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In 2008, when the U.S. financial crisis was at its peak, the Minto Group was negotiating a large revolving credit facility to support its expansion in the Florida housing market.
The lead lender in the deal was Wachovia, at the time, the fourth-largest bank holding company in the U.S., based on total assets.
But in September 2008, the world was turning upside down fast.
“At the beginning of that week, people were talking about how Wachovia could be the saviour for Merrill Lynch,” said Michael Waters, incoming president and CEO of Minto. “By the end of that week, Wachovia had been taken over by Wells Fargo.”
Nonetheless, Minto did secure that credit facility and forged ahead. The company had been in Florida since 1978, having built more than 20,000 homes in more than 25 communities, but its activities had been concentrated on the east coast. Faced with a volatile downturn that saw nearly all private homebuilders in the state disappear, in 2009 Minto made a bold decision to take advantage of depressed market prices to expand their presence in Florida.
“You would like to say it was foresight, but we got a lot of land at very good prices,” said Waters.“It was courage on the part of Roger Greenberg to push that through and now we’re seeing real progress there.”
It’s a mix of the measured growth and calculated risk-taking that has typified the evolution of Minto Group since its inception in Ottawa almost 60 years ago. When Waters first joined Minto in 2007 as CFO, the company was well into its second generation of family leadership under Roger Greenberg. But as Waters soon discovered, Minto Group operates with a strong team approach. Even when Greenberg accepted a CEO of the Year award in 2004, he emphasized how much of the credit belonged with, not only the other members of the Greenberg family involved in the business, but also with trusted employees.
Taking up the torch
This Fall, Waters will become Minto’s first non-family chief executive. It is a transition years in the making and Greenberg will continue to lend his expertise as executive chairman of the board.
“I know Roger really well and he knows me and there is a high level of trust and transparency between us,” Waters said. “’Good news fast and bad news faster’ is my motto.”
So far it’s been a smooth transition and Minto has continued its expansion outside of Ontario in response to the economic realities of the past five years. In addition to Florida, the company is also investing in the Alberta market with a large multi-family residential portfolio acquisition late in 2012.
“You don’t want to have all your eggs in one basket and the commodities boom out West is creating opportunities different than those in Ontario,” Waters said.
“Supply of everything is tight because of the huge demand driven by the oil sands and some of the huge infrastructure projects,” such as airports, hospitals and ringroads, he added. “We are taking a very long view about where we want to be positioned.”
Minto’s greatest advantage in any market is its integrated business model, which includes property development, construction and property and asset management. Whereas most real estate players are pure play, Minto can lever these diverse strengths.
Seeing value others might overlook
Minto’s fully integrated capabilities allows it to see opportunities that others might overlook.
A recent example was the purchase of Cherryhill Village in London, Ont., which included a medical centre, commercial plaza and several apartment buildings. With such a mix of expertise across the organization, Waters said Minto can realize the full potential of these varied asset classes. This also allows the company to see potential where others do not, such as with multi-residential properties that have become tired and rundown, but may be at a location that is suitable for intensification. Minto can come in, revitalize the property to raise its market appeal, and then proceed with an expansion to grow its revenue base.
Waters admits there are risks to having such a diversified business. It can be easy to lose focus, be unable to achieve enough scale in any one area, or to stretch the management team too thin.
The solution is to always think about strategy and evaluate how any project or potential opportunity fits within that strategy.
“We always have to ask ourselves, are we being tempted into something that will lead us down a path that will pull us apart?” he said.
On the other hand, it makes for an exciting and dynamic work environment that provides employees with a range of opportunities, and allows for any project to benefit from a diverse range of experiences and perspectives.
“It’s quite attractive because someone can come in and get exposure to many different asset classes and business lines,” he said.
A sustainable edge
Differentiating itself in the marketplace continues to be a priority for the Minto team. Thanks to another Greenberg, Roger’s brother Alan, Minto committed itself to environmental sustainability and energy efficiency in the late 1990s. It has since set the standard for others to follow with examples such as 180 Kent Street at Minto Place (Ottawa). The 20-storey office tower was the first in Canada to earn a Leadership in Energy and Environmental Design (LEED) Platinum Core and Shell certification from the Canada Green Building Council.
While he believes it is just the right thing to do, Waters also emphasized the obvious financial benefits of sustainable and efficient design, a consideration that has become increasingly important to larger tenants, such as government departments, corporations and non-profits.
“It’s just good management,” he said. “There is a business case to be made just on its crude ROI (with utility cost savings). It does create competiveness in the marketplace and if you can show that your all-in occupancy costs are lower, that is an advantage.”
On the residential home-building side, more energy efficient designs are becoming table stakes in many new communities. The challenge is to continue to differentiate with lifestyle, design and sustainability. Minto must also continue to closely monitor housing trends to see where local employment and job growth is likely to support a healthy homebuilding market over the long-term.
Regardless of the challenges at hand or ahead, Waters remains confident in Minto’s continued growth potential for two reasons – he has a great team behind him and an outstanding mentor in his predecessor.
“My hope is that Roger will maintain a high degree of involvement for as long as he possibly can and I am sure he will, this is his calling and he is highly energized by it.”