"We are open and we're happy to try anything."
Managing Director of Ready Media Group, Rob Langton, recently sat down with the men behind independent property development company Revelop, in an exclusive interview with the company’s two founders, Charbel Hazzouri and Anthony El-Hazouri. We’ve parsed through the 54 minute-long conversation to bring you the highlights from this extensive discussion.
The business was launched in the midst of the GFC
For many, 2008 brought trials and tribulations. The Global Financial Crisis had crippled much of the worldwide economy, stagnating growth for nearly every major company. It was at this time that Charbel and Anthony initiated their Revelop endeavour.
According to Anthony, they came into the industry with a certain degree of naivety, which allowed them to take advantage of opportunities that competitors were avoiding due to risk.
“We weren’t in the industry to know enough about [if] this was a good time or this was a bad time. For us, we saw that there were opportunities.”
One of their first opportunities was to purchase a home in Sydney’s north-west. They bought the property under an option, and were able to develop that house into four townhouses. Anthony believes that the reason they could achieve this was specifically because the market was struggling at the time.
“Had the market been buoyant; had the market been full of capital from banks, etc., we wouldn’t have had these opportunities.”
Ultimately, Anthony reiterates that it’s about identifying the gap in the space; exploiting the openings that their competitors hadn’t noticed.
“Even though the economy wasn’t thriving, there were segments which were allowing us to make a bit of money. It was just how we used that money that was a bit unique.”
Charbel Hazzouri and Anthony El-Hazouri speaking with Rob Langton
Cashflow is king for Revelop
“We used to talk to a lot of people and pick a lot of brains, and the biggest thing we learnt is that anyone that had financial issues... it was only because they had no cashflow.”
Charbel and Anthony developed their model around cashflow, making it a preeminent consideration for their business. When analysing their fellow investors and developers, they recognised that there was a disregard for keeping money consistently running into the business.
“They always had phenomenal sites, [and] they had amazing developments, but... the reason they couldn’t go to the next step was because they had no proper cashflow.”
Other groups were, in essence, recycling their capital. Once a project had been completed and the funds had been recouped, that money would be repurposed into the next project.
“They were funding developments from their prior developments. They were living off their prior developments, [with] nothing to fund their business as a whole.”
The recognition that this was the approach elected by many prompted Revelop to evaluate their business model.
“We’ve made a development here; instead of just reinvesting it into another development, let’s go and put it into a cashflow asset, which could end up fuelling this business.”
According to the two property moguls, this is the differentiating factor that has allowed their organisation to become what it has.
Renmark Square - Revelop's maiden foray into the shopping centre sector
Their first shopping centre was located in South Australia... which they had never been to prior.
“We always owned strip shops, which were a smaller form of retail. We had an opportunity to buy a sub-regional shopping centre in regional South Australia.”
This shopping centre was what would become Renmark Square; a centre situated on the southern side of the Sturt Highway, anchored by both Big W and Woolworths outlets. It served as a major leap for the two businessmen, and Charbel explains how significant the shift was.
“We’re going from owning 1,000 sqm retail centre, to a 15,000 sqm sub-regional in regional South Australia.”
Along with the natural challenge that this additional space posed, this acquisition required that they get familiar with a place they had never been to before, and quickly.
“To be honest, me and Anthony had never been to South Australia. I don’t think it was even on the radar to buy a shopping centre.”
Despite Charbel and Anthony’s lack of knowledge within this specific commercial sector, they saw value in the property. Part of that stemmed from their inexperience in the space, Charbel admits.
“We were naïve. We didn’t understand retail enough. Being naïve was the real driver here.”
They jumped on a plane to go inspect the site, and upon arriving at the shopping centre, they found an undervalued landholding that had all the makings of a blockbuster investment.
“We both looked at each other and said, “What aren’t we seeing here?” It’s a big building, it presents amazing, and we’ve got a Woolworths and a Big W and all these shops, and what they’re asking is what you buy a house for in some parts of Sydney.”
They jumped on the opportunity, and they helped established Renmark Square as one of the local area’s finest retail offerings. This was the impetus for their large-format retail obsession, as within five years of purchasing Renmark Square, they had gone from owning a single shopping centre to owning 22, with a further nine in the pipeline.
Charbel Hazzouri and Anthony El-Hazouri
They’ve kept their business private, because they value their autonomy
Even with offers in place, Revelop’s co-founders have elected to keep their company private, and the reasoning behind the decision is pretty simple, according to Anthony.
“The thing for me and Charbel is always [that] we control our own destiny.”
The two have an intrinsic understanding of how the other thinks, and it allows them to follow their gut and play to their strengths. They prefer this approach, as opposed to answering to a higher-up who might have quotas that don’t fit their agenda.
“We haven’t worked in an environment where we’ve got people to report to, or people to account to. That’s not our personalities.”
They’ve found a great deal of success in trusting their natural instincts, and they believe taking the business public would inhibit them from doing that.
“We want to make decisions within 30 seconds. We want to... not have to present a 35-page report to go buy something tomorrow. We don’t want to change the recipe.”
Most important to them are their young families, and by continuing to lead the business the way they have, they are able to dedicate much of their time to their children and partners.
“Whilst there are a lot of quite appetizing options out there... I think we’ve shown that our model has probably given us equivalent, if not greater, growth prospects and speed than potentially going public... and still maintaining our independence and our ability to really live as we want to live.”
Watch the full interview, conducted by Ready Media Group’s Managing Director, Rob Langton, here.
