Boston private

Although Ken Munkacy, the newly appointed chief operating officer of New Boston Fund, has only been with the firm since the end of October, his relationship with the Boston-based real estate investment company goes back to the beginning of his 25-year career in the industry.

In the early 1980s, Munkacy started work at Halcyon Real Estate Advisors on the same day as Jerry Rappaport Jr, New Boston Fund's current chief investment officer. Although the two would go their separate ways, Munkacy stayed close with Rappaport and eventually advised his family on the establishment of their firm, New Boston Fund, in 1993.

“Over the years, I was the kitchen cabinet for Jerry,” says Munkacy, referring to the mutual exchange of ideas, products and even personnel between him and the Rappaports. “And they were my kitchen cabinet. I've known their people and products for a long time. Joining the firm was a natural progression.”

New Boston is currently investing two funds. New Boston Fund VI—what Munkacy refers to as “the mothership”—closed on approximately $420 million (€360 million) in June 2004 and is approximately 50 percent committed. In addition, the firm recently held a first close on $100 million for its Urban Strategies America Fund, an investment vehicle geared toward urban development— Munkacy notes that the firm is aiming for a final close of approximately $200 million.

Although New Boston has traditionally invested in a broad range of property types in the Northeast and Midwest, the firm has begun looking at opportunities in Florida and the West Coast. The international arena could possibly be next.

“We're always open for new opportunities,” says Munkacy, referring to the possibility of overseas expansion. “There is a lot of temptation all over this planet—we'll be taking a hard look at who we are and how we want to grow in the future.”

New Boston's international perspective will no doubt be shaped by Munkacy's experiences. Before joining the firm, he worked in Prague as senior managing director of a joint venture between GE Capital Real Estate and Chicago-based investment company Golub & Co. Munkacy has also spent time in Asia, where he was both a managing director of Asia for Starwood Capital and president of TrizecHahn Asia.

It's a skill set that Munkacy believes will serve him well at New Boston, whether his new firm ventures abroad or continues to focus on the US market. “I've done transactions in over 12 countries,” he says. “Real estate is something we all do in the same language everywhere. The basic blocking and tackling is common to all countries.”

PEOPLE

Sternlicht lambasts Starwood/Marriott deal
Barry Sternlicht, chairman and chief executive officer of private equity real estate firm Starwood Capital, has openly criticized the recent decision of Starwood Hotels to sell 38 hotels, more than a quarter of its properties, to Host Marriott for $3.3 billion (€2.8 billion). Sternlicht, who built StarwoodHotels into a leading hospitality company before stepping down as executive chairman in May, told the Wall Street Journal that the sale represented “a very black day for Starwood shareholders and its board. I am 100% certain that private equity interests would have paid more for these assets.” Sternlicht, one of the company's largest shareholders, told the Financial Times: “This is not the transaction that would have maximized shareholder value. I cannot fathom why this was not put to shareholder vote. I would not have voted for this.”

Stanford real estate pro joins hedge fund
New York-based hedge fund manager Sterling Stamos Capital Management has hired Verna Kuo to help the firm oversee its real asset investments. Before joining Sterling, Kuo worked at Stanford Management Company, the investment arm for Stanford University, where she was responsible for managing a multi-billion dollar real estate and natural resources portfolio. Kuo will join David Hood, a former principal with Lone Star and Carmel Partners, who was hired by Sterling in June. The firm, founded in 2002 by New York Mets owner Fred Wilpon, currently manages over $2 billion (€1.7 billion) in capital and invests in fixed income, absolute return strategies, public market equities, private equity and real assets.

Marathon names senior director
Marathon Real Estate, the property investment arm of New York-based hedge fund Marathon Asset Management, has hired David Friedman as senior director and chief legal counsel. Friedman, who had previously spent twelve years at the law firm Proskauer Rose, will work on a broad range of issues including transaction structuring, asset management and business development. Launched in 2004, Marathon Real Estate is headed by managing director Jon Halpern and has thus far completed 14 transactions totaling $1.4 billion (€1.2 billion). The firm recently acquired a residential complex in St. Petersburg, Florida for $111 million; Marathon is also the lead equity investor in the $285 million development of the Grand Hyatt hotel on the San Antonio Riverwalk.

Citigroup Property Investors adds two
Citigroup Property Investors, the principal real estate investment arm of the financial services company, has added two professionals to its staff in North America and Europe. In Los Angeles, the firm has hired Christopher Harris, formerly with GMAC Institutional Advisors, as a director with responsibilities for institutional marketing and client relations. In London, Alasdair Findlay-Shirras, formerly with Henderson Global Investors, has joined as a director responsible for business development and client relations for Europe and the Middle East. Citigroup Property Investors is led by president and chief executive officer Joseph Azrack—the group currently employs 75 professional in four offices worldwide and manages $7 billion (€6 billion) in real estate commitments.

New chairman at AFIRE
The Association of Foreign Real Estate Investors (AFIRE), a nonprofit organization, has named Mark Ballie as the group's chairman. Ballie, a principal with Macquarie Capital Partners, is the first Australian to hold the post. He replaces the 2005 chairman, Stephen Zoukis, a partner at Atlanta-based real estate investment firm Jamestown. Founded in 1988, AFIRE currently has 157 members from 17 countries, who collectively have approximately $300 billion (€256 billion) invested globally.

DEALS

Blackstone acquires La Quinta
The real estate arm of The Blackstone Group is acquiring Dallas-based extended-stay chain La Quinta, taking the company private in a $3.4 billion (€2.9 billion) deal. The private equity group paid $11.25 per share, a 37 percent premium over the stock's previous closing price. The chain owns 360 hotels and franchises an additional 240 in 39 states. BlackstoneReal Estate has made a number of hotel investments recently, including the Rihga Royal hotel in New York City, The WyndhamInternational Group and the Extended Stay America chain. The firm closed its last USfocused real estate fund, Blackstone Real Estate Partners IV, on more than $2 billion in May 2004.

CNL exits hotels to Goldman, Strategic Hotel
Orlando, Florida-based real estate investment trust CNL Hotels & Resorts has sold its stake in two properties, the Waikiki Beach Marriott Resort in Hawaii and the historic Hotel del Coronado in San Diego. The former, a 1,310-room hotel in Oahu, was sold for $279 million (€239 million) to Goldman Sachs' Whitehall Street opportunity fund. CNL sold Chicago-based REIT Strategic Hotel Capital a 45 percent stake of the Coronado, a 679-room hotel CNL purchased alongside buyout shop Kohlberg Kravis Roberts and its KSL Resorts affiliate in December 2003. KKR and KSL are both increasing their stake in the property, which the deal reportedly values at $745 million.

Goldman venture checks out of East Side Marriott
The New York Marriott East Side in Midtown Manhattan, co-owned by Goldman Sachsand a subsidiary of REIT Strategic Hotel Capital, was sold to a Morgan Stanleycore vehicle for $287 million (€245 million). The 646-room, 35-story hotel, which sports 19 meeting rooms and 17 suites, was acquired by Goldman in 1998 for approximately $191 million, who then renovated the hotel. The buyer, Morgan Stanley's PRIME Fund, is a $4.5 billion core vehicle with office, retail, multi-family, industrial, self-storage and hotel assets throughout major markets in the US.

JER picks up O'Hare Westin, Boston offices
Starwood Hotels and Resorts, a company formerly controlled by Barry Sternlicht, sold the O'Hare Westin to McLean, Virginia-based private equity real estate firm JER Partners for $106 million (€91 million). The 525-room hotel, located two miles from Chicago's O'Hare International Airport, will continue to be managed by Starwood under its Westin banner. The 665,000 square foot property, which includes a 12-story tower, amphitheater and 43,800 square feet of meeting space, is JER's second acquisition in the Chicago area: in January of this year, the firm acquired the 751-room Westin Michigan Avenue Hotel for $137 million. JER also recently announced the acquisition of two office properties in Boston's Financial District for a combined $53 million.

Investcorp acquires retail, offices
Private real estate investment group Investcorp has acquired three properties in Florida, New Jersey and Washington, DC. The firm teamed up with Fort Lauderdale, Florida-based Gumberg Asset Management to acquire the Embassy Crossing Shopping Center, a mall in Tampa suburb Fort Ritchey; Investcorp also acquired the Seaview Square Shopping Center in Ocean Township, New Jersey, in a joint venture with Chatham, New Jersey-based Fidelity-AMG Realty Partners. The transactions have a combined value of $115 million (€98 million). In the office sector, the firm worked with private real estate investment firm Brickman Associates to purchase Maritime Plazas I and II, two office buildings adjacent to the Naval Yard in Washington. The office properties were purchased from The Bernstein Companies for an undisclosed price.