UGL Equis: Economic Rent - American Executive - RedCoat Publishing - American Executive

UGL Equis: Economic Rent

Real Estate

Written by John Zorabedian

Monday, 31 March 2008

UGL Equis: Economic Rent - American Executive - RedCoat Publishing

David Montross tells us how this real estate services company fulfills client needs without the conflicts of a typical brokerage firm.

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After a company’s employees, facilities management is the second largest business expense, and companies are increasingly outsourcing the management of their real estate portfolios to firms that can help them reel in those costs. For large companies with a global footprint and dozens of locations, efficiency in managing properties can lead to massive savings.

David Montross, CEO

As a business, real estate services are largely immune from the cycles that buffet other sectors of the economy. “We don’t relish economic downturns,” said David Montross, CEO of real estate services firm UGL Equis Corporation. “But when the marketplace has pain and companies want to cut costs and get more efficient, that’s exactly what we’re designed to help them with.”

Even in the suffering US real estate market, UGL Equis is experiencing good times. “In times of prosperity, we benefit because all that growth generates new work for us,” Montross said. “But times of difficulty also create huge opportunities for us because we can address the issues and problems of clients to make them more efficient.”

UGL Equis is not a real estate investment trust, nor a traditional commercial real estate brokerage, investing in properties for clients. Rather, the company gears its business model to providing services exclusively for occupiers of space, including transaction work, strategic planning, facility management, capital management, and workplace integration.

The Australian engineering and facilities management giant United Group Limited, which also provides commercial real estate services in booming Asian markets, purchased the Chicago-based Equis Corporation in July 2006 for a reported $120 million. With a truly global reach, UGL Equis now provides services in 44 countries. Additionally, United Group Limited purchased facilities management giant, Boston-based Unicco, for $408 million last year. “We needed ownership that was focused on establishing a global platform,” Montross said.

One of UGL Equis’ largest clients is Belgium’s AGFA Gavaert Group, the global imaging and IT company with a portfolio of 15 million square feet of property in more than 40 countries. UGL Equis had provided transaction management services for AGFA’s North American offices for more than a decade. After UGL Equis went global, AGFA retained the company to provide portfolio management, transaction advisory, and data and project management services for its entire real estate portfolio.

Conflict free
Montross attributes the company’s global growth to its unique business model. Unlike its competitors, UGL Equis provides services for occupiers exclusively, avoiding the conflicts of interest faced by companies that service both property owners and occupiers.

“We have a distinctive business model that we want to hold true to, a non-conflicted occupier services line that allows us to work with our occupier clients without interference from investor clients,” Montross said. Companies that provide services to investors and occupiers do not have an incentive to find the best deals for their occupier clients. And the potential exists for clients to seek insider or sweetheart deals.

With increased scrutiny, accountability, and public oversight of corporate governance under the Sarbanes-Oxley Act of 2002, more companies are seeking services that are free from potential conflicts. Montross said UGL Equis’ model is bearing fruit due to that insistence on integrity.

“I had a notion that this was going to become a strong phenomenon in our industry,” he said. “Over the last five years, the RFPs we received had scant mention of conflicts of interest. Nowadays, there isn’t an RFP that we see that doesn’t expressly ask for detail of conflicts and compromises in meeting their needs across all their service lines.”

Because of its unique approach, UGL Equis has a different culture from other real estate brokerage firms. “We have a unique culture that we protect very carefully, and we have to find the right individuals to fit in it,” Montross said. “We’re not hit-and-run broker types. We’re focused on building, maintaining, and keeping long-term relationships.”

Saving space
Considering the cost related to commercial real estate, maximizing efficiency can make the difference between profitability and going broke. And even when profitability is not a factor, as in the case of government agencies, efficiency in real estate management can translate to millions of dollars.

A prime example of the savings UGL Equis can acheive for its clients is the services it provides for the US General Services Administration (GSA) managing the federal government’s $2.3 billion annual leasing program. Under its contracts with the US government, valued at approximately $17.5 million, UGL Equis provides leasing, administration, and acquisition services for government offices and facilities.

The company was awarded the contract for the US Census Bureau’s 2010 Census, which involves securing thousands of locations across US—one in every congressional district—from which the bureau will operate.

UGL Equis assists the government with leasing privately-owned property and provides initial space requirements analysis, fire- and life-safety surveys, real estate tax adjustments, lease alterations, acoustical studies, and insurance assessments. Over the course of its contracts, UGL Equis has improved cycle time for real estate transaction processing by more than 30 days.

“We have a big consulting side to provide the imagination to come up with new solutions, tools, technologies, and processes to make us more effective,” Montross said. “We also have the responsibility to implement it and turn it into results.”

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