Colony gears up for diversification drive

The Los Angeles-based private equity real estate firm, famed for its opportunistic plays, is expanding into new areas. The move is being spearheaded by Colony president Richard Saltzman, the man credited with creating the first real estate opportunity fund and the modern-day REIT.

Colony Capital is considering long-term plays in the energy and infrastructure fields as part of a bid to diversify the private equity real estate firm’s brand, according to president Richard Saltzman.

In an exclusive interview published in the September issue of PERE magazine, Saltzman spoke about the firm’s strategic push, revealing energy and infrastructure were two spaces that could have “deep opportunities” for the firm in the future. He also spoke about Colony's opportunistic investments, notably in the distressed arena.

Saltzman was recruited by Colony founder Tom Barrack in 2003 to take charge of the firm’s new business initiatives and guide Colony’s strategic planning, acquisition and asset management activities. Saltzman has since helped the firm establish a core-plus, value-added platform, Colony Realty Partners, and two years ago, the real estate securities arm, Colony Investment Management.

In the interview, Saltzman said Colony’s diversification was about creating an organization where the “sum of the parts is greater than the constituent pieces.” He added that it’s not a case of trying to be “all things to all people” but about developing “opportunities that are complimentary and synergistic to what we already offer. Different spaces should not be siloed off.”

The former Merrill Lynch real estate veteran is credited with creating the concept of the first real estate opportunity fund through the Sam Zell/Merrill Lynch funds in the late 1980s, as well as being one of the driving forces behind the modern-day real estate investment trust.

During the interview, Saltzman also spoke about Colony's global opportunity funds and the firm's refusal to be boxed into one set strategy. “It’s not about the underlying way of getting there, it’s about what the ultimate return is,” Saltzman said. “With Colony’s global funds there are no themes or rules guiding how we can think about the business and the opportunities available to us. We don’t emulate whatever success there has been already in the market place.” 

Saltzman has been “front and center” on many of Colony's distressed investments, and speaks about the 2004 acquisition of the Fukuoka Dome baseball stadium, and adjacent hotel resort and shopping center. “We always like distress, even when we’re not in a distressed cycle,” Saltzman said.
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