Comment: Analysts and investors were agog on Monday as Federation Centres, which was “merged” in April with Novion, the former Colonial First State Global Asset Management shopping centre portfolio, sacked its chief executive without notice.
Gone is Steven Sewell for apparently being too big picture, not detail-focused managerial enough, though the media reports were sketchy on reasons, big on the surprise.
But if the new CEO Angus McNaughton is in fact true to his reputation as a more operationally aware, detail focused kind of leader then he might also be sharp enough reverse a recent decision under Sewell’s watch to downgrade the company’s sustainability capability.
Gone soon will be Alan Dayeh, who had replaced the well-regarded Rowan Griffin at CFSGAM, and came from a well-regarded background himself that included setting up the Sydney branch of Net Balance (now absorbed by EY) with Ro Coroneos in 2008.
According to our sources the more senior strategic position that Dayeh held at Novion was not considered essential at Federation (soon to change its name to Vicinity Centres). What will remain, however, are two sustainability roles focused more on the operational side. Of course it’s to be expected that there is some staff fallout when two companies merge; and sometimes it’s part of the driver for a merger – to capture efficiencies.
But the move has sparked some industry angst that Griffin’s legacy would be at least partly lost. And especially in the tortuously difficult sustainability area of shopping centres. They struggle not just with huge energy and water consumption, but with the very nature of the businesses they house, which is to sell more stuff (sometimes referred to in these pages as the landfill retailing industry).
The number of (green) stars among the owners are thin. There’s GPT’s track record of course (let’s hope new chief executive Bob Johnston who comes from Frasers Australand picks up the green challenge), there’s Stockland’s solar roofs on centres, and yes, Westfield’s Scentre Group has at least started to look like it’s getting a move on green when it hired Benjamine Duncan as energy and sustainability manager not so long ago.
We’re still waiting, however, to see what Duncan does or is allowed to do with this giant of retail property that has always scoffed at the notion it needs to do much in the way of green at all (apart from rake in the folding version). Some leadership would be good.
What one observer said – and this must hurt the Federation Centres greenies – is that Westies could always say it never had to pick up the wooden spoon because there was always Federation.
Look, by contrast, to Novion/CFS’s reputation and you can see this merger was never going to be an easy marriage, certainly not of equals.
Here’s what CFSGAM proudly reported in 2013:
CFSGAM Property is a global and Australian leader in responsible property investment and sustainability:
- Global Real Estate Sustainability Benchmark: One of our funds has achieved the global leadership position in both the 2011 and 2012. Two funds are named as Oceania sector leaders in the 2012 survey and four funds in the top 10 in 2011
- Our three listed real estate trusts were awarded at the 2012 Asia Pacific Real Estate Association Best Practices Awards for corporate governance and investor reporting
- Carbon Disclosure Project: Our Australian listed real estate funds were named in both the Carbon Performance and Carbon Disclosure leadership indices for 2012, topping all Australian and New Zealand companies
- Our listed real estate funds are included in the 2012 Dow Jones Sustainability Indexes
- Our listed trusts are also included in the 2012 FTSE4GOOD Index
As the English aristocrats are famously believed to say: by all means, marry outside your race, marry outside your religion, but never, never marry outside your class.
Mr McNaughton, you now have a chance to prove these naysayers wrong.