Brexit: A 'Wrong Decision' Creating Opportunity

“We’re going to be living with this for a long, long time,” says Dickerman.

NEW YORK CITY—As head of a global private equity firm with investments in gateway cities on both sides of the Atlantic, Ronald Dickerman is well positioned to comment on the implications of the UK electorate’s vote to leave the European Union. In his case, though, the Madison International Realty founder and president can speak from an especially authoritative vantage point: he and his team were on the ground in the UK during the historic Brexit vote. Here, Dickerman shares his insights on what he saw and what’s coming in the months ahead. GlobeSt.com: There has been a great deal of commentary about the Brexit vote and what it will mean for the UK. Are people overreacting, perhaps? Ronald Dickerman: It’s a fascinating situation. I was in London for Brexit. I purposely went there with members of my management team. We met with private equity, managers, sponsors, brokers—we really just wanted to get the lay of the land. What you read about a situation in the press is very different than being there. The day before the Brexit vote, the Dow Jones was up 230 points. The pound was rising; people were buying the currency. The UK bookmakers had a 20% chance of Brexit. Obviously, all indicators were saying that there was a “remain” vote coming. But when you look at the polling, it was very close. And all of a sudden, Thursday night it looked like the Brexit vote was going to win and the markets began to gyrate. We woke up Friday morning; Land Securities was down 30%; that’s the battleship listed property name in London. And then David Cameron resigned. It was unbelievable, but the world is so volatile now. I think this is going to create a huge overhang. I don’t think that most British citizens knew the implications of what they were really voting for. There are some analogies between this being just a protest vote and what’s going on in this country with Donald Trump and the presidential election, that most people didn’t tie in the Brexit vote with what their actual issues were. I think it really was misconceived, it was the wrong decision, David Cameron made a horrible mistake and now we’re going to be dealing with the implications of this. The world is becoming global like never before, and the UK should be in the European Community. You’re talking about China, the United States and the EU, which are the big trading blocs now, and how is it possible that the UK could benefit by going alone? Is it the end of the world? No. It’s going to be the beginning of a long period of negotiation. I told my people, “This is a lot like what we experienced in the United States in 2011, where we were reading about the possible breakup of the European Community and the failure of the euro as a currency and it was on the front page of the Wall Street Journal every morning.” For the next two years, we’re going to be reading about the negotiations for the UK to leave the European Community. The real shock of this was last Friday morning, and there are real issues in the UK, but the fact of the matter is that we’re going to be living with this for a long, long time. GlobeSt.com: It’s safe to assume that this will have an impact on investors’ behavior, both in the US and in Europe. Dickerman: The United States continues to be seen as the ultimate safe haven. There was a moment where everyone wanted to invest in Europe; they thought the US was overbought. Now it’s turned around completely. People do like Europe; they think that Brexit will likely benefit Europe, but it’s just an interesting situation, put it that way. GlobeSt.com: In view of the US being viewed anew as a safe haven, do you anticipate investors making opportunistic plays in Europe? Dickerman: Absolutely. We’re absolutely looking at the UK. We have a business which is based on purchasing interests in buildings from investors looking for early exits, and we think there will be opportunities for us. We’re very engaged there, we have an existing portfolio that we’re looking to manage and protect, but it’s very high quality and very well leased. We’re also long-term investors, so we tend to have a long view.