Vanessa Simms is a strong advocate for doing things differently. As CFO of property group Grainger, she is part of the only female senior management team in the FTSE 250, along with CEO Helen Gordon, that is transforming the group.
Gordon started on the first day of 2016 and Simms followed a month later, with a mandate to move Grainger away from trading property assets to investing into rental homes. The move is to fulfill the group’s mission “to be the UK’s leading landlord, by professionalising the private rented sector,” says Simms.
Right now its a growth story that’s playing to a government keen to support any kind of home building, given the UK’s massive housing crisis. In the year to the end of September 2017 pre-tax profits were up 2% to £86.3m while net rental income increased 40% to £40.4m from its 4,300 rental homes out of a total 8,700 homes it owns in the UK.
“We think private rented sector can be a real catalyst to address the housing crisis,” says Simms. “We can execute faster than housebuilders because they release phases of a development, whereas we can build homes and rent pretty quickly,” she says.
“The government is in line with our business model because we offer three year tenancy agreements, but buy-to-let landlords can’t usually do more than 12 months because of banking requirements,” she says.
Such is the pace of development that Grainger, that can trace its roots back over 100 years ago in Newcastle where it is still headquartered, has committed £690m of its target to spend £850m by 2020.
Simms says the group has a “clear line of sight on opportunity”, focusing mainly on cities with a strong business base and university ties offering strong post-graduate retention. She cites London, Manchester, Birmingham, Bristol, Leeds and Sheffield as prime sites for development.
The key criteria is affordability- judged by how long it takes to save a deposit based on annual average salary in each location- and lifestyles in which many young people are renting for longer.
What has enabled Grainger to invest with such conviction is that the group has powerful data sets that Simms set up in concert with the group’s investment team.
“We researched all the cities to get real factual evidence and data of where there was strong demand and strong growth prospects,” says Simms. “That intellectual property we now own is a break from the past when we used data from surveying firms,” she informs.
It’s not the only technological breakthrough for the group. Simms has also implemented a tech strategy for improving customer experience and to improve efficiency – especially to improve flexibility in a market traditionally run to six and 12 months contracts.
“Airlines and hotel groups have for years used dynamic pricing, where they put all their data on their pricing into a yield management tool. We’re looking to do a similar thing in the rental market, to improve pricing at the point at which a property becomes vacant,” she says.
Understanding ‘Generation rent’
Using these tools, Simms says Grainger can react to changing customer expectations and needs. “We want to make sure we’re providing best service as a landlord and therefore differentiating ourselves in the market. We can use social media to monitor what’s being said about the organisation as well as use it to advertise,” she adds.
Many of the developments are for young professionals- so the Argo complex in Canning Town, close to the Jubilee Line in London’s East End, offers amenities such as gym, a live/work space, a dining room to be rented out and a guest suite, where parents might stay. There’s also a concierge to sort out problems.
That is contrasted with a development in Barking- also in the east of London, where a lot of families are living. “As a lot of teachers are there we’ve created a, community space with a book club and homework club. We try and look at how people live in a place and community,” she says.
This approach reflects Grainger’s original purpose to provide homes in a responsible way to communities. That’s still continued with some homes provided at a discounted market rate, making it more affordable to local residents.
“We’re trying to look at where the deepest demand is within the market, and provide homes for that group pf people, to try and think what the area requires, thinking about what community’s need are,” says Simms.
Simms says she had some experience of this at Unite Students- a provider of student accommodation with a focus on health and wealth-being where she rose from Finance Director to Deputy CFO.
After starting out at sports car company Porsche, Simms moved to a commercial financing and customer proposition role at telco Vodafone. A switch to medical products provider Stryker where she made Financial Controller involved seeing products being used in operations.
“We worked with health providers- in the NHS and private health area- looking at work in operating theatres to find out how we could work together to improve finance arrangements,” she reveals.
A move to the same role at commercial real estate group SEGRO where she became UK Finance Director was the first foray into the property sector. A common thread in these roles has been a belief that finance should play a key role in enabling the customer facing parts of the business to thrive.
“Being a catalyst for the company is fundamental,” she insists, “Otherwise it’s just reporting numbers that don’t have a meaning or a purpose,” says Simms, who gained an MBA at the Hult International Business School.
When it comes to risk management, Simms says changing environmental needs are not a high priority- a greater risk potential is potential loss of talent. “We recruit people that are targeted by start-ups, and businesses across the B2B sector,” she says
Although Grainger has formed a house view on Brexit, Grainger declines to say what it is. But she says the group is very positive on Britain. “We don’t see the UK as suddenly going to stop being a good place to rent out homes,” she says.
Days after Simms started, Grainger announced it was selling its £94m German property portfolio. “Although it’s a fantastic sector we were small, so not large enough to be very competitive and saw huge opportunities in the UK and wanted to lead the way in that market instead,” she informs.
A fresh approach
Simms is every inch a CFO playing a key role in group strategy. “Traditionally a CFO has been about stewardship, performance management, whereas now I think fundamental to the role is being a good business partner.
“It’s helping the business make the right decisions, and helping to execute a strategy. I see that as fundamental to the CFO role,” she says.
Are CFOs expected to think more broadly about developing relationships with other types of partner? Simms says in property the joint venture model is quite heavily used, as is using third party relationships. “An example is working with local authorities that want to enhance the quality of their areas,” says Simms, citing the example of Grainger’s work with the BBC’s development in Salford, Manchester.
On the question of better corporate governance, given the issues at Carillion, Simms is errs toward caution. “Although the situation at Carillion is unfortunate, I don’t think something dramatic needs to change as I think the guidelines are good,” she says.”
Transparency, good due diligence and board ethics are fundamentals which should be in place, says Simms. That brings us on to the subject of Grainger’s all female executive team and the question as to whether UK companies are moving in the right direction on diversity and inclusion. Simms says: “I think so. It feels that way.”
She says: “It’s a coincidence that we find ourselves in an all-female executive. It is important that everybody considers how diverse a team is, but mainly it should be diversity of thought, to avoid group think.”
A conversation about improving housing is what she’d prefer to have, rather than on the numbers of women in senior roles. But on reflection she says: “We can’t ignore or dismiss it because there’s a lot to do to improve diversity. We as leaders of organisations need to make it possible and comfortable for diversity.”
Grainger may stand out for its all-female top team, but it’s an all-round innovative approach – harnessing powerful data to develop the rental property market- that is raising most interest. Simms, the dynamic CFO who has been at the heart of that innovation, is a critical part of the story.