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Roger Smee: Hard Knocks, Sharia and Success

May 27, 2009

In these troubled times, entrepreneurial success is seen about as often as snow in the Sahara. All the more reason to celebrate a comeback by former Chelsea footballer turned global businessman Roger Smee, says Alex Wade. In April 2009 he backed his global office fit out businesses into Real Office Group Plc. listed on London’s AIM market.

Roger Smee describes himself, with a wry chuckle, as “a bit of a gnarled old character”. Smartly dressed with abundant energy, Smee might, at 60, be old enough to be gnarled, but he doesn’t look or behave the part. If anything, he’s in rude health, his thinning hair belied by a robust frame and tanned complexion. You might even think, if you happened upon him, that Smee (pictured below) was, in a former life, a professional sportsman.

You’d be right. Smee made his name as a footballer in the 60’s and early 70’s. As a useful, muscular striker, he played for Chelsea and Reading in a professional career spanning 10 years. He maintains a healthy interest in the game, helping oversee the coaching of young players in the home counties via his 25 year presidency of the Berkshire Association of Clubs for Young People, an organisation managing 140 youth clubs in Berkshire where many disadvantaged youngsters are given a life focus. This, though, is but one if Smee’s many and diverse interests. Football may have been his first career, but Smee has since gone on to appear in various real estate and finance guises in the global business world. No surprise, indeed, when he reveals that business was a passion even in his playing days.

“I was always fascinated by the commercial world when I played football,” he says. There is a twinkle in his eye as he recalls that while in Reading, he developed his first property portfolio by buying up properties near the football ground and then spent afternoons with team-mates who had trade backgrounds refurbishing the properties and building extensions.

Having qualified as a Quantity Surveyor whilst playing football, an early assignment after full time soccer was to project manage a number of major projects in Iran, Dubai and Riyadh protecting the interests of a London Merchant Bank. “I would fly across the globe looking down at the UK and always feel there were as good, if not better, opportunities outside the highly competitive property market in the UK. I have always enjoyed the excitement and challenge of doing business in other countries”.

This sense of perspective – of being able to see things from afar, with a strong sense of ethics – has characterised Smee’s career as an entrepreneur. It’s one that has seen some hard knocks as well as considerable success. “There’s never been a dull moment,” laughs Smee, whose most public role was as Chairman of Reading between 1983 and 1990. He is widely credited by Reading fans as having beaten off Robert Maxwell, and turned the club around before he sold his interest to the current chairman of Reading, John Madjeski.

By then though, Smee had established himself as an International real estate player and had steered his property investment companies to a fortune of many millions.

But then came the 1989/90 crash. Smee’s company Rockfort Group had gone public in August 1988 at the top of the market and, along with many other high profile real estate players of that time, was hit hard. Rockfort assets were wound down. Smee had to start again, and he began building a new real estate portfolio in the UK and USA. In 2002 after a decade of strong real estate gains, Smee became concerned about the disconnect between real estate values and the International money markets. “I realised that a financial time bomb was ticking when I was offered a controlling stake in a new booming US mortgage business,” he says. “The company was involved in the refinancing of huge numbers of house mortgages, lending at 125% of an already over-inflated property value to people who obviously did not have the funds to maintain the mortgage. As we now know, these loans were then packaged up and sold on, earning the mortgage business a 7% deal fee on each transaction. But it was simple to see the underlying fundamentals were totally flawed. These mortgages were being packaged and sold to all the usual suspects in the USA but, more importantly, to major European institutions as well.” Smee viewed this as “an accident waiting to happen.”

In the new millennium Smee admits that he was, for a while, “seduced” by the riskier and supposedly more sophisticated end of the financial market. The compelling management fees of hedge funds appealed, but with the Western world’s financial markets increasingly, as he puts it, “coming to resemble a bunch of casinos,” Smee knew that the writing was on the wall. “I became very disenchanted with the stock market, its behaviour, and the morals of some people in it,” he says, his normal ebullient tone acquiring a harder timbre. With world markets about to implode, Smee did that rare thing in investment – he acted honourably. “I decided it was time to get out, and wrote to all our investors telling them they had more chance of making money by spending a weekend in Las Vegas. Some were surprised, and told me I must have got it wrong, but everyone was sent their money back. I felt I had to act responsibly.” Investors made only modest losses prior to the market going off a cliff and are now thankful for Smee’s bold action.

In order to separate real estate activities from the Hedge Fund, in November 2008 his Rock Capital Group was administrated and Smee re-acquired his original real estate business. This is a £300m fund run from London by nephew Rob Silvester, a former partner of Kinge Sturge. With a major commercial portfolio managed by Rock Asset Management for him in London and Real Office Group which he runs internationally mostly from Doha, Qatar, Smee is as busy as ever. One thing is for sure, the shareholders of Real Office Group Plc will not see their investment stagnate.

Over the past 3 years, Smee has concentrated his energy on building his business interests globally. The majority of profits relating to Smee’s activities are now earned outside the UK. Many are based in the Middle East, where Smee firmly believes that the Western World could take a leaf out of Sharia banking principles, which, he says, are “based of a deep sense of partnership with your bank or other investors.” Moreover, under Sharia law the charging or paying of interest is prohibited, something which, Smee claims, “has left both the Islamic banking system and their customers comparatively unscathed by the credit crisis. Because charging or paying interest is not allowed, Islamic banks do not borrow or lend on money markets, so they are not experiencing any of the same liquidity problems as are currently besetting the Western world.”

Smee has business in New York, Florida and Nassau (where he has worked for many years), but much of his Real Office Group Plc. work is presently based in the Middle East and India as well as London and Europe. He spends his time flying between America, Europe and, in particular, Doha, where his Real Office Group – an office fit-out specialist – has just bought 3 companies for £48.9m and re-listed on AIM. Smee is delighted with Real’s progress: “The move creates an international platform which will allow the company to offer a ‘one stop shop’ for clients’ office design and custom build needs. It will ensure the highest quality consistent delivery across the office network worldwide.”

Smee is, as ever, acutely aware of the context underpinning Real’s move. “This may seem an unusual time to be considering the traded equity market but we believe the change in financial markets over the past 18 months will positively impact on our growth plans,” he says.

It seems that the man who first espied the business potential of property from a plane is poised, once again, for success, not least because, as he says, “the business world has recently inherited a large dollop of financial reality. Asset values have been revised downwards. Our long-term partners across a range of target locations share our vision of entering the publicly-traded equities markets at reasonable valuations – without the need to take on debt. The Real Office Group is debt free – and, barring exceptional circumstances, we aim to keep it that way.”