walk but it’s at high altitude and it’s hard. And she achieved it and it was a great sense of satisfaction for her, there was a great sense of accomplishment that we did it together and we developed the great relationship as a result to this day, I mean she’s 29 years old right, so that’s fifteen years ago. I said hey it’s so great well let’s do it with my second daughter. So my second daughter we tried to climb Mont Blanc, a place out in Chamonix, we had very bad weather, we ended up climbing Gran Paradiso so and we came home one day and my daughter was happy but she didn’t really get that same sense of accomplishment so she said to me, I remember we were sitting at the kitchen table and she with my wife and we just sat having dinner and she said what about Everest? What do you mean go to Everest, you know Everest Base Camp? I said yeah that’s a great idea. So I have a friend of mine who is a major climbing, a serious guy who does a lot of philanthropy in Khumbu Valley which on the way to Everest. He helped build, well it’s called The Pyramid by the Base Camp and I said hey, I’m in, we’re going to do this, we’re going to make it a bit of a charity exercise, we’re going to bring stuff that’s needed for the schools, my daughter could teach in the school and she said great so as my wife said, you know then she said, I was going to do this idea but I was really buying the plane tickets but the punchline is we did it and it was extremely successful. She taught in a school called Tama in Tarmey but we did a, we did the group which is great, went to Everest Base Camp, went to the Pyramid and again, like the first, my first daughter, it was emotionally incredibly powerful, it was very confidence building in terms of my children and again it improved my relationship. So by the time I got to my third kid, I was already, I fell in love with climbing and I loved, I was a big skier where I fell in love with actually getting a bit more technical and like I coached in the Castle in Finsbury Park and I said hey, this is great, let’s go do something more technical. So my third daughter now is, I say would you like to climb and instead of doing some crazy two week mission or one week adventure, let’s go do some more technical stuff. And so she climbed a thing called Dent du Geant (Giants Tooth) in Chamonix, it’s on the Italian side of the Mont Blanc massif, which is quite scary and quite impressive and she did a fantastic job and we were really with guides, it’s all safety with ropes. She did great and again, huge sense of accomplishment, great confidence builder for her. Then went onto climb over since from the age of fourteen till she was about 21, we did over 40 major summits and we did quite a lot of climbing and she’s fantastic. And then my son came along and he’s the youngest boy with elder sisters who do all this cool stuff and he goes I’ve got to do something even harder. So instead of us doing something more dangerous, we just did something a little bit more technical and we climbed a very steep cliff, again in Chamonix, which he did a great job and on that back of that, dad also continued to build that story. So, in summary, I think the mountaineering for me is beautiful because you’re outdoors, you get to experience God’s world and get to really feel what it’s like to be part of a larger story, that’s what’s exciting about it, it’s very good for the soul and good for the mental stability because it clears the brain in terms of allows you to be better at work so it creates that balance, that’s the positive. And from the children’s perspective, I highly recommend it, I think you since then when I meet people of teenage daughters or sons, they say you know how do I get my kid off the computer or how do I get them talking to me, I go, go do cool stuff and it doesn’t matter where it is but just go do something that is interesting and gets to understand how great the world is and I think that’s powerful. And what I’m saying 52.33 drink my twelve cups of coffee, everything that we do is charity, has a charity angle to it so, it’s very, very important not just to do cool stuff because it’s cool stuff and we can do it, it’s also very important to give back so, in each of these stories like I think, I forget the exact amount of money but I think my daughter raised $64,000 for Great Ormond Street Hospital when she did Dent du Geant and my son raised a ton of money for his thing and my other daughters did their thing so, so it’s very important to incorporate that and in fact my son went climbing with me with the bunch of disabled Royal Marines and we climbed, it was Climb 2 Recovery, the Cuillin Ridge in Scotland, which is fantastic and that was incredibly important and powerful to him and if you ask him at this point what was the most interesting thing he’s ever done in his life, he goes doing the Cuillin, that’s, so that’s very powerful.
Susan Freeman
It sounds incredible. I don’t think I can do it and also knowing that I mean you have had a climbing accident and I think you were also caught in an avalanche so, you know having, having gone through that and sort of carried on I think is pretty amazing.
Keith Breslauer
I’m not sure about that. Listen I’m fortunate enough that I’m here, I mean both of them were, particularly the avalanche is a very terrible situation to happen, it was a complete accident, while a higher group cracked a cornice which fell down on us, despite all the safety, despite everything we tried to do, you know, unfortunately I mean now and then nature is what it is and things happen and so that was pretty terrible, and I’m not belittling anything that happened or what happened but I think the kind of the lesson learned always is you’ve got to just try to keep moving forward so, it’s important to reflect, it’s important to understand, it’s never, it’s important not to desensitise things that are very serious and think about how to, how to solve that, but what’s really important is moving forward and that’s kind of the approach that my mother beat into me and certainly my father did as well and I hope I’ve instilled that in my kids and I hope that in my the teams I work with and businesses I’m involved in. You know my work goes wrong, things go wrong all the time, there’s always a problem. 2008 was a disaster for us, but we survived, we did okay and we rebuilt and we did even better. You know Covid, disaster, everything got delayed. How you deal with Covid, how do you address it, how do you deal with people and their families and all the problems? Obviously the interest rate hike in real estate, disaster in many ways but it’s all about balance and about figuring how to deal with those challenges and remembering, you know remembering the objective. The objective from a professional perspective is we are the protector of very, very serious capital from people, schoolteachers and priests and people involved who give part of their pension money ultimately to us and therefore it’s our job to try to do or say it was on the tin, we have to earn that risk adjust and return. Sometimes it works, sometimes it doesn’t, usually it works which is good but that’s what we’re trying to do.
Susan Freeman
I think that’s a really important message.
Keith Breslauer
I tend to go on a lot about the charity because I think it is important, I think a lot of people are afraid let’s say to start and initially we did, you don’t need to be afraid, anything’s possible, even mentoring someone is possible, talking to someone. My mother’s greatest expression or greatest perspective was inner strength, if you have inner strength it means you have the ability effectively to open up, to understand your weaknesses, to talk about them and to have that conversation and I think that’s powerful as a person and it is incredibly rewarding so, my perhaps message is that it’s incredibly important and incredibly helpful for society and to yourself and I think that’s, that’s something we should be thinking about.
Susan Freeman
Absolutely. Keith, thank you very much.
Keith Breslauer
Thank you for your time, appreciate again.
Susan Freeman
Thank you, Keith for some fascinating insights into the fast paced world of Patron Capital and your thoughts on the market. Your ability to balance running a successful business with putting time into your charitable endeavours is an inspiration to all of us.
So that’s it for now. I hope you enjoyed today’s conversation. Please join us for the next PropertyShe podcast interview coming very soon.
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