Mike Flax – The Midas Touch

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Mike Flax, CEO of Spear REIT Ltd, describes himself as a creative person, with a flair for English, drama, sales and marketing. Over the years, he has masterfully blended these creative abilities with the analytical skills gained from his dual qualifications as a Chartered Accountant (CA) and Chartered Management Accountant to achieve business success.

Flax kick-started his career as an accountant at Deloittes. He explains that he felt the lack of creativity in the accounting industry was very stifling for him, and so made plans to get out of his auditing articles as soon as he was qualified.

“I managed to convince my boss at Deloittes to sign off my articles early,” he explains. This freed him up to join his cousin, Lawrence Seeff, at his then fledgling Seeff Commercial brokerage in Cape Town in 1989.

A period of risk taking

From being a highly-qualified accountant, Flax suddenly found himself working, without a salary, as a commission-earning investment property broker. Still being young, however, and with very few overheads, Flax felt it was the best time to be taking a risk on his career:

“The knowledge that I had no paycheck made me work harder and made me hungrier for success. I ensured I had a few months of cash to see me through, as I didn’t earn any commissions for at least the first three months.

“Even with my CA background, I had no clue how to operate in the property world and it was a steep learning curve for me,” explains Flax. His time at Deloittes did, however, give him some necessary exposure to property; he explains that one of his clients was the Board of Executors (BOE) ‒ later acquired by Nedbank ‒ which was quite active in the property syndication industry.

“I applied what I had learned while auditing the BOE and formed a Joint venture business under the Seeff banner called Seeff Trust. Our initial strategy was to compete with BOE and Metboard (part of Investec) in the lucrative public syndication industry,” explains Flax.

Flax was now in a position where he could combine his creative marketing and sales abilities with the analytical investment advising that the position required. “My CA qualification also gave me gravitas with older investors and allowed them a measure of trust in what I was selling them,” explains Flax.

“The business demanded a good feel for property, as we had to buy well and ensure decent ongoing returns for our investors. We became industry leaders within a brief period, as I built a massive sales force and huge client base numbering in the thousands. At the time, my future colleague and property doyen Marc Wainer, was my counterpart at Metboard.”

They went on to build Seeff Trust into a large, property investment management business and listed Seeff on the JSE in 1996, at which time Flax folded Seeff Trust fully into the group.

Listing Spearhead Properties Ltd

“Through some corporate action, within a year of going onto the JSE, Seeff ended up acquired and inside Brait, which had styled itself as an integrated financial services business under the leadership of Mark Barnes, who is currently CEO of the SA Post Office,” explains Flax.

“Then the financial crisis of the late 90s hit, causing interest rates to reach 25%. Property became a swearword for investors. Nobody wanted to touch it, including Brait. They wanted out of property and offered us the Seeff businesses to buy back.”

Flax bought back the old Seeff Trust business, which by then managed numerous prime commercial and retail properties, as well as a number of properties owned by Brait.

“To finance the whole deal, I combined all the properties together into one internally managed property fund and listed it in late 1999 on the JSE and called it Spearhead Properties Ltd.

“From a share price low of R4.50 per share in early 2000, we built the business up with a fantastic team of people and a quality portfolio of properties and, eventually, Marc Wainer came calling and made us a friendly offer we just couldn’t refuse.

“We sold out to Redefine Property Fund for an equivalent R45 per Spearhead share: 10 times more than the share price seven years earlier. Needlessly to say, Spearhead shareholders were elated and most swapped their shareholdings into Redefine where they had another great ride over the following five years.”

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