Presidents Club: A stain on the industry

The real estate sector’s condemnation of ‘the most un-PC event of the year’ was swift. Now all eyes are on how it will act.

It was always going to be a matter of when, not if. Since October 5, when a New York Times article detailing decades of allegations of sexual harassment against American movie mogul Harvey Weinstein sparked a flurry of similar accusations across Hollywood, media scrutiny of gender discrimination, misogyny and sexual aggressions has spread to other sectors, including business. Then came the property sector’s turn.

Again, it was an exposé – this time published on January 23 by the Financial Times, that was responsible for directing the spotlight onto the needle-movers of real estate. This time, undercover FT reporters focused on transgressions over a six-hour charity event in London earlier in the month. But this was an event that has run for 33 years – and just for men. Besides raising millions of pounds for charities during that time, it had become a diary highlight for some of the UK’s wealthiest males.

The guest list at the Presidents Club Charitable Trust dinner and auction held at London’s Dorchester Hotel read like a who’s who of the city’s property market – alongside notable figures from the worlds of British politics and sports entertainment. According to The Guardian, among the 360 invitees were UK property moguls Bruce Ritchie, Richard Caring, Gary Hersham, Ross Hilton Kemper, David Pears, Mark Steinberg and Robert Tchenguiz. Real estate executives dominated the headcount, with approximately 150 either coming from property-related companies or among their guests.

Jo Allen: Frogmore to be more diligent screening events

Institutional real estate was represented, too. Private equity real estate firm Frogmore was among 10 property companies to sponsor one of the dinner’s 21 tables, and the firm confirmed to pfm‘s sister title PERE that its chairman Paul White attended. The Guardian also listed Roger Orf, head of private equity firm Apollo Global Management’s European real estate business, as among those invited.

No specific allegations relating to the evening have been made against any of these individuals. Nevertheless, their involvement at an event at which 130 specially hired hostesses were required to wear “skimpy black outfits, matching underwear and high heels,” according to the FT report, has come under intense magnification amid assertions that a gathering of this nature has thrust the sector back to a time when the objectification of women was commonplace and considered normal, even institutional.

“Welcome to the most un-PC event of the year,” roared Jonny Gould, a sports television presenter who participated in the auction, the newspaper reported. The report went on to allege “hostesses were subjected to groping, lewd comments and repeated requests to join diners in bedrooms elsewhere in the Dorchester.” It also described an auction with lots including an evening at Soho’s Windmill Club – a well-known strip club and lap-dancing bar – for up to 100 guests and 50 exotic dancers, and a course of plastic surgery with the invitation to “add spice to your wife,” the FT report said. “A boob job for the missus – 10 grand to get me started,” Gould is reported to have bellowed when introducing that lot.

Reputational implications

The day after the FT’s damning report, the Presidents Club announced it was disbanding. Despite that swift action, however, the stain on the property sector remains. Firms directly involved are dealing with the reputational implications, and in a notable early instance involving one of private real estate’s biggest institutional investors, there have been financial repercussions, too; Ivanhoé Cambridge, the property unit of Canadian pension manager, La Caisse de dépôt et placement du Québec, stated it had pulled future funding for the investments of Residential Land, the London-based private property company of Ritchie, who was one of the Presidents Club trustees.

The two organizations have partnered on a number of London property deals in the past, and in February 2015, formed a £650 million ($925 million; €640 million) joint venture. “We are deeply troubled by the events and behaviors as reported by the media; they are clearly unacceptable and contrary to our core values as a global institutional investor,” the investor said. “Under the circumstances, we have stopped future investments with the company.”

What they said…

“I am hopeful that the spotlight on the Presidents Club, as ugly as the allegations were, will raise awareness and bring changes in behavior and adjustments to outdated attitudes that have no place in today’s world”
Jo Allen, Frogmore

“It’s easy to look at the Presidents Club and agree that it’s awful and should not exist”
Peter Cosmetatos , CREFC Europe, on the Presidents Club

“Was it a little fruity with 300 guests and 150 hostesses? Yeah. But it wasn’t Sodom and Gomorrah”
Unnamed property CEO of a London-based private equity real estate firm and one-time attendee at the Presidents Club

Predictably, condemnation of the alleged behavior by the event’s guests has been widespread. Associations have been among the first to issue statements. Real Estate Balance, a UK-based organization focused on gender equality in the property market, said: “We consider the sort of behavior reported in the press in connection with the Presidents Club dinner to be completely out of touch with the values of modern society. The property sector is, and can be, better than this … a strong lead about what is, and isn’t, acceptable behavior in a professional context is overdue.”

Andrea Carpenter, founder of Women Talk Real Estate, a collective focused on improving women’s visibility in the sector, said: “It’s disappointing to hear there are still elements of the industry that are behaving in a way that can’t be tolerated. We need to make sure we continue to call and stamp that out.”

When asked whether a boycott of male-only events was called for, she said: “The rationale for having a male-only event is difficult to come to these days. There’s no reason to have an event of that scale and nature.”

Peter Cosmetatos, chief executive of the Commercial Real Estate Finance Council Europe, an association for real estate lenders and debt investors, told pfm’s sister publication Real Estate Capital the association’s directors and other senior property lending market figures, male and female, are privately reacting to the Presidents Club exposé with a consistent mix of embarrassment and disappointment. He said it was not appropriate for lenders to “blacklist particular firms,” but agreed: “It’s easy to look at the Presidents Club and agree that it’s awful and should not exist, especially in an industry that now has so many female leaders.”

Andrea Carpenter: questions rationale for men-only events

One such female leader, Jo Allen, who was promoted in 2016 to chief executive of table-sponsoring Frogmore, told PERE her colleagues were shocked at the FT report: “They assure me they’ve never seen the kind of behavior that was described.”

Allen confirmed Frogmore has been attending the event for several years, but “they stay to participate in the auction and then they tend to leave after. As you know, we’re a bit older than the average host. Most want to get home and start the next day.” Frogmore decided to end its association with the event before it announced it was disbanding, she added. When asked why Frogmore sponsored a decidedly men-only event in the first place, Allen replied: “I’ve been to many events where I’m the only woman. There is, at the senior level, a bit of a numbers game. I’ve worked in this industry for 30 years and it has been very male dominated.

“This was an event for hospitals and children’s charities that has always raised a good deal of money for good causes. Nobody thought twice about it, I suppose, is the honest answer.”

After speaking to PERE, Allen took a stronger stance on the matter, issuing an additional statement in which she condemned the alleged behavior at the event, reiterated her support for associations like Real Estate Balance and highlighted Frogmore’s charity activities. She said that given the allegations relating to the Presidents Club event, “Frogmore would be more diligent in screening the events we are invited to attend. We will not support or condone any events that do not meet our high standards of integrity.”

Frogmore is not alone in reconsidering its corporate entertainment approach. PERE spoke with another London-based private equity real estate firm, which declined to be identified but admitted it had no policy in place. Its chief executive said: “Times have got to change. This is not appropriate anymore. We’ve no policy, but we’ll review that and likely implement it.”

Cannes don’t

Predictably, questions were asked of the property market’s biggest event, MIPIM, which attracts more than 20,000 delegates annually. Ahead of this year’s event that run between March 13 and 16, MIPIM director Ronan Vaspart vowed to “increase communications to all MIPIM delegates on the code of conduct” and added that “if we are informed of inappropriate behavior we will take action. MIPIM will safeguard the dignity and respect of all its participants.”

Despite that, few regular attendees of the event expected seedy activities around its fringes to be interrupted. In one commentary following MIPIM in 2016, Estates Gazette’s head of news and finance, David Hatcher, wrote: “In the early hours of last Friday morning, the final night of MIPIM, dozens of prostitutes lined La Croisette. For them, business promised to be brisk … it wasn’t subtle and it wasn’t discreet – in fact, it could hardly have been more obvious. MIPIM is a busy time for the sex trade in Cannes.”

Cannes, but won’t: some private real estate executives are considering skipping this year’s MIPIM event

Subsequently, scrutiny of MIPIM’s famed party scene has started. Arguably, the most popular party for institutional private real estate investors and managers has been that of Tristan Capital Partners, one of Europe’s biggest private equity real estate firms.

From an intimate event of about 25 selected attendees held at one of Cannes’ bars, the party has ballooned over the years and in 2017 counted around 750 guests. Beyond its proliferating popularity, the event gained a reputation for being secretive: it had a no cameras policy and its theme, different every year, was only revealed upon arrival.

Tristan did not hold the event this year. But, contrary to speculation, the decision not to do so was made independently of the alleged events at the Presidents Club and long before the FT’s exposé, with its founder Ric Lewis having told PERE at MIPIM 2017 that the firm was planning to move the party to every two years. “It was always our intent to do it every other year,” Lewis said, pointing to escalating costs, capacity constraints and too many attendees who were unaware of Tristan’s activities and did not know its senior executives. We were losing pricing power; there were too many non-strategic people attending and it was taking a huge amount of time away from our core business.”

In any event, Lewis was keen to stress the differences between Tristan’s party and the Presidents Club, starting with the fact the firm’s party invites property professionals of both genders. “First of all, ours is co-ed,” Lewis said. “It’s basically a cocktail and dance party. We invite everyone, including the press [PERE journalists have attended on multiple occasions]. The reason there was a no-phones and pictures policy is because, for the first couple of years, people got giddy about pictures of senior people in the industry dancing.”

Silver linings

But while the property sector has suffered reputational damage, there is optimism the events at the Dorchester Hotel will lead beyond policy reformation – or formation, in some instances – to genuine introspection and shifts in attitude as well as greater support for groups which promote diversity in the sector. CREFC Europe’s chairman-elect Barry Fowler said: “Our industry needs to continue to attract the best talent, which in turn means that we must step up our efforts to embrace diversity and create an inclusive environment that inspires the next generation.”

Frogmore’s Allen concurred. She said: “I’m really pleased that we’ve now got all this stuff out in the open. There may have been some extreme reporting, but if it makes everybody think twice then that’s a good thing.

“I am hopeful that the spotlight on the Presidents Club, as ugly as the allegations were, will raise awareness and bring changes in behavior and adjustments to outdated attitudes that have no place in today’s world.”

Carpenter added: “If the industry needs to have that conversation with itself, then let’s have it now and let’s move on positively.”

Dorchester image credit: Uggboy