Dedicating private muscle to public need

Peter Coman's profile sank after he left property consultancy Jones Lang LaSalle 18 months ago.

In the five years he worked from the PricewaterhouseCoopers Tower on Auckland's Quay St, JLL's former managing director was in a prominent position, running the business which had about 100 staff during the height of the real estate boom in 2003 to 2008.

There, he expanded the consultancy with its agency, property management, research and tenant representative arms.

Last January, he jumped ship and landed at Lloyd Morrison's Infratil/HRL Morrison & Co.

Few of his former business associates would now have much of an idea about what he has been doing.

He works from the Fort St offices of NZX-listed Infratil's creator and manager Morrison & Co and agrees that to some of his peers, he might seem to have vanished from the corporate radar.

Describing the focus of his work since he became Infratil and Morrison's property chief executive, Coman says those businesses manage assets worth $5 billion and have property assets of $100 million-plus. His role as a property expert is to unlock potential from that big portfolio.

"We thought there were assets in the business we could extract more value from," he says, citing one example as Infratil's New Zealand Bus which moves 60 million passengers annually and controls large slices of urban real estate.

Its 2.2ha Kilbirnie bus depot in Wellington has what Coman describes as old, ineffective buildings.

"It's an inefficient site for a modern bus business. Our thinking is that there is real potential for residential development of up to 200 units or houses. We'd have to find an appropriate alternative home for the bus business but it's potentially a $100 million development."

Auckland real estate is another target, particularly the NZ Bus New Lynn depot on a site near the new underground railway station, due to open next winter with the completion of the western line duplication project between Newmarket and Swanson.

"We've been negotiating with Waitakere City Council about how we're going to assist in terms of building a transport-orientated development around bus and rail and providing land for that as well as utilising surplus land for development."

Plans there could see a $10 to $20 million retail and low-rise office project developed but nothing is yet decided.

While bringing real estate nous to the Kilbirnie and New Lynn projects, Coman has been working on something much bigger: Morrison & Co's Public Infrastructure Partnership Fund, starting with up to $500 million but eventually intended to stand at $1 billion-$1.5 billion.

That fund has been developed with NZ Superannuation Fund as the key investor which has agreed to put in $100 million.

This is potentially a huge coup because not only is the super fund expected to have assets of $100 billion by 2025 but it is also actively seeking to increase its exposure to New Zealand infrastructure.

Morrison only announced the new public fund on July 23 and Coman said he hoped to have some deals under its belt within six months.

Types of buildings listed as the fund's target sectors include schools, student accommodation, health sector offices, railway stations, park-and-ride stations, prisons, courthouses, community buildings, police stations, and housing estates.

"The focus will be on education, corrections, health, transport-related infrastructure, defence force accommodation, local government water infrastructure and community facilities," Coman says.

"The Government will be able to concentrate more on providing [better services] rather than on providing physical assets. The fund wants to deliver great social infrastructure assets that can help New Zealand become a great place."

Projects in the $30 million to $200 million range are the fund's target although it has ruled out building toll roads, ports and electricity generation plants.

The scheme would work like this: The need for a new prison or school would result in a project company being established. The Government would pay that company for delivering the building. No payments would be made until the school or prison was finished. The fund's role would be to select contractors to design, build and maintain the school or prison which would then be transferred to the Government.

Coman said he understood the ideological political objection to such public-private partnerships but he sees the fund's role as providing the ability to unlock capital and deliver great new infrastructure and buildings.

Meanwhile, he acknowledges the fund's profit objective. "We're wanting to provide returns to our investors that are long, inflation-indexed and stable."

Coman emphasised that most Government-owned developments would still be carried out by the Government, not the private sector.

"We think there's an appropriate place for the procurement of some social infrastructure by the Government."

PETER COMAN
Chief executive, HRL Morrison Property & Infratil Infrastructure Property

Age: 44
Education: BA in politics and history and bachelor of property administration from Auckland University. Masters in investment management from London's City University Business School.
Career: Roles include property manager at AMP and Jones Lang Wootton, analyst and associate at Lend Lease Property Capital in London and New Zealand managing director of Jones Lang LaSalle.