“Mr. Fixit” Highlighted on the Sydney Morning Herald

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Nov 15
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Saving Investa gets featured in an article by Carolyn Cummins on the Sydney Morning Herald.

One Tough Battle

The battle for control of the Investa property platform was one of the longest in the real estate investment trust sector, having started a long time before it hit the headlines.

It also took its toll on many involved, like all battles do, from people losing jobs to others suffering ill health.

But at the end, Investa is now one of the better performing, all Australian-focused REITs.

There were many, many parties involved from Morgan Stanley, which started the ball rolling after having bought in to rescue the business, only to sell a few years later, to all the advisers, bankers, lawyers and Investa employees, many of whom had to keep the business ticking along, amid all the behind-the-scenes battles and boardroom brawls.

One person at the heart of the fight was Scott MacDonald, an American brought in to try to work out a deal between Morgan Stanley and the parties at Investa.

Mr MacDonald has penned a book, Saving Investa, detailing the saga, which, among the background of the battle, includes details of the toll it took on his health and personal life.

He also says it was a lesson in how “catastrophic” it can be when companies use debt as a takeover tool.

A brief history of the deal is that in 2007 Morgan Stanley Real Estate Funds and other global sovereign and pension funds bought the Investa Property Group for about $6.5 billion. The payment was in the form of about $2 billion in equity and the remainder in debt.

Investa had three parts: direct assets, funds management and a land division, the former Clarendon Homes.

All was fine until the global financial crisis in 2008, which pushed the debt markets over the cliff.

As the book says “the Investa business plan called for a quick sale of Investa assets at peak prices and use of the proceeds to pay down the high level of debt to a more sustainable level”.

After much angst getting the Australian banks to extend loans – where Mr MacDonald said he worked with people he called “very professional”, including Morgan Stanley’s Steven Hawker, and Investa’s Ming Long, Campbell Hannan, Jonathan Callaghan, Peter Menegazzo and Michael Cook – the business was eventually broken up and assets were sold.

Earlier this year the former Investa management division, run by Mr Callaghan succeeded in winning and now runs the consolidated Investa platform.

When he was in Sydney recently promoting his book, Mr MacDonald said he would do it all again.

He has dedicated the book to his sons Andrew and Ross and to the “Investa team”.

Mr MacDonald said what kept him going was the people at Investa and the dedication they all had to see the business succeed.

“I was only meant to stay for six months, but I extended that because of the great people I met and worked with,” Mr MacDonald said.

“The issue was the two separate boards and how to get them together. It was a complete breakdown. Everyone involved are good people, it’s just sad and unfortunate that it became such a battle.”

In his book, Mr MacDonald also touches on the personal battle.

He suffered a stroke while in a meeting and in December 2008, less than six months after being at the helm, his wife emailed saying she had filed for divorce.

“I moved back to the States to San Diego and wrote this book. I really enjoy writing and feel there are a few more books in me,” he said.

“I inherited a dog from my son and now my life revolves around him. I apply dog behaviour to human management.”

Mr MacDonald is now able to focus on his passion of setting up need-based college scholarships and has awarded 40 across North America through the MacDonald Community Scholarships.

“I like Australia and could easily live here,” he said as he strode out of the Westin Hotel, Sydney, looking like any other local.

 

 

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