The two who stole a slice

Anna Pakulniewicz, ‘Eurobuild CEE’: As far as I know, the market was expecting your merger?

James Turner, non-executive chairman, BSC Real Estate Advisors: It became evident that there was something that we needed to do: to focus on the two parts of the business separately, and so we came to the decision to demerger our services arm and run it separately – this was the best thing to do. Our clients were telling us to do this. And we were getting more requests from international investors that wanted to do some leasing with us, project services, property management – and that’s all. But they didn’t want asset management…

So whose idea was this?

JT: The demerger of Balmain’s services from the asset/investment management business was my idea. Jason and I have been long term professionals, friends and colleagues for many, many years, and we started discussing the growth of his business and the directions he wanted to take it in. There it was, right in front of us. It seemed logical to sort of take the decision. So when we sat down, it was obvious that we could have a proper merger of advisory businesses to become potentially one of the top five advisory businesses and probably the only one that is independent. From Balmain’s asset management side, what we have done is to take one of my partners, Stuart Lang, with whom we are collaborating on raising capital and on our existing clients. At a high level, Balmain will still have a relationship with other agencies and advisors and we are not obliged to work with BSC. Former Balmain partners Paul Cawood and Tim Rylance are in the BSC camp and working with Jason. It was very important that we did not lose any part of our operations.

Jason Sharman, managing partner, BSC: Through the merger we have created a mid- to large-scale real estate advisory firm. Now we’ve got three highly experienced partners – myself, Paul and Tim – dedicated to BSC, whilst still working for Balmain Asset Management, which in effect becomes a client. To avoid any doubt, however, they are going to trade as an entirely separate entity, focusing on asset and investment management. To be entirely honest, since the merger I have hardly seen James. Prior to it, we did have a number of meetings together. But now we are working on our own objectives and clients.

How will the group of companies work?

JT: We have formed into a group, but I am not involved in this. Stuart and I are looking after the Balmain business, which is focused around investment and strategic asset management. What is interesting about it, though, is that even with the close relationship with BSC we can now focus on investment across different assets and bring in offices and industrial to the Balmain asset management platform. And this is the key thing for us. It also gives us the ability to work with other agents and to be a completely independent organisation. For example, we are selling a property at the moment and JLL is even selling it for us post-merger. In the end we have no obligation to work with BSC. Our clients value our independence. And the market wants to see us like this. We do think that BSC is the best in class, however.

JS: In terms of direct market comparisons, the Balmain/BSC relationship is more akin tobeing like LaSalle Investment Management and JLL the agency, Savills Investment Management and Savills the agency, or CBRE Global Investors and CBRE the agency – as a separate business, with a separate focus. Of course, higher up there is a common group watching over us, but we operate differently in terms of different objectives. BSC’s objectives are to provide high quality advice to key and specific clients, where we can really dedicate resources with the private approach that you can only have in a private company.

Who is who at BSC?

JT: I am the non-executive chairman. In Polish, there is no equivalent term for this. This means that I sit in on the group board meeting every month, while Jason and the team report to the board and he is the executive managing director. So Jason runs BSC with Tim and Paul day-to-day. And I will be sitting in London and listening to what is happening in the CEE market for BSC, but at Balmain I am more involved on a day-to-day basis in asset and investment management.

JS: So it is like there are two companies. James is running Balmain, I am running BSC, and occasionally we meet to discuss how we can assist Balmain as a client.

Who is under who?

JT: Jason, Paul and Tim make all the decisions. At BSC they come and show us what the plans are and what the budget will be, and so on, and then we chat about it – such as about what help they can get from us. Frankly speaking, Jason knows the business much better than I do. It would be different if we split the business and I was running both sides. But it was very important to us when doing this. There was no other person on the market to make this merger other than Jason, because of his experience and complementary market philosophy. The deal was made between Jason and me, and it took us six months or so, but to take things from the first chat and glass of wine it has taken maybe ten years. In reality we have always dealt with each other, and we always gave a lot of friendly advice to each other, so we have been forming this relationship longer than just these six months. It is really important to have long term ties to something. I think the impact of the merger is to really thrust us in amongst the big and established players. BSC is careful to distinguish itself as an advisor that carries out agency services, we are the only independent advisor. That might sound arrogant, as we have just got started.

So you decided to make this move because you knew each other? Or your companies seemed to be very comprehensive? Or you were looking to make any kind of move?

JT: It was a logical step to demerge the advisory business and I talked about a demerged company during our regular chats with Jason and it seemed perfectly sensible that we merged these businesses together. We both had a few conversations about selling the businesses, but we wanted to create something that going to last.

JS: We had a few approaches. One was a big UK company and two were big international companies looking to enter the market. And I was looking for the next step in the business and growth possibilities in terms of asset classes, services provided, etc. So we decided to maintain an independent partnership. And at the same time scale up. BSC will be competing widely with other agents – and not only with agents but other companies that provide property management services across all sectors. You are going to see a company providing advisory in a way that will make clients say: finally, here’s a company in central Europe that behaves in the way that we need.

JT: The scary thing is, we both actually believe that

JS: I have to admit that, when we go for a meeting as a team, at MIPIM or elsewhere, we both feel very empowered. Clients will feel that we are not only partners but also colleagues and friends. Clients can trust us. And that is our added value.

Why didn’t you decide to sell the firm?

JT: In our case some of the companies that approached us already existed on our market. I stopped and looked at the whole business and said maybe if we have two parts of the business we have to look at them as two parts. We both thought that we didn’t want to sell. We wanted to grow the business.

Will this mean any changes to your premises?

JS: Yes, we need more. Soon Sharman Church will be moving here [Warsaw Towers] and expanding.

JT: April 3rd was the official merger date. On this date Sharman Church stopped trading and BSC started operating.

JS: We plan to move at the end of May

JT: The floor below in this building needed to be arranged. We like the proximity, but we need to be careful about maintaining independence.

The story of two

James Turner was prior to the merger the managing director of Balmain Asset Management. Before establishing Balmain in 2003, he held various senior positions with Westfield over a ten-year career, culminating in establishing their European shopping centre business in London in 1998.

Jason Sharman, a former partner and owner of Sharman Church, began his career in London training as a West End office agent with the predecessor of GVA, Grimley JR Eve. In 1997, he moved to Kyiv and then to Prague with DTZ. He then relocated to Warsaw In 2001 with Jones Lang LaSalle. In 2003, he established an office in Poland for King Sturge. After the takeover of King Sturge by JLL, he became a regional director and head of asset and financial management for Central and Eastern Europe at JLL. He left JLL and established Sharman Church in 2012.