REFIRE: Congratulations on 15 years of JenAcon!
Arenth: And likewise to REFIRE – that puts us in the same age bracket.
REFIRE: And you’re likewise weathering the storms…?
Arenth: Yes, indeed. The first world economic crisis I remember was the 1973 oil crisis. No gasoline, no more cars driving around, a stroll with my parents on the Autobahn on a lazy Sunday afternoon. My first lockdown. In fact, from an economic, political and psychological viewpoint, the whole decade was a crisis.
But if you are in your twenties today, you’re experiencing crisis for the first time. The last decade was a stroll in the park - stock markets going from one high to the next, plenty of attractive jobs everywhere. For today´s younger managers, Corona is their first real setback. Yet whereas the 1987 stock market crash did not unduly affect me personally - I was a student then – the dotcom bust at the beginning of the new millennium hit my employer severely.
REFIRE: You were working then for…?
Arenth: Bertelsmann, from the beginning of 2000 until the end of 2003. I was Head of Strategy, commuting between Guetersloh and New York City - quite a combination.
REFIRE: Looking back, was 2004 a good year to start a real estate career?
JenAcon
Dr. Arenth - JenAcon
Dr. Arenth - JenAcon
Arenth: Absolutely. My first transaction was the sale of the 77 Karstadt department stores, followed by the sales of Deutsche Woolworth, both op.co. and prop.co., and a major transaction in parking, with 20,000 parking spaces.“
REFIRE: Each of them with €500 million transaction volume, right?
Arenth: That´s correct. But I benefited from dealing with CEOs who in those days still dared to delegate a transaction and, of course, from developments in the overall market. The time was right for structured deal-making. And I really could use what I learnt during my earlier five years with McKinsey, and from my research during my university years in Munich, Hamburg, and the U.S. Formal learning in structured and research-based work is unbeatable. But you also need more than a measure of luck, that´s for sure.
REFIRE: Luck? Your company is known for preparing all its transactions extremely scrupulously.
Arenth: True. There´s no doubt about the fact that hard work and careful preparation is both critical and indispensable in deal-making, as is a well-structured process, and, above all, having a well-trained team. Handling both quantitative and qualitative issues at the same time is a big part of it. But no one person is in full control of a major sales effort a hundred percent of the time. In the end, for the last mile, you need God´s help, or luck, or however you want to call it.
REFIRE: Such as…?
Arenth: As examples - In the autumn of 2008, we signed off on the sale of the ADAC headquarters in Munich. ADAC is Germany´s automotive club, with a market share among motorists of 90% and brand recognition of 99% among all Germans. Days later, Lehman hit Europe, and the transaction market plummeted and stayed down for a year or two. Later, in December of 2019, JenAcon signed four major transactions, just weeks before the arrival of Corona. That’s luck.
REFIRE: Well, fortune favours the brave. But it’s certainly good timing. How do you rate Corona´s impact on the real estate industry?
Arenth: You really have to look at it three-fold. Obviously, hotels, high street retail, shopping centres and gyms, 1b offices and micro-apartments are taking a heavy hit, and that’s unlikely to improve much through the first half of 2021. In residential, there’s been barely any negative effect, and perhaps even an upside, for understandable reasons. On the plus side, food-anchored retail and logistics have been big beneficiaries. These represent another milestone, another triumph for e-commerce in its enduring battle versus stationary retail.
REFIRE: How do you see things developing from here?
Arenth: Some hotels will bounce back pretty soon, I don’t doubt. But micro-apartments are facing a tougher time. It’s hard to live within a few square meters in any event, but it’s practically impossible for two people to work in a micro home office at the same time. Offices will be hybrid, but that´s how consultants have been working since the 1990s – that’s not new.
The medical and healthcare sector will most probably see an uplift. Logistics, once viewed as the ugly little sister of retail, has risen from a dubious niche segment for special investors to becoming a mainstream asset class, possibly even over-hyped. And – surprise! – those who laughed at us for focusing on supermarkets and discounters since 2006 have had to swallow their words…
REFIRE: How do you assess that sector at the moment?
Arenth: JenAcon has analysed, sold and bought more than a thousand supermarkets and discounters in Germany, plus lots of centres, since our foundation. In our view, this sector is at its peak right now. We find it hard to believe that valuations will ever be higher than in 2021.
REFIRE: Looking back, what have been the biggest changes over the last 15 years or so? ESG? Digitalization?
Arenth: Well, JenAcon has used mails, electronic data rooms, conference calls, and video conferences from day one, so neither digitalization nor Home Office are new to us. But since 2006, we’ve reduced the number of our domestic flights, both business and private, by about 90%, our physical printing by about 70%, and our driving and international flights by more than 50% or so over time.
REFIRE: Even handling your dozens of clients - retailers, Family Offices, funds - not only in the Big Seven cities, but right across the country…?
Arenth: The answer is: many conference calls with our core clients and (until Corona) endless train rides between Hamburg, the Ruhr Area, Berlin, Frankfurt, and - my personal favourite - Munich. One day they will name an ICE intercity train JenAcon, I am pretty sure.
REFIRE: After your first 15 years, what new goals are you setting for your company?
Arenth: Overall, we’ve now closed more than 75 transactions. So, 100 sounds nice. Plus, as we want to control our growth, we are currently hiring new analysts and associates. But we will remain a boutique, and stay highly focused.
REFIRE: You’re not driven by publicity, or size ambitions?
Arenth: Certainly not. To use a military metaphor, JenAcon has always been a submarine rather than a battleship. Almost invisible, yet efficient and effective. Small, but with reasonable firepower, whereas some three- or four-letter brokers prefer mass over class. Perhaps that sheer size is impressive at first glance, but we think it’s outdated in the end. What we’re hearing is that they fight over titles and PR and incentives half the time, and are bleeding highly qualified personnel. This isn’t our style. We believe in stable teams. We have been the same three senior people discussing everything since 2006. And not a single JenAcon colleague was let go as a result of Lehman, nor a single one during Corona.
REFIRE: To what extent has Corona made you think about your business model?
Arenth: Well, it has, to quite a large extent. But we will remain with our focus on food retail and our selected clients, and stay true to our principles, like taking money only from one party to the transaction. And of course, feeling that certain passion for transactions.
What I’ve missed most in 2020 is meeting women and men from all over the world. Given my background (M.A. in American studies and a Ph.D. in international politics), I personally love international deal-making. I never cease to learn a great deal from other cultures. But these days, unfortunately, patience is as important as passion.
REFIRE: Patience - four years as Assistant Professor, five years with McKinsey, four years with Bertelsmann, yet more than fifteen years with JenAcon. You must really enjoy it… Or is it just that nobody’s offering you another job…?
Arenth: Well, I’d say five years with the leading consulting company is like thirty-five years with a normal enterprise. Dog years, in some respects. But above all, for me leading JenAcon is a rewarding and exciting task. Almost every day a new challenge, a new frontier. It’s never boring. And we are proud to have been in this challenging market for such a long time. More than half of all German companies disappear after a few years. Oh, and no need to worry - I do actually receive three or four qualified offers per year.
REFIRE: And… not tempted? Or are you afraid to step away…?
Arenth: Maybe once I WAS tempted. It was a really interesting challenge, with an international player, a super brand name, HQ in Munich, decent salary, all the rest. Yes, I was tempted.
REFIRE: And…?
Arenth: Well, my then-assistant got the meeting points mixed up during the EXPO REAL. I ended up waiting at the wrong stand.
REFIRE: Perhaps for the better… Good luck for the next fifteen years with JenAcon.
