PMG is celebrating 30 years in business. Photo / Supplied
It started as a one-man band.
Now, 30 years on, PMG Funds looks after nearly $1 billion of commercial property nationwide.
In the last decade alone, the Bay of Plenty-based funds management company has grown from 120 investors to more than 4000 across four generations, with investors from six-months-old through to 94.
The company’s founder Denis McMahon and chief executive Scott McKenzie say its secret to longevity is the people: “He tangata, he tangata, he tangata.”
PMG Funds founder Denis McMahon said it felt “surreal” to see the company he had started in 1992 still standing today.
“I started off on my own in a small office in the old Trustpower building in Spring St. I was the only tenant.”
Three decades on, McMahon said it was reassuring to know the company had stood the test of time.
“That is why this is the year I will step back from the company. I feel it is in good hands.”
McMahon said he started the succession planning when he hired now-CEO Scott McKenzie in 2012.
“It has paid dividends and it has come home to its roots. I have taken some pride in creating something that will continue for many years to come.”
McMahon was been dubbed one of the “pioneers” of the property syndication industry.
His first syndication was in 1994 at 143 Durham St, where PMG Funds’ current offices are today.
He had what was called the ‘baker’s dozen’ - 13 investors - “tremendous people” from the original syndicate in funds who were still involved today.
“I have had a 30-year relationship with those people. They are not just investors - I have got to know them as people. I have dealt with their parents, children, and grandchildren. That tells the whole story.
“That is very rewarding and very special.”
From there, McMahon grew his philosophy, which was to be invested in the company.
“That need to co-invest, so you look at any decision through the investor’s eye - I installed it in Scott from day one. This industry is all about trust. That goes right to the core of what we do in this industry.
“I saw in Scott someone who could be trusted with my legacy and my investors. The last 10 years speak for themselves.”
McMahon said what he’s enjoyed the most has been the people he has met throughout his career.
“I will miss that, but I have no regrets. I feel like I am bowing out at the right time.”
From a one-man operation, PMG Funds has grown steadily over the years as McMahon brought more opportunities for investors to participate, largely across the Golden Triangle - Auckland, Hamilton, and Tauranga.
In the early days, McMahon maintained low or no borrowings on the funds so he could be confident that if the clouds came over the horizon economically, the company could still meet its commitments to its investors.
The concept was vindicated in 2008 after the Global Financial Crisis.
“We were very fortunate to get through the GFC relatively unscathed, but it did raise the question: ‘Is there a better, more robust formula’?”
The answer was through an unlisted funds structure.
Cue Scott McKenzie.
“He came in at a crucial time for the company.”
McKenzie, 44, was working at BNZ when he met up with McMahon in 2012.
“I watched from outside this business that Denis had built.”
At the time, PMG Funds had about five staff and “really good bones” with a portfolio of about $80-odd million worth of properties across the Golden Triangle.
“I could see the potential to turn it into something that really had an opportunity for growth, and [wanted] to keep fulfilling the needs of the customers.”
In 2014, McKenzie helped establish and launch the company’s unlisted funds structure.
The concept was simple - spreading risk across geography, building, tenant, and market sectors.
It was designed to be a robust, resilient, and diversified fund to withstand the changing economic environment.
“We were, to some extent, selling the potential, selling the dream,” McKenzie said.
“We are forever thankful to those initial investors that came on board and entrusted us to be able to deliver on that.”
McKenzie said part of his role has been to pull together a team of people who can help steer the PMG Funds ship towards its vision of becoming one of the most trusted property fund managers as it continues to grow a national brand.
“It has been a bit of a whirlwind journey, if you think $80-odd million in 2012 to $930 million today.”
He said it has been the team behind him who have helped the company achieve what it has today.
“They make a big part of our fabric, really. We have a saying: ‘Some of the parts are greater than the whole’.”
In 2016, PMG Funds became licensed by the Financial Markets Authority.
“That was a point in our journey where PMG grew up,” he said.
It introduced a governance structure and began investing heavily in technology, infrastructure systems, and processes to position itself for future growth.
It launched a Direct Office Fund in 2016, a Direct Childcare Fund and Capital Fund in 2017, and a Generation Fund in 2020 to pave the way for people, including the younger generation, to passively invest in commercial real estate.
Today, the company has 40 staff spread across three offices in Tauranga, Auckland, and Christchurch, and a portfolio from Invercargill through to Whangarei.
“We are nationwide now,” McKenzie said. “We look after $930m of real estate nationwide.”
PMG Funds has grown from 120 investors in 2012 to more than 4000 investors on its books today, he said.
“We have now got six-month-olds through to 94-year-olds. Four generations of investors invested with us.
“It is quite a deep range of New Zealand’s demographic involved with us now, which is really nice - people can participate and receive the benefits of being invested in commercial real estate.
“We are recognised as an important piece of the fabric of the unlisted property investment space now among our peers.”
Continuing McMahon’s mantra, McKenzie and the team were also invested in the business.
“We genuinely treat the buildings that we look after as if we own them, because often we do. We think with our investor hat on, because literally, we are investors as well.
“That philosophy and culture permeates through the business.”
Moving forward, McKenzie said it was important to continue to “retain the essence of who we are” and be “the good people” of property funds management.
Sustainability was part of growing the business, he said.
“For us, it is about how we continue to be more efficient with the elements of the business we are responsible for as custodians. If we can improve our energy and efficiency, and make the environment more appealing for our customers/tenants, often that is going to lead to savings and be more attractive for our tenants to stay with us while also benefitting carbon emission footprints.”
Supporting the community it operated in was also important, he said, which was why the PMG Charitable Trust was set up last year specifically to address financial inequality among New Zealanders and help build the financial futures of young Kiwis.
“We believe everyone has the right to financial success, but not everyone has the know-how.”
McKenzie said the company’s secret to success was “cliché but true”: “He tangata, he tangata, he tangata - the people, the people, the people.”
“We have worked really hard and continue to work hard on fostering the culture we have within our business. The inclusiveness, being an employer of choice; people wanting to not only stay with us, but come and work for us.
“That’s about just treating people well.”
Local Democracy Reporting obtained the decision through the court.