The REA Group Limited (ASX: REA) share price is 3.7% or $2.67 higher in lunchtime trade today after the operator of the www.realestate.com.au website told the market yesterday that Owen Wilson would be its next CEO when Tracey Fellowes departs in January 2019.
Mr Wilson is the current chief financial officer who has been with the digital operator since 2014 and investors are likely pleased that a candidate with an already strong understanding of the business will take the top job.
The Australian newspaper is also quoting Mr Wilson today as saying that he hopes the group's Asian operations it bought off the iProperty Group back in 2015 for around $750 million will start to deliver more growth.
Unfortunately, it's clear now that REA overpaid for this collection of Asian digital assets across Malaysia, Hong Kong, Singapore, Thailand and Indonesia, with it already having written off a $180 million in the value of the investment and potentially more write-downs coming.
Its Asian operations took in just $8.3 million in EBITDA on $44.3 million in revenue over FY 2018, which puts the stratospheric total purchase price around $75o million in sharp context.
In FY 2018 alone $134 million went towards the repayment of debt for the Asian iProperty acquisitions, with another $120 million already earmarked for FY 2019.
Fortunately for REA Group investors have shrugged off this blunder thanks to management's otherwise outstanding performance.
Another notable point from The Australian's article today was Mr Wilson's admission that the "secret sauce" of REA Group's success is in fact its human capital and relationships with estate agents.
Anecdotally, I recently met some REA Group sales staff for lunch and was impressed, with much of the group's success dependent on strong relationships with agents as Wilson acknowledges.
Foolish takeaway
As an investor it's easy to forget how human talent across a business commonly drives its success or failure, with REA's outstanding performance down to this more than any other factor in my view.
As such I'll continue to hold a few shares, with its strong recent quarterly result speaking for itself despite the soft housing market conditions.
In fact if I didn't already own a few shares I'd be happy to buy more today for many other reasons commonly covered in prior articles on the business.
