Kathryn House
Hello, and welcome to Talking Property. I'm your host Kathryn House, and for our latest episode, I thought we'd change gear.
Lee Holdsworth
With the right funding partner, there's a great opportunity to take advantage of the growth in the renewable space.
Kathryn House
That's Lee Holdsworth, a Bathurst 1000 Supercars winner and commercial real estate expert at CBRE, who has a key focus on alternative investment assets, particularly in the renewables space. Lee has 21 Bathurst 1000 starts to his name and took the top spot on the Mount Panorama podium three years ago. While he's retired from full-time racing, he continues to take to the track as a co-driver for endurance events, alongside his expanding CBRE career. I've been wanting to chat to Lee for some time now about how he made his career change, what put property on his radar, how to have a winner's mindset, and where he sees the property opportunities as Australia makes the energy transition. So I'm delighted that he was able to join me. Welcome to the program, Lee.
Lee Holdsworth
Thanks, Kathryn. Thanks for having me on. You're making me sound very old saying I've done 21 Bathursts. I didn't actually realise I've done that many.
Kathryn House
You're a spring chicken! Maybe to start off, I'd love to know what sparked you to pursue a career in property? A little birdie has told me it may have been spurred by a COVID lockdown beer.
Lee Holdsworth
Yeah, that's probably one of the reasons, but I think when you're in motorsport or when you're in any sport, you commit your whole life to it and you sacrifice so much, so you've got the blinkers on for most of your career and not focusing on having a backup, and that was me. From the time I was six years old, it's all I wanted to do was race cars, and then I was fortunate enough to make a career of it, but I'm now 41 years old, and it was when COVID started hitting us, so I was, what was it, three years ago?
Kathryn House
I think we've all tried to black it out.
Lee Holdsworth
I know, I know. We want to forget about it, but to be honest, it was such a turning point of my life, and it probably came at a time for me where I really needed to have a backup and start focusing on something else because you can't do this forever. You can't play sport forever. Your body doesn't allow it, and I was getting to that point where I needed to move out and into another career, and so lockdown forced me into that. So in 2021, I lost my drive. Because of COVID, we lost sponsorship in the team, and that meant that I was sitting on the sidelines for 2021. At that point, I wondered what the hell I was going to do with myself. I was always interested in property. I had some good connections there through racing. I know a lot of the developers and a lot of high-net-worth individuals, so I reached out to my contacts, and they gave me some advice to go and get my real estate license, which I did in 2021. I also won Bathurst that year, so I got asked back full-time the next year. I was a co-driver, of course, so I wasn't racing full- time. For the end of 2021, I had my real estate license and was ready to go full-time the following year with CBRE. Got offered a position and that's how it came about, but funnily enough, I took the full-time drive instead under a promise that I would be full-time the following year and I'd be part-time for 2022. Start of '23, I started full-time with CBRE and now part-time racing. Yes, it was a great transition year, dipping my toes in the water and getting to understand the industry and understanding all of the team and the Capital Markets team at CBRE and also the industrial team that surround me. It was a really good, warm introduction to CBRE and the property industry.
Kathryn House
Dare I ask, is there a little irony in the fact that you've gone from a petrol-guzzling career into one where one of your focus areas is renewables?
Lee Holdsworth
Yes, yes [laughs], a little bit of irony. I always say that I spent my life ruining the earth or polluting and smoking rubber and burning tyres, and now I'm here to give back. I'm trying to offset the carbon emissions that I put out there and now selling renewable energy assets, so it is a little bit ironic. I came into CBRE to focus on the automotive sector, so car dealerships and petrol stations, and it was a natural fit for me with my background and contacts. That has evolved a lot over the past couple of years into now what we've seen as a massive gap in the market and that's in renewables, that there's all these institutions and corporations are now looking to go down the greener path. That's the way that we chase it, but I'm sure we'll touch on that soon.
Kathryn House
Why do you think there's such a growing emphasis on alternative investment assets, particularly in the renewables space? Is it portfolio diversification, income stability, carbon offsets? What's really driving that interest?
Lee Holdsworth
Yes, I think mostly it's diversifying the portfolios and investors are wanting to mix it up. They're moving beyond the traditional assets like stocks and bonds. They want steady income. Long-term power purchase agreements can do that for them, which is what those renewable investments offer. The 10-20 year commitments from PPAs, which is a great source of revenue, and then going green, companies are keen to reduce their carbon footprint and meet their ESG targets. There's also government support. There's policies and incentives that are encouraging investments, investment in the alternatives space. Then, you've got technological advancements as well where it's making the costs of the projects cheaper, which is driving better returns. Then there's, of course, clean energy demand as the climate action concerns continues to grow, so there's a number of factors that are driving the alternative investment assets.
Kathryn House
Absolutely. So taking a step back, I'd love to learn more about your motorsport career. I've read that it started with go-karting before you began racing cars at just 17 years of age.
Lee Holdsworth
It did. Yes. I think people ask you how you get into motorsport, and it really comes down to having someone in the family that loves motorsport in the first place. It's not like you go to school and all of a sudden you want to go and race a go-kart. My Dad was an avid motorsport follower, and we were watching Formula One and Supercars, or touring cars back then, when we were four years old and five years old watching Bathurst. He'd pull down the mattress and set up for the day and it was a whole day event back then, and watching Bathurst was really what got me into motorsport in the first place. But obviously Dad had to go out and buy the go-kart. I got a go-kart when I was six years old, and then spent racing every couple of weekends with my brother out at the go-kart track up in Ipswich or Gold Coast or Lismore or somewhere close to Brisbane. Then, we eventually got into car racing by the time I was 17, but there was a lot of sacrifices that came with that, but it was also a great thing for my brother and I and Mum and my Dad to spend time as a family, because Dad was out working his ass off and really didn't have time to do anything else with us apart from go racing.
Kathryn House
Yes, so if we fast forward to you winning the Bathurst 1000 in 2021, it sounds like you've always had a never give up attitude. I was reading that you and your teammate, Chaz Mostert, had been largely written off. There'd been a tyre delamination on lap 50 of 161. You limped back to the pits for an unscheduled stop, car dropped to be almost 50 seconds off the lead. But I believe a wandering echidna reset the race?
Lee Holdsworth
Yes [laughs], we wonder if that same echidna caused the puncture on our tyre.
Kathryn House
He took something away and he gave it back.
Audio of Race Commentator
There's a safety car. Oh, and what an Australian reason for a safety car. There's an echidna on the edge of the racetrack.
Lee Holdsworth
It was an amazing week. Chaz and I and the Walkinshaw Andretti United team. As soon as we got there on the, well, we get there on a Monday usually at Bathurst, and you've got all the lead-up, all the commercial arrangements with sponsors. Then, you finally hit the track on Thursday. As soon as we hit the track for practice one, we had a really speedy car and we basically topped every session up until the race. Chaz put it on pole. I was the driver in the car to start the race. We got away to a good start and led the race and we're dominating up until that tyre failure, and then we got written off pretty quickly from the commentators and probably most of the others around us were probably pumping their fists because the fastest car was out. Well, people thought we were out of the race. We dropped down to about midfield and fought our way back. It was actually pretty cool to fight our way back because I think it would have been a bit boring just to lead it from start to finish. We had to have some...Bathurst always throws so many challenges at you, whether it's weather, whether it's echidnas crossing the track or kangaroos or snakes. There's always something that provides some entertainment. For us, it was the echidna that came out at a crucial time for us when we needed a safety car, and so that got us back in the game, to be honest, as well as the speed of the car and Chaz and myself. We fought on and in the last stint we're in the top three and managed to come home to win it by the end. An incredible feat and something that, as I said, when I was a young bloke, I was watching that race with all the legends in the sport, your Dick Johnsons and Peter Brocks and Craig Lowndes and all those guys that made, well, Bathurst really made them. Then, to put my name up with the likes of those names was very, very surreal, and I think it was my 18th attempt at the Bathurst race to actually come home on the top of the podium after falling short so many times.
Audio of Post Race Interview
The 63rd winner of the Great Race. This is your life's work. How does it feel to have your name in the history books forever?
Lee Holdsworth
I honestly feel like it's been a dream this week. It's not going to sink in for a while, I don't think, but this week just couldn't have gone more to plan. We rolled out with such a quick car. Chaz has been quick. The team has given us a great car, so thanks to those guys, they're just amazing. Yeah, this one's been a long time coming for me, so I'm just stoked to get that one, and this is where we're going to enjoy it.
Kathryn House
You must have had a very proud Mum.
Lee Holdsworth
Yes, Mum was very proud. She's also very relieved every time I finish a race because she-
Kathryn House
Oh, I bet.
Lee Holdsworth
... chews her nails for most of it, but for Dad, it was a dream come true and it was a pretty special moment.
Kathryn House
Many former sports people have made, and you're not former yet, but sports people have made the transition to property. Why do you think that is? How has that winner's mindset helped you to make the transition?
Lee Holdsworth
I think it's the commitment that you have to show and dedication in sport to actually make it a profession. Also, you have to love what you do, you have to enjoy it, and you have to perform in a team environment, and you certainly have to do that in a race team. Although most of the viewers at home see it as just the driver in the car, there's so many people behind the scenes that make it happen. That's like in this corporate sector, in the property industry at CBRE where you've got your team around you, you all rely on each other. You get a result where you might get a fee or sell a property and you might be at the face of it, but there was a team of people behind you that made that happen. You can't lose sight of that, and I guess bringing in that attitude into the corporate world puts you in good stead to work in that team environment and really make sure that you're all looking after each other and you realise that there's going to be ups and downs. It's a rollercoaster ride, but if you stick at it, then eventually you'll succeed.
Kathryn House
Teamwork makes the dream work.
Lee Holdsworth
Indeed.
Kathryn House
Turning back to the work you're doing at CBRE, what are some of the major trends you're seeing in the energy and renewable space?
Lee Holdsworth
Renewable energy generation is a massive focus at the moment, this solar and wind energy that are leading the charge, big solar farms popping up everywhere. Then, because there are so many solar farms popping up everywhere, then, of course, it reduces the energy prices through the day. At night, the energy prices are still very high when there's no sun, so that's when there's a need for energy storage. Now, there's quite a large emphasis on battery storage. It's getting hotter. The Australian government's backing initiatives like community batteries and households with solar, but also with the large-scale batteries that are linked to renewable energy generation, there's incentives for those investments as well. Then, of course, Australia lacks grid infrastructure. They need to upgrade infrastructure to handle all the new renewable energy resources, so investment in transmission and distribution infrastructure is where you can expect a huge amount of investment to head as well.
Kathryn House
How important is it to find the right capital partners in this space?
Lee Holdsworth
Very important. The energy market's been flooded with demand thanks to the investors, your infrastructure funds, private equity firms, banks, government grants, but finding the right partner is key to it all. You need someone who shares the vision, understands the risks, and has the expertise to navigate the sector, and also having a partner that's committed for the long term is very important, but with the right funding partner, there's a great opportunity to take advantage of the growth in the renewables space.
Kathryn House
I'd love to know what returns are the really savvy investors getting in this space at the moment?
Lee Holdsworth
They're very attractive returns compared to your traditional investments in real estate. Someprojects are generating returns of 10 to 15% equity returns in solar and wind projects. Your debt returns are sort of five to 8% IRR for renewable energy projects. Then, yield returns are eight to 12% dividend yields for yield co-investors, so public traded companies that own and operate renewable energy assets. There's very attractive returns, but when you throw battery in the mix, it also, for a solar project, you can see a blended yield in the high teens.
Kathryn House
So that would be so attractive to investors at the moment.
Lee Holdsworth
Absolutely.
Kathryn House
We've talked a little bit about investment. I'd love to get a bit more of an idea about the types of investors that are most active at the moment. Is it domestic investors? Is it international investors? Where's that money coming from?
Lee Holdsworth
It's domestic. It's international investment as well through the infrastructure funds, the private equity groups, as well as family office as well. There's a huge interest from family office that I'm seeing as well, so really there's no limitations as to where the capital is coming from, to be honest.
Kathryn House
Lee, can you give us some examples of innovations you're seeing in the renewable space? I believe you're working with a group that's harnessing solar energy as it passes through glass paneling and turning it into electricity.
Lee Holdsworth
Yes, we are actually. There's so many products coming online at the moment that are really going to be game changers for the future, and one of the groups that we're working with at the moment has an exciting product that they've just introduced into the market. It's a building integrated solar PV technology, which acts as a replacement window and cladding on the side of buildings. It's a transparent solar panel, so it is a window. You wouldn't even know that it's generating electricity, and you can also put it on the side of buildings as a cladding replacement. You can do all kinds of patterns and everything on it that look like concrete or tiles or whatever you want it to look like, and also new innovations for rooftop solar solutions because there's a lot of issues with the structural integrity on the rooftop of your commercial buildings or office buildings. There's now a solution for that where you have a replacement roof, which is also generating electricity through the solar panels. Some of the other innovations we're seeing are energy storage advancements through solar state batteries and flow batteries, smart grids, and energy management. That's through the AI-optimised energy management and energy trading platforms. Then, the other innovations are we've got floating offshore wind that's happening out in the Bass Strait, and in the future off the coast of Newcastle, and concentrated solar power, which produces heat or steam to drive turbines. There's so many different products on the market that are going to change the future of energy in the C&I space.
Kathryn House
It's really exciting to see how quickly things are advancing.
Lee Holdsworth
It really is. It's happening so quickly and we're seeing new advancements with AI and that's across the board really, and is not limited to this space, in the energy space. It's such a great area to invest at the moment, and it's growing rapidly, you can't keep up with it, to be honest.
Kathryn House
Watch this space. Now, I have to mention that back in 2022, you were the winner of the Barry Sheene Medal, effectively the best and fairest for supercar drivers, recognising someone who displays outstanding leadership, character, personality, fan appeal, and sportsmanship throughout the season. You've certainly bought that mindset into CBRE and it's been great to have you on Talking Property, Lee.
Lee Holdsworth
Thanks, Kathryn. I certainly hope so, and I've just always enjoyed working with a team, and I guess sport isn't too dissimilar to business in that it's competitive and everyone needs to work together to drive the best outcome. My mindset hasn't changed. Hopefully I can do some good things within CBRE, but thanks for having me on.
Kathryn House
No, no, it's been fantastic.
Audio of Race Commentator
Here comes Chaz Mostert, Lee Holdsworth, his first-ever victory at Mount Panorama.
Kathryn House
To our listeners, thanks for tuning into this episode of Talking Property. Make sure to follow Talking Property wherever you get your podcasts so you don't miss our upcoming episodes. Until next time.
