The property industry’s reputation has been tarnished during the past week.
The Financial Times’s undercover reporting from the men-only Presidents Club dinner at London’s Dorchester hotel painted a depressing picture of elements of the business world; brash, entitled and sexist. The fact that a property tycoon was co-chair of the club, that many of the tables were sponsored by property firms and that several senior real estate men featured on the guest list puts the industry front and centre of the story.
The scandal could act as a wake-up call; a chance to better promote diversity and inclusion, to make clear acceptable standards of behaviour and reconsider how the industry networks and socialises – and events like the Presidents Club dinner can be consigned to history, where they belong.
It needs to be said that the Presidents Club is not representative of the vast majority of property gatherings – and it wouldn’t be fair to tar all men in the property industry with the same brush because of the actions of a few at an event that was way out of kilter with the times.
It should also be noted that although, like the wider financial sector, Europe’s property finance community needs to become more diverse, there are already several high-profile women leaders. Among the debt market’s ranks are people of many nationalities and backgrounds. The sort of behaviour reported at the Presidents Club bears no resemblance to the average gathering of property finance people.
That said, all parts of the property industry must acknowledge the scandal shines a spotlight on areas that have not moved with the times. A debate about standards across the whole industry is needed, including among lending teams.
The clearest example of a stand being taken against one of the firms which hosted a table at the event is the decision by Canadian investor Ivanhoé Cambridge to cease investments with Residential Land, the firm run by Presidents Club co-chair Bruce Ritchie. It suggests that involvement in such events could have financial ramifications. It also raises the question of whether those providing debt to property companies that engage in such conduct ought to also reconsider their sponsor relationships?
Real Estate Capital attempted to speak to some of those who have financed companies implicated in the Presidents Club story. Lenders are secretive at the best of times about their sponsor relationships, but our requests were unanimously declined. It seems that, in private, people have strong opinions about the issue, but they are reluctant to speak out.
One person who did speak was Peter Cosmetatos, chief executive of property finance body CREFC Europe. He made the point that, rather than expecting lenders to blacklist certain firms, the ultimate response ought to be maintaining a daily focus on improving diversity and inclusion across the industry. Comments provided by Aviva’s Barry Fowler, in his capacity as incoming chairman of CREFC Europe, echoed this point. “We must embrace the challenge and push for ever higher standards in all areas,” he added.
They’re right. The best response would be a greater focus on efforts to make lending teams more diverse – an area in which strides have already been made – and a fresh debate on what is, and isn’t, acceptable behaviour in the industry.
If this discussion is happening within your organisation, we’d be keen to hear about it. As the source of crucial capital to property companies, lenders have the potential to influence the way the market operates. Solutions are tricky, but the debate needs to happen.
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