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Mirvac’s Campbell Hanan didn’t plan for a career in property
The new chief executive comes to the job from a career in office property, and has had to manage the fallout as that sector takes its most serious turn since the global financial crisis.
Campbell Hanan didn’t plan on a career in property. The man who has been property developer Mirvac’s chief executive for a month simply saw his first job in office leasing as a decent vantage point from which, hopefully, he could spot other opportunities in the workforce.
As Hanan puts it, he thought leasing office space was a good way “to get exposure to so many different company types,” but along the way he decided the property game itself was the one he wanted to play.
That game has just taken its most serious turn since the global financial crisis.
The 53-year-old who started off working for real estate services group Colliers in a career that has taken him to investment bank UBS, Investa and Mirvac,has his work cut out. He is leading one of Australia’s largest listed property companies as the office sector – his speciality – tanks.
Property was initially a stepping stone to a career for Campbell Hanan. Michael Quelch
Mirvac is an $8.3 billion real estate investment trust that develops residential, commercial and mixed-use property assets that it both sells and retains for investment.
The company that in February reported a near-halving of first-half revenue to $855 million and a 62 per cent slump in net profit to $215 million is increasingly tapping third-party institutional investors such as pension, insurance and super funds to boost development with less drag on its own balance sheet.
Years of cheap money and soaring asset prices have given way to inflation that ever-tighter monetary policy is trying to rein in.
“It’s been a great expansionary environment. And ultimately, it’s probably not a surprise that we’re now starting to see inflation come back into the environment. It’s probably not a surprise, [but] probably the speed it’s come. Yeah, it’s been a surprise,” Hanan says in a meeting room on the 28th floor of Mirvac’s Sydney headquarters. The executive joined Mirvac in 2016.
“That is going to have a natural impact on any asset class, which is valued on the basis of its income yield. I think everything that’s happening right now makes sense. An overstimulated market that needs to slow down is exactly what’s happening.”
It’s true, but in the game of property, where fast-flowing capital is the antithesis of – but crucial to – development and ownership plans that take years to realise, Hanan is about to be tested in a way he hasn’t yet been.
Sydney’s Quay Quarter Tower. Louise Kennerley
“You’re constantly tested by your ability to invest well, which I always really enjoyed,” he says. “I always found it quite lonely, but I found it very enjoyable to be tested on that front.
“Investing for anyone is great when things are going well. But the simple reality is markets change. It’s your preparedness to deal with the change that determines how well you perform. And that doesn’t happen equally across an industry, so you’re constantly tested. Are you investing in the right assets in the right markets at the right time?”
Only time will tell.
Born in Wollongong, Campbell Hanan grew up in nearby Berry on the NSW south coast, with a cattle-farming surgeon and urologist father and a mother who had a women’s tennis wear label. He has an older sister. After attending the local primary school, Hanan boarded at Sydney’s Scots College.
“I always had assumed that I would move and have a career in the city,” he says.
An economics degree at the University of Sydney followed.
“It’s a great broad degree, but it doesn’t really prepare you for much,” he says. “So I spent a lot of time trying to think about things I really liked and didn’t like, and the things I was good at and not good at, and then try and craft a career around them.”
He got into leasing, with four years at Colliers followed by four more years at rival Savills – and spending six of those eight years seconded to AMP Capital, where he leased space to corporate tenants at buildings such as Sydney’s Angel Place and the old NRMA building at 388 George Street.
And then he went into equity sales at investment bank UBS, which he describes as a “pivotal moment” in his career.
“It was looking at real estate through a totally different lens. It was all about equity and capital markets rather than physical real estate. For me, it was pivotal because I just got to see a different side of real estate. And it gave me a sense of value from a different perspective – it gave me a sense of capital flows, how money rolls in and out of sectors.”
Career coup
Hanan achieved the coup of his career last year when Mirvac pipped rival Dexus to win the management rights for AMP Capital’s $7.7 billion unlisted office fund.
The fund – now rebranded MWOF – was the troubled AMP Capital’s crown jewel, home to iconic buildings such as Quay Quarter Tower, Brookfield Place and Angel Place (which he used to lease) in Sydney and Collins Place in Melbourne.
Wholesale funds such as MWOF only allow investors to take money out at set times known as redemption windows. Mirvac offered a redemption facility to unitholders as part of its management bid.
As part of its offer to take over management rights, the company agreed to coinvest $500 million to give the fund liquidity. That will be used to meet redemption requests, Hanan says.
“We would expect there will be redemption requests that flow into that,” he says. “It makes sense.”
He’s not clear on whether redemption requests will be so large that the fund will be forced to sell assets to realise cash – which it would do at weakened asset values.
“I think it’s probably too soon to answer that question,” Hanan says.
He takes comfort in the quality of Mirvac’s office assets. A process of selling older buildings in favour of newer, more attractive buildings should enable Mirvac to weather the coming storm better than others.
Mirvac’s two big office markets, Sydney and Melbourne, have recorded 14 per cent and 15 per cent vacancy rates respectively, but the Mirvac portfolio has a vacancy rate of just 3.5 per cent across the two capitals.
The vacancy rate of Mirvac’s office portfolio in Melbourne and Sydney is 3.5 per cent, below the market average. Chris Hopkins
“Good balance sheets don’t need to sell. Poorer balance sheets do and that will always test the market,” Hanan says.
Even so, the company is being cautious. In February, Mirvac said office market uncertainty prompted it to decide against pushing ahead with developing two new office buildings in Melbourne and one in Parramatta.
Hananwants to expand third-party capital – that is, the business of attracting superannuation funds, pension funds and insurance funds into assets Mirvac creates. That said, it is expected property group will continue to have about 80 per cent of its balance sheet invested in real estate.
Build to rent (BTR) is another opportunity.
With the exception of Rich List developer Harry Triguboff – who incidentally, also went to Scots College and claims to be the biggest owner of BTR apartments in the country – Mirvac has led the development of BTR by real estate investment trusts in Australia.
But he’s cautious, declining to say how quickly or how much he wants the company to expand its 800-unit BTR portfolio beyond the 2200 it will add over the next two years.
“I’m not going to put a flag on the hill in terms of scale,” he says.
The growing area of commercially owned and managed residential accommodation offers the company an opportunity and one question for Mirvac is how much more capital to allocate to them, he says.
Besides BTR, this includes land lease, the business of building affordable accommodation for downsizing baby boomers, an asset class Mirvac has yet to enter.
Hanan sounds more cautious about it than his predecessor.
Whereas former chief Susan Lloyd-Hurwitz last year said the company was planning two pilot projects, now Hanan says they are planning just one – at a so-far undisclosed site in Queensland.
As we meet, Mirvac’s 28th level is filling up with caterers and stalls for a Harmony Week lunch that the CEO says will be serving 10 different types of food for staff, including Lebanese, Sri Lankan, Vietnamese, Mexican and Indigenous. Rainbow-coloured steps emphasise the message of inclusion.
Indigenous Voice
It’s the Thursday that Prime Minister Anthony Albanese announces the final wording of the motion for the Constitutional amendment to establish an Indigenous Voice to parliament. Hanan declines to discuss whether Mirvac will publicly support the referendum.
“On a personal level. I am a supporter of the Voice and certainly we do speak internally about that. How we go about formalising our view, externally – that’s something that we will work on. But I’m a believer.”
Hanan, who has lived in Paddington in Sydney’s eastern suburbs since the early 2000s – and moved three times to stay on the same block – is the latest in a wave of new leaders taking over the ranks of Australia’s largest property companies.
Tarun Gupta went to Stockland in 2021, the same year as Tony Lombardo took over at Lendlease.
A long-speculated departure by GPT boss Bob Johnstone was confirmed earlier this year.
Hanan declines to detail what other offers he might have had.
“I’m probably not going to go into that because I’m in the job. What I can say is: ‘I love Mirvac.’
“From my perspective, the opportunity to lead [this company] was something that would be more important than any other opportunity.”
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