Satterley puts the pieces in place

A STOCK exchange listing is off the agenda, but Perth property developer Nigel Satterley is creating a corporate structure that will ensure his Satterley Group stays in business long after he is gone.

First steps to create a perpetual succession plan, including the formation of an outside board of directors, have already been taken by 60-year-old Mr Satterley, who maintains he has no intention of fading from view soon.

"I plan to be actively involved in business for another 25 years," he said.

But part of that aim is bravado, especially after he suffered a health scare last year. The reality is that Mr Satterley is re-shaping his organisation to mimic that of another big private Perth property investor, Stan Perron.

The new board of Satterley Group, which held its second formal meeting last week, is chaired by business veteran Tom Lang, and includes the chief executive of the Hawaiian property group, Russell Gibbs, and lawyer Michael Lurie. An additional director will be appointed early in the New Year.

Mr Satterley will remain chief executive of the company he founded in 1980, and which last year booked sales valued at about $500 million.

However, Mr Satterley's day-to-day workload will be shared from later this month with recently appointed chief operating officer Nick Perrignon, the former WA manager of Stockland property group, and through an expanded team of executives.

"We're investing in our senior management group," he said. "We're going to train them up. "It's all part of our succession planning. We're not going public, as lots of people have asked me. We've consulted Perron's people, and we know what they do, and we're really following that formula."

Mr Satterley's success in building his property business can be attributed to two factors. First was a close working relationship with the late Sir James McCusker, the founder of Town & Country Building Society (now part of the ANZ Banking Group); then came the creation of a business structure that attracted large amounts of capital from professional investors seeking exposure to the booming WA market.

In some ways, Satterley Group has an approach to property investment similar to the listed Peet Ltd, acquiring large land holdings and developing that land for residential sale. Funding in both cases comes from external investors, minimising the stress on Peet's or Satterley's balance sheet.

Peet's biggest shareholder, and former chief executive, Tony Lennon, solved his succession question by listing on the stock exchange. Mr Satterley is handling the same question about long-term planning his way.

"What we want is a structure that's so good that it just keeps going," Mr Satterley said.

Part of the push for a new corporate structure has come from banks, which want to see a clear succession plan for any private business with which they do business.

Mr Satterley said his banks suggested it was time to find someone to fill a role occupied by Ian Armstrong, general manager of the Perron Group, or Peter Gammell, general manager of the private interests of media owner Kerry Stokes.

"If you're sick, the structure is good," he said. "By Christmas, everything will be in place."

Mr Satterley said there was no appeal in a stock exchange listing.

"We're long-term investors," he said. "We don't have to work to the whims of the stock market, such as selling good assets when you don't have to sell."

On the current level of business activity, Mr Satterley rated conditions at 6.5 out of 10. Demand was improving, but had a long way to go.

"We're happy with how we're performing. We got to 10 out of 10 during the boom, and we fell to six out of 10 at the depths of the downturn," he said.

"There is slight improvement under way, but I think it's too early to say we're through the worst of the downturn, though I don't think we're far away from a sustained recovery."