Alongside the development work, early in his property career, Botan reviewed potential and existing investments for a portfolio company created for Danish investors. The task was to check purchase prices, rental income, yields and cash flow, report to the manager and the investors, and look for practical ways to improve the properties.
The interesting part was never the arithmetic. Anyone can run a yield. The value sat in the questions underneath it: is this income durable or does it depend on one tenant? Is the price reflecting a problem that can be fixed operationally, or one that is structural? Is this area overlooked because it deserves to be, or because nobody has looked properly?
The same period included following demolition, construction, funding, marketing and sales on live schemes, and negotiating with a hotel operator when apartment sales at one scheme stalled. The building was later repossessed in the financial crisis.
What changed my thinking
Watching a building get repossessed in the crisis changed how I read a set of numbers permanently. Everything about that scheme had stacked up on paper, right up until the market moved. I learned to ask a different question of an acquisition: not whether it works, but what has to stay true for it to keep working — and how much of that is within anybody’s control. Very often the answer is less than the spreadsheet implies.
Botan Hourami