Credit Suisse placement arm plots growth after senior hire

The real estate placement arm of Credit Suisse has hired former REMCap executive Maxwell Rothaus to lead its advisory operations in US.

Credit Suisse Real Estate Private Fund Group (REPFG) hired Rothaus to be part of its real estate project management team based in New York in mid-August. The hire bolsters REPFG's advisory functions amid expectations of further growing the capital raising business in 2012.

Rothaus was previously a principal at REMCap and prior to that director of investments at Madison Harbor Capital, which later merged with Aviva Investors.

There are many false starts in the market place today and false starts are very costly to the managers. Anthony Carpenito, managing director and head of Credit Suisse REPFG

Anthony Carpenito, managing director and head of REPFG, told PERE the advisory role of placement agents in preparing fund sponsors ahead of any fund launch had taken on even greater importance in today’s tough fundraising environment.

“There are a lot of funds out there that are not getting done or are struggling to get to a first close. There are many false starts in the market place today and false starts are very costly to the managers, not only in terms of the economic costs associated with the offering, but also in terms of the manager's capital raising track record and reputation,” said Carpenito.

For some managers, the right advice might be to look to a joint venture, single-asset deal or club fund rather than a blind pool, commingled vehicle, Carpenito said. “There are a lot more nuanced conversations today than ever before.” As part of Rothaus’ appointment, REPFG is also expected to consider providing advisory-only work not tied to capital raising although this will remain a small part of the business.

Carpenito said REPFG expected to take on a “few more potential” deals in 2012, but he conceded the fundraising market was still challenging.

Asked if the landscape had improved over the past 12 months, he said the market had bifurcated between a handful of successful large, global players and niche managers able to position themselves close to the asset. “It’s a bar bell with each of these types of managers at either end.  Each have the best potential to do well, but the other managers in between will find it hard to distinguish themselves and therefore are more likely to find it significantly harder to raise capital.”

According to data from consultant, The Townsend Group, there are currently more than 505 closed-ended real estate funds in the market – with GPs spending much longer in market and struggling to get close to their targeted equity amounts.

In the first half of this year, Townsend revealed that real estate funds with an initial closing due in 2011 corralled just $2.8 billion of equity compared to a target of $77 billion – the equivalent of 4 cents on the dollar. For 2010 vintage funds, GPs raised the equivalent of 24.5 cents on the dollar, securing $17.6 billion against a targeted $71 billion.