DLJ Real Estate poised for management takeover

The private equity real estate division of investment bank Credit Suisse is in discussion with the management of its opportunity funds and its limited partners with a view to spinning out the business.

DLJ Real Estate (DLJ RE) is in line to become the latest investment bank-owned private equity real estate unit to be cut loose.

Its owner Credit Suisse is in negotiations with the limited partners of the funds managed by DLJ RE with a view to ceding management of the platform.

Should these negotiations materialise in a separation, Credit Suisse will join Lehman Brothers, Citigroup and Merrill Lynch on the list of investment banks to significantly reduce its private equity real estate funds exposure.

The plans to spin-out the DLJ RE, led by managing partner Andy Rifkin, are understood to be part of a wider strategy by Credit Suisse to focus on business lines where it can achieve greater scale, a source close to the matter said.

DLJ RE, which has raised more than $2 billion in equity for its funds programme over the last five years, is run from offices in London, New York, Tokyo and Zurich. It was formerly part of US investment bank DLJ which Credit Suisse acquired in 2000.

Investors in its funds include the Australia Post Superannuation Scheme, the Contra Costa County Employees Retirement Association, the North Carolina Department of State Treasurer and the New York State Teachers Retirement System.

The business is currently part of Credit Suisse’s Credit Suisse Real Estate Investments Group. The group, which manages approximately $33.5 billion of assets, also includes Real Estate Asset Management focusing on core and core plus investment strategies, Global Real Estate Securities focusing on real estate securities management initiatives, Real Estate Private Fund Group, a placement agency business and the Real Estate Commercial Senior Debt division which targets senior debt investments.

Credit Suisse declined to comment.