27 Jul 2019
‘Dad said I’d never make it as an actor. I laughed because I knew it was true’
Richard Croft listened to his father, co-writer of Dad’s Army, and went into real estate, he tells Louisa Clarence-Smith of The Times
It was a candid dressing-room chat with his father David Croft, co-writer of Dad’s Army, that sent Richard Croft down the path of a career in property. The 17-year-old aspiring actor had just finished performing the lead role in a production of the farcical black comedy Arsenic and Old Lace when his famous father delivered the lifechanging verdict. “To make it in this business properly you need to be one of two things: either supremely talented or supremely beautiful. And you, son, are neither.”
The younger Croft says that he didn’t take it too badly. “I laughed, because in my heart of hearts I knew it was true. He said you are not without talent, but maybe take that talent and do something else with it. So after a few failed starts in careers, I ended up in real estate.”
Mr Croft, 49, is now chief executive of M7 Real Estate, which invests in industrial property, retail warehouses and office buildings across Europe and has its headquarters in London. Founded ten years ago by Mr Croft and nine partners, the business has grown rapidly in recent years and now has more than £7.5 billion of assets under management, of which £2.5 billion are in the UK.
It boasts a line-up of heavyweight investment partners eager to access its expertise in the sector, including Hong Kong’s billionaire Kwok family, Goldman Sachs and Blackstone, the US private equity group.
The success of M7, which was set up as a specialist investor in light industrial property, has tracked the boom in warehouse valuations driven by a surge in demand from online retailers.
Mr Croft sees no signs of that shift in the way we shop slowing down and is a full online-shopping convert himself. “I don’t know what I would even go and buy in a shop any more. If you can make retail a social engagement, then people will still do it. If you’ve just got to go and buy something, you’re going to do it online, because why would you want to go into town and try and park and all of the kerfuffle that goes with it?”
Rising rents and values in the UK and European logistics property market has driven a wave of mergers and mega-deals in the sector. M7 is being circled by potential buyers, having appointed Eastdil Secured last year to advise on its corporate options.
“It would not be untrue to say that we continue to discuss our capital structure with a large amount of potential acquiring parties,” Mr Croft said. “It would also be untrue to say that we are close to doing a deal.”
For Mr Croft, a priority of any sale would be to preserve the management and culture of the business. “M7 is much more than one person – it’s much more than the ten founding partners; it is about 260 people. We have 38 different nationalities employed by our company; we have tremendous diversification. I’m very proud of that and I want to make sure all of that is protected, if and when we do a deal.”
There have been rumblings that asset values in the industrial and logistics property sector are starting to reach their peak, with UK investment yields — which indicate the estimated annual return from l i h d rental income on a purchased property — at all-time lows. Mr Croft doesn’t see a correction coming because of the huge global demand for income-producing assets in a low interest rate environment.
Yet the possibility of losing investors’ money keeps him awake at night more than anything else. That fear comes from his experience of working in property during the global financial crisis. In 2008 he was fired as chief executive of GPT Halverton, a European property fund management business he had founded four years earlier. Most of the senior management team resigned with him and went on to co-found M7. “I didn’t make a good decision for two years, so I went from relatively wealthy to utterly broke during the crisis. I think that was a seminal moment for me because I realised that actually it was OK to make mistakes and you’ve just got to understand and rebuild.”
He believes that if there is another financial crisis it will be triggered by geopolitical events, not economic ones. Mr Croft, an outspoken Remainer, thinks that Boris Johnson, who has made it clear that he would be prepared to pursue a no-deal Brexit, is a “disaster for the country”.
However, M7 has done very well out of Brexit because of the fall in sterling since the referendum in 2016. It earns most of its money in euros, with 80 per cent of its investments in the eurozone, while most of its overheads are in sterling.
“I personally and M7 have massively benefited from Brexit, but I think socially it is a long-term poor decision for the country, because the issues that caused Brexit, which are disenfranchisement, a feeling that the educational system isn’t working, that the healthcare system isn’t working, that people are being left behind — all of which are true and social mobility is a massive issue in our country and I feel very personally strongly about it — that isn’t going to be dealt with by Brexit at all.”
He thinks that a no-deal Brexit would cause “a short, sharp shock” that would be righted relatively quickly to serve everybody’s interests. He doesn’t foresee a huge amount of disruption to the property market because it would trigger an interest rate cut and more quantitative easing, pushing more money into income producing property.
While Mr Croft’s immediate response to Brexit was to consider running away to live in Amsterdam, he has chosen to stay put in Suffolk. He says that he has invested a lot of his personal money in Shout About Suffolk, an organisation that supports Suffolk-based entrepreneurs by giving start-ups free office space and invests in more mature businesses to help them grow. “If there is no social mobility and if we are to make a success of Brexit, which is going to be hard work, we have to invest in local enterprise, and we have to invest in small businesses.”
For Mr Croft, it comes down to the concept of “better together”, both in terms of his views on the UK and the European Union, and how to run his company. “I’m very proud of the fact that the business has been built out of partnership, friendship. People achieve more together than they do individually.”
Who is your mentor?
My dad. He was a kind, considerate man and a genuine leader of men.
Who do you admire?
John Major, who represented for me the very best of social conservativism.
Does money motivate you?
Not so much for money’s sake but for what I can do with it, looking after my family and contributing to the greater good.
Favourite TV show?
The West Wing
How do you relax?
I party, but I’m doing it less now.
What does leadership mean to you?
If you can encourage the people around you to actually be leaders themselves then you’ve been a great leader.
Most important moment of your career?
My dad’s advice, without which I’d probably be working in a pub in Camden and still a jobbing actor; and getting fired from GPT Halverton.
Born November 18, 1969
Educated Rugby School 1982-87
Career 1990-2004, tea boy to director of European business, IO Group (now Cromwell Property Group); 2004-2008 chief executive, Halverton; 2009-present chief executive, M7 Real Estate
Family Married, two children