Jaime McKenna, Managing Director, Group Head of Real Estate at Fengate | Why sensors & data are worthy of technology investment | 27:31

Transcript

DA: Welcome to TEN, the Tenant Experience Network. I’m your host, David Abrams. In this episode, we are connecting with Jaime McKenna, Managing Director, Head of Real Estate at Fengate Asset Management, where she leads, and is responsible for Fengate’s real estate business, and is a member of the executive team. In this episode, we will learn about Jaime’s journey to her current position at Fengate, where she brings her extensive experience in finance and investment. And we’ll tap into her thinking around how the office will continue to have a major purpose in our future. Learn about the early days of her journey from humble beginnings, to taking a company through an IPO, and gain insight into why she thinks sensors and data management are key areas worthy of future investment. We’re excited to be sharing this podcast with you, so be sure to follow TEN so you never miss an episode of the Tenant Experience Network. And now I’d like to welcome Jamie to the show. Really glad you could be with us today. How are you?

JM: Thank you so much, thanks David.

DA: Okay, so let’s start with your journey to your current role as Managing Director, Head of Real Estate at Fengate. How did you get started? Walk me through it, and maybe share a little bit about the current role itself.

JM: Yeah, for sure. So I will skip the first six months of my career where I sold life insurance and maybe start to the most meaningful part.

DA: Okay.

JM: My background’s an accountant. My first role was at Bell Canada, and I really see that as the launching off for my career was because I started there in a corporate accounting policy research job. So I literally researched new accounting policies that were coming out at the time. It was around the time Enron, WorldCom, all those those frauds were coming out, and so it was really important for corporations to start to understand how accounting was changing, and then translate that into actionable items for the operations. So it actually was a great experience. Had great mentors in the role. Was very hungry coming into the job, mostly because I was very poor and I was afraid that I wouldn’t have a paycheck one day. So I worked my tail off. And over seven years I was there, I had an opportunity to move up through the organization, and I got to get some experience on the M&A side. So Bell went through quite a bit of M&A, we acquired seven companies while I was there. And I played the role of on the diligence team around the financial statements and then how we integrated into the systems, and just a really dynamic experience. A lot of different stakeholders, got first exposure to smaller companies because Bell Canada’s 40,000 people and we were buying companies that were anywhere from 20 to 200 people. But the reason I left Bell was I was there during the privatization when KKR came in, we went through the hundred day plan, was working on the restructuring team, ended up spending a lot of time letting people go all across the country, great experience, but it just wasn’t for me long-term. So I actually left, and that’s when I joined Minto. And everybody says, “Well, what made you go to real estate?” And it wasn’t so much I wanted to go to real estate as I wanted to go to a smaller company. One that was big enough to have a meaningful presence in Canada, but small enough that I felt like I could make an impact. So I left Bell and went to Minto. And you know, when you’re in accounting, you have that flexibility, you can change industries, because accounting’s accounting at the end of the day, and then you just sort of have to understand the nuances of the industry. And that’s what started my real estate journey which was unbelievable. You know, the time at Minto, I learned a lot. Went from, you know, running an accounting team to getting involved in a corporate restructuring. Then I moved into the investments role, which was really cool because I remember I joined the investments team, took over the, I had finance and investments at the time, and the VP of acquisitions there had been at the company I want to say 25 years, he’ll kill me if I got that wrong, and I remember saying, “I have no idea how to walk on a roof, look at HVAC, understand a boiler.” And I said, “Look, I will teach you how to financial model and assess a deal any way you want, and governance, all that kind of thing, if you can teach me how to figure out if I should buy a building.” And we developed a really great friendship through it. And he was really kind of my partner in crime, as we went through the IPO. And again, IPO, what an experience. Everybody wants to have an experience with an IPO. Once you’ve done it once, you probably don’t want to do it again. It’s a lot of work. I remember, you know, as much as like I got involved in the finance side, which was great, ’cause I got to experience sort of the regulatory aspects of it. Even coming from a public company helped, we knew what the end result was going to be. But I just remember like the hours we were working, and I was taking red eye flights across the country because we were acquiring, but I couldn’t afford to be on a plane during the day ’cause I needed my daytime. So it was literally you were 24/7, an unbelievable result. And you know, I really hold that experience, the team building, and then the financial results near and dear to my heart. And then, about, I guess, 18 months later, I got a call and, you know, we all get calls. And for some reason I picked up this one and went, met Lou Serafini. And I was like, “This is really cool what they’re doing at Fengate.” And you know, I’d spent so much time at Minto, and I really, really, really struggled with the decision on a personal basis, but I could see Fengate was doing a lot of what Minto did, a lot more asset classes, a number of funds, you know, really out there as an entrepreneurial company, but also institutional at the same time, so a lot of parallels, and made the leap. And that’s the only way I can describe it is I made a leap, I wanted maybe some new experience, some different asset class experience, and it’s been quite a ride over the last 18 months. I was excited today. I saw the RENX article that we were two of the top 10 GTA largest transactions this year. So, which I didn’t expect, ’cause you don’t really think about it in that context, but that was sort of a fun thing to see. But no, so Fengate’s been great. You know, we’re a company of eight funds. Our largest investor is laying a pension plan, and we’re continuing to grow that base of investors as well.

DA: Well, first of all, we have something in common. So we both started in public accounting. I did as well, you may not know that.

JM: Oh!

DA: But actually started in public accounting before leaving to join a small marketing communications agency that I was going to help position for sale with my financial background and ended up staying there for 25 years. So, and ultimately taking it over. So I agree with you that that financial background really enables you to do almost anything and just give you an amazing background to take on those kinds of challenges. So interesting. You’ve had a long tenure, so you know, at Bell, at Minto, and now at Fengate, I suspect Fengate’s thinking they’ve got you for a long time, so lucky them.

JM: Yeah, I am very loyal with my employers, for sure, for sure.

DA: Clearly, clearly. I think that’s a great example also for young people today. So why do you think you were so uniquely positioned or suited for the opportunity? You talked a little bit about that, and you know, ultimately what helped you become successful? And again, you talked about maybe some mentors along the way, but maybe just elaborate on that a little bit.

JM: Yeah, I mean, people often use the term grit, and looking back, I think grit was a big part of it, unconsciously. I came out of school, I had not a lot, I don’t think I had two pennies to rub together. And I think when you’re driven by, you know, survival instincts, you think you’re working the same pace as everybody else, but you’re probably working harder ’cause there’s a little bit of fear. There’s a lot of learning. There’s a lot of mistakes along the way. And so, you know, like I said, I thought I was keeping pace with my peers, but maybe I was working that much harder and I just wanted to survive. And survival became a bit of a story of success. It drives humility in you. And I think humility is really important because when you have these mentors, and I’ve had mentors throughout my career, you listen, and you take the feedback, and you self-reflect, and you’re probably harder on yourself because you think oh my God, I’m going to fail and I can’t afford to fail. So I think a lot of those things just formulated who I was early in my career and has stuck with me. And, you know, I talk about the VP of acquisitions at Minto. I mean, for me, I wanted to show him as much humility as possible because I wanted him to know I don’t know this area, so teach me and I will listen, I will be a sponge. And I just think that humility translates into approachability which translates into good communication skills. And that’s probably been a big help for me.

DA: Right, you talked about wanting to know about the boiler room and all the mechanics. And, you know, again, I spent 25 years serving the commercial real estate industry, and from a marketing communications perspective, Brookfield Place being my first client. And I’m kind of like a little bit of a real estate geek in that I had the opportunity to go into the bowels of the building, you know, top and bottom and see what really goes on in terms of making these buildings run. And I think the average person probably does not have an appreciation for the complexity of what it takes to make sure the lights go on each day. And that that building runs as efficiently as it does. So I would imagine, you know, from your perspective, being able to get into the weeds and learn the industry from the inside out would have been pretty fascinating.

JM: Oh, absolutely. I agree with you, you know, when we were doing the IPO, we had to do a lot of tours. So I toured the Minto portfolio a bunch of times back to back, and watching what the property managers were experiencing, and then having to coordinate with us turkeys showing up in our suits, and wanting to see, you know, the roof and the HVAC, and, you know, they’ve got tenants that are in the elevator asking them for things. And yeah, if you don’t appreciate that, you can’t really appreciate how you’re going to make incremental positive changes in your portfolio.

DA: Right, well, I like to say that buildings are really like small cities. That really is the level of complexity. They have their own, you know, systems, and security, and maintenance, and politics, and government, and they really are quite complex. So I share that fascination with you. So let’s agree that living through a pandemic is absolutely horrible. There are those that have fared quite well, but I think, you know, in general, even if we have, I think this has been an awful, awful time in our lives. That being said, I don’t think it’s an excuse, and I don’t think it should be an excuse, and I’m tired of really hearing in some cases where it still is an excuse for other businesses that perhaps aren’t performing at the level they should be. And they use the pandemic as the reason why. I believe and our own philosophy, and my team’s philosophy is this is the time where we can be better, ultimately do better, and build something better. And we’re digging deep. You talked about grit, I think. You know, you got to have grit on steroids today to sort of work through all the challenges we’re faced with. So I’m just curious. If you had an extra $100,000, or actually, I should say in your case, maybe a million dollars, given the scope of transactions that you’re used to, what would you do with that right now? How would you spend it, and why?

JM: So $100,000 I’d finish my basement. But at a million we could probably do something a little bit more meaningful. You know, I’ve been thinking about this a little bit. So I guess there’s sort of two ways, is how would I invest it versus what would I actually action? From an investment standpoint, I think, you know, our residential REITs and our residential private equity firms, investments, are undervalued right now, because to your point is that when the pandemic happened, it hit very specific industries very deep, but it wasn’t a widespread impact. And I think people forget that. So hospitality was deep, but at the end of the day, we still have a housing shortage, and when the immigration taps come on again, people are going to need apartments, they’re going to need housing. So I think those fundamentals stick. In terms of my portfolio what I’d like to do is start to come forward in the field of technology. And, you know, one area that fascinates me is understanding how you can use sensors at a property level, collect that data, and do things in a meaningful way for either, whether it’s energy efficiency, traffic flow comprehension, or even just tenant experience. So, you know, if I had a million dollars, I would plow a bunch of buildings full of sensors, have a proper data management strategy around it, and spend six months understanding what it was telling me, and then roll that out across the balance of my portfolio.

DA: Right, well, I think first of all, a million dollars would get you a lot today, actually. That whole world is becoming far more accessible and far more economical, so interesting conversation. And we can definitely circle back and talk about that more. So there’s a lot that we don’t know, you know, I’m not going to ask you for some prediction as to what’s to come or what might be. And, you know, I think anyone that is making some of these grand statements that we’ve heard in the marketplace I think are really, you know, jumping the gun. I think it’s too early to say one way or another what the future of buildings are, or the future of workplace, but I do believe there will be a return to the workplace. I think you’d probably concur. I think we can agree that it’s going to be much slower than we first thought, you know, in April, May, we probably thought it was July, and in July we thought it was September, October. And I think now, you know, come towards the end of last year, I think we’ve realized that, you know, we’re hoping it’s going to be sometime in 2021. It is going to take time. There’ll be some new themes that will emerge. Certainly, flexibility is going to be a significant one. And people will continue to work from everywhere. This is not going to be a one-time hit, including the home. And you talked about residential, and apartments, and condos, I think there’s a huge opportunity there. So just wondered what your thoughts are in general about the future, about flexibility, and about working from everywhere.

JM: I think real estate people are all extroverts and want to go back to the office desperately has been my experience.

DA: Right.

JM: And I say that with my team because we’ve had sort of a voluntary return to office before the restrictions were tight. And if you walked into the office, it was all the real estate guys. The infrastructure and PE guys less so, but all real estate guys. So there’s something about extroverts that want to be in the office. I think to your point, there’s a bigger picture here, is you can’t listen to office landlords about the future of office because of course we want everybody to return to the office. So you got to look at there’s social elements, there’s financial elements. I think as a woman, you know, I have the advantage of working from home and being able to work very independently and focused on my career. But a lot of women don’t have that opportunity. They come home, and now they’re expected to clean and maybe childcare and so on, and it impacts their career negatively. So that sort of begs the question to me, is working from home sustainable? And maybe the issue is the option of how offices are going to exist. And what does that mean for suburban office, satellite offices, and so on? I do think working from home is limited, but I do think what we’ve learned is that we spent a lot of time, wasteful time, commuting when we didn’t necessarily need to commute, being in the office, you know, hours 8:00 a.m. till 6:00 p.m., maybe symbolically to please a boss, like those bad habits will go away, and I think naturally we’ll be more efficient. But I do think about the Yahoo story and, you know, more than a decade ago, everybody in Yahoo went and worked from home, and they all got pulled back in the office five or six years later because people realized they weren’t working as efficiently at home. So it’s a whole bunch of data points that we need to balance. But again, I just don’t want people to lose sight of that social component. There’s people who have personal safety issues, domestic abuse, and just inability to actually be able to balance their career ’cause of unrealistic expectations when they’re in the home, all signs that office is going to serve a major purpose in our future.

DA: Wow, I agree, an interesting perspective to bring to the conversation. I know from my team, you know, I think that depending upon the stage of your company, the type of work that you do within your company, there are all kinds of reasons why, you know, that kind of flexibility I think is going to be amazing. You know, I think I would not want to work from home on an ongoing basis forever and a day. My team is definitely burned out. While there are aspects of it that we enjoy, we cannot wait to be back together, and to collaborate, and to have those moments of creativity and spontaneity that, you know, you cannot replicate, no matter how great Zoom is. And, you know, we’re obviously connecting today through Zoom, and where would we be without it? What we can’t replace is again, that human touch, that human opportunity to connect. And so, you know, I think workplace is going to come back, I think they will be stronger than ever. I think it’s absolutely going to be different. And I think we’re going to be continuing to have this conversation for many months as to how it will all unfold. So I look forward to connecting again and continuing that part of our conversation. With that, we’ll take a brief moment, we’ll take a quick break, and we’ll be right back.

Commercial Break

DA: We are back with Jaime McKenna from Fengate. So the CR industry is moving faster towards recognizing that their core business is not just about building ownership, but rather it’s really about creating the best customer experience. And I’ve said this to others, and some have challenged me, they’ve said, “Really? Do you really think it’s moving faster?” I do believe it is, you know, not the same speed for all, but I do think those that are in the know recognize that it really is about people, it is about the experience, the physicality of the real estate is just one component and certainly not the only component. So I’m just wondering what your thinking is around how we will define and deliver great tenant experience in 2021.

JM: Well, I think the pandemic accelerated the whole importance of tenant experience. It’s always been important, but it’s done two things. One is, it put our tenants in crisis. And those firms that took the time to call every tenant and understand, you know, what is their current situation, what’s their ability to pay their rents, what is their ability to stay in this space? We’re ahead of the curve, and I know we personally called every single one, and we maintained collections at over 90% in a suburban office and industrial portfolio, which was sort of unheard of. And I really credit that to, we didn’t use any of the government programs. We just understood what our tenants wanted. And so that’s one element that the pandemic created, but it’s also the pandemic’s changed the supply and demand of our industry than what it was 12 months ago, 18 months ago. So all of a sudden supply is outpacing demand, and that hasn’t been the case in residential for a long time. And the reality is we just need to listen to our tenants. It seems so simple, but we can’t guess. Real estate’s not a financial instrument. It has elements, there’s debt, and there’s equity, and, you know, we make trades and all those things, but the success of the underlying asset are the people that pay the bills. And if you’re not delivering to them, especially in a time where supply is outpacing demand, you’re going to fail for sure. So that’s my view, and I think that could be enabled. whether it’s through technology, but again, one-on-one conversations, and do they want a community experience, do they want an office, like an office within their apartment or something like that? So I think it’s more critical than ever right now.

DA: Listen, I agree with you. I think it’s not technology for the sake of technology. Technology is really meant to just, you know, amplify the experience you might already be creating. And to your point, if you were able to connect, and contact, and communicate, and support your tenants just through that personal reach out, I mean that’s the most important. And technology, I think, can just amplify that and maybe help make it more efficient in some ways. But if you’re not already thinking about that and behaving like that, the technology’s not going to solve that for you.

JM: Exactly.

DA: Right, can you share any details about anything that you’re working on or a challenge that you’re facing in light of the world circumstances that you think our listeners might find interesting?

JM: Yeah, good question. So I’ll start with challenges. I mean, our biggest challenge right now is taking like what’s our position on the future of the financial elements of real estate? So when are rents going to recover, both on a commercial and residential standpoint? We know that we’re at an all time low. I think the stat on vacancy that came out the other day in the GTA is the highest it’s been in 50 years. So but we know that’s not where it’s going to be. So now we’re just sort of trying to develop an opinion on how quickly is that going to recover, and how does that factor into our future investment decisions? Also trying to figure out what’s going to happen to things like property taxes, DCs, et cetera, with so much money going into the recovery, how is that going to hit us on the back end? And, you know, we’ve had decades where we’ve been able to be pretty accurate in those assumptions, and everything’s been thrown up right now. So that’s challenges. I would say on more of a thinking forward perspective is what does health and safety look like at the building level going forward? We know that once everybody’s vaccinated, probably we won’t have masks and gloves, and one way stickers on our office floors, but what do things like air filtration look like, cleaning products, what are the expectations from our tenants going to be? So we’re spending a lot of time studying what makes sense to invest in versus might be a one-shot deal because people are being opportunistic during the pandemic.

DA: Right, interesting. And I’m sure lots still to unfold in that area, as we sort of get further along in the process, and hopefully closer to understanding what true building re-entry and repopulation looks like. So our closing speed round, an opportunity to get to know you more on a personal level. If you could have one superpower, what would it be, and why?

JM: My superpower would be that I could move things with my mind so that I didn’t have to get up from my couch when I wanted a snack.

DA: Okay, what city or country would you travel to first when you can, and why?

JM: I would travel Italy because I’ve always wanted to go to Italy. Also, you know, I work for an Italian family, and I hear all kinds of great stories. And I’m also studying my wine designations, so Italy would be a logical first place to travel to after the pandemic’s done.

DA: Okay, well, we have that in common too. So Italy is my number one favorite destination.

JM: Good.

DA: I’ve been many, many times, the entire country from north to south. So I’m happy to help you out when you’re thinking of planning your first itinerary. And also a love of wine. I actually have my WSET Level 2.

JM: Oh good!

DA: Which I actually studied and took in Florence.

JM: Oh cool, very nice.

DA: So I can tell you more about that at a later date. So when you are not working, what are you doing?

JM: Well, I have a 10-year-old son who is, you know, the highlight of my life. So he is an avid war historian for a 10-year-old, and I sit and listen to his stories, which take a long time.

DA: Right.

JM: I love to run, I love to cook, and I’m just finishing my WSET 1 and going on to 2 in two weeks, so same as you, studying wine ’cause why not?

DA: Exactly, all right. Well, I’m happy to talk more about that offline. Okay, number one thing you miss about the workplace?

JM: Well, the people, obviously. I mean, I’m what you call an ambivert, so I’m half extrovert, half introvert, but so my extrovert is desperately suffering. So I figure I’m going to go into extrovert mode for about three years now.

DA: To make up for it.

JM: But, you know, the other thing I miss is like the discipline, the discipline of getting up and maybe you work out and get dressed, and you pour your coffee, and you could jump in your car. Like, there’s an element of that discipline which I miss. And I think the lack of delineation between the workplace and home is not healthy as a permanent solution.

DA: I agree, this past weekend, by way of example, it was a relatively quiet weekend. And Sunday afternoon, I’m literally like, “I can’t work anymore.” Like I’m working every hour, you know, can’t really go out, can’t visit with friends. I already exercised earlier in the morning. I’m like, “What am I going to do?” And it was, I had a moment of pain.

JM: Yeah, for sure.

DA: I settled in with a good novel and worked my way through it. But I agree, this is tough. Okay, most important question, probably what everybody talks about. Your favorite recent TV streaming movie or series.

JM: Hockey.

DA: Hockey?

JM: I’m so happy hockey’s back. I’m a big Leafs fan, and like, I didn’t realize how much I missed it until, you know, started watching again, I guess it was last week they kicked off. And so hockey, for sure. I guess before hockey, I’m not a big TV watcher, but I would say I did binge the last season of “The Crown”.

DA: Okay, all right.

JM: It was pretty good.

DA: I’ve been told to watch that I have not started that, but we will. We just finished in two nights, “Ted Lasso”, which is a series on Apple TV Plus. And if you like soccer, it’s a very enjoyable series, and a great distraction from the world we’re currently living in. That’s great. So, Jaime, thank you so much for joining me today. Really enjoyed the conversation. And through this conversation, found that we actually have a lot in common, which is great. So wishing you continued success at Fengate. Looking forward to touching base down the road, and, you know, seeing how some of the things we think today, how they pan out, and how our industry is unfolding. And obviously in particular of interest to us at HILO, you know, how the world of tenant experiences is taking root within commercial real estate. So look forward to touching base again, thank you.

JM: Thank you so much, David, it was great getting the opportunity to meet you and find those commonalities.

DA: Great, thanks so much, take care, bye now. I want to thank Jaime McKenna for joining me on today’s episode of TEN, and for sharing her journey, from early beginnings as a financial accounting expert, to now leading the team that is driving Fengate’s real estate business. Great learning for all our listeners, and an opportunity to gain insight into what it takes to become an innovation leader. Please be sure to follow TEN for future discussions with leading professionals and industry experts who all have something to say about the impact of technology on tenant experience in the built world. If you, or someone you know, would like to be a guest on a future episode, please reach out to me directly at david@hiloapp.com. And until our next episode, I wish you all continued success in building community where you work and live. Thank you.

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