Occasionally, I stray from my usual focus in order to shine the spotlight on a neglected, deserving billionaire. So Jay Hennick presides over a property service empire with a market value of over $10 billion. He has major stakes in two publicly traded companies: he’s Founder, Chairman and largest shareholder at FirstService, which has a market cap of $7 billion. And he’s Chairman, CEO and second largest shareholder of Colliers International, which is worth some $3b. His disclosed stakes total about $1.5b. Part of that is owned by his family foundation (which had 2018 assets of $83m). There's also a family holding company, Hennick & Co., which takes stakes in private companies and real estate. It owns a mortgage lender and in 2019, along with partners, sold the Toronto East Harbour real estate project (supposedly, Toronto's Canary Wharf). Adding everything together and substracting the foundation, I feel pretty safe saying that Jay now qualifies as a billionaire.
FirstService focuses on residential services, while Colliers is about commercial real estate. Those exposures are borne out in their relative performance this year, with First Service being up 33% YTD while Colliers is down 15%. FirstService first got involved with Colliers by acquiring Vancouver-based Colliers Macaulay Nicolls (CMN) in 2004. CMN was the largest shareholder of Colliers International, which, at the time, was an unwieldy network of affiliated commercial real estate brokerages. FirstService set out to convert this patchwork into an integrated global company by acquiring the various regional players. It especially capitalized on the 2008 financial crisis to make major forays in New York and London. By 2009, FirstService controlled the Colliers global brand. In 2010, FirstService and Colliers merged. Then in 2015, they separated into two independent public companies. Colliers is now part of the Big 4 global advisors in commercial real estate, who together command 17% market share, leaving lots of potential for more consolidation.
Jay Hennick's involvement in property services started at age 15, when he was hired as a lifeguard at an apartment complex one summer. Jay borrowed $1,000 from his father and soon snowballed that job into supplying lifeguards for other apartment buildings, condos and hotels. Within a few years, Superior Pool was managing more than 100 locations. Jay rented an office near his high school and still made time for class.
His parents expected him to get a "real" job, so Jay studied law at the University of Ottawa. He then worked for 13 years as a corporate and securities lawyer at Fogler Rubinoff, where he was the youngest to make partner. He was still running Superior Pool on the side. He has said he learned a lot from helping his clients wheel and deal. Ed Sonshine of RioCan fame and Eugene McBurney, co-founder of GMP were also lawyers at Fogler. The firm is still the main Canadian legal counsel to Jay's businesses.
FirstService was formally founded in 1989, rolling up the business of Superior Pool and expanding to other services. Over time, FirstService grew into the largest manager of multifamily residential communities in North America. The other main business is a collection of branded essential home services: everything from painting to home restoration to closets. A lot of FirstService's growth was in the US, the source of 90% of its revenues. They are known as relentless acquirers with the motto of “Creating value one step at a time.”
In 2003, Jay was willing to remove his father - a close advisor from the beginning - from the board of directors of FirstService to appease governance keeners. But he said at the time he would never give up his control through multi-voting shares, because many investors are myopic. A few billion in value creation later, he finally gave up control in 2019 at FirstService. The company is led by CEO D. Scott Patterson (who under no circumstances should be confused with G. Scott Paterson). Jay is still the controlling shareholder at Colliers though.
Jay's performance as a public company CEO has resulted in about 20% annualized returns over 27 years - a 100 bagger in that time. Jay uses a partnership model across his businesses with management having strong equity aligned compensation and decentralized decision-making powers. His legal assistant from Fogler, Lynda Cralli, is still with him thirty years later as part of the leadership team at Colliers, one of a number of executives with tenure of 20+ years. He acquires with no predetermined plan to exit and can make very quick decisions. If I wasn’t so deferential to pre-existing journalistic conventions, I’d call him the “Warren Buffett of Canada”.
Jay is an active philanthropist and has won a number of accolades, including in 2019, the International Horatio Alger Award. Horatio Alger implies overcoming adversity. Around the award, Jay revealed that when he was in his mid-30s, he survived a bout with thyroid cancer. Then a few years later, he was diagnosed with a brain tumor. His operation to treat that tumor resulted in deafness in one ear and the permanent loss of seven hair follicles.
Superior Pool, the business Jay started as a 15 year-old in 1973 is still around. Finally, in case you think this post is off-topic to OPM Wire, Colliers has taken a recent interest in real asset investment management and already has AUM of $35 billion.
Here's Jay in his own words: