Four former senior directors at New York-based sale and leaseback specialist, WP Carey, have formed a firm that will concentrate on the same strategy.
Northcliffe Asset Management has been formed by Gordon DuGan, former chief executive, Benjamin Harris, former head of US investments, Alistair Calvert, former head of the firm’s London office and Michael Heal, from the investment department in the same London office.
DuGan, who resigned from WP Carey in July citing a disagreement with chairman, Polk Carey, has assumed the title executive chairman and managing partner of Northcliffe, and said he intended to build the firm into a global investment manager for sale-leasebacks and net leased investments.
He was appointed president of WP Carey in 1999, co-chief executive in 2002 and chief executive in 2005.
During this period, the firm’s assets under management rose from $2.5 billion to around $10 billion in 2010, becoming the largest company in the sale and leaseback investment sector.
However, he fell out with the firm’s founder culminating in his departure. At the time, he said he was leaving “based on a disagreement with respect to the degree of authority and control of the chairman and a disagreement with the chairman on the strategic direction of the company”.
DuGan said: “We expect to benefit from extraordinary opportunities available in the current economic climate. Companies are climbing out of a period of turmoil, with liquidity and capitalization their primary concerns. They are looking at a variety of financing alternatives, such as sale-leasebacks. On the fund raising side of the equation, we are also seeing unprecedented interest from investors as virtually no other real estate strategy offers the risk adjusted cash returns of sale-leasebacks in this environment.”
He added the European team was already managing a successful net lease portfolio and was actively investing, while the US team would begin soon.
Calvert, managing partner of the firm’s Europe business added that opportunities in sale-leaseback transactions had “never been greater”, given the spread between the rental yield on investments and financing costs at historic highs. “Constrained capital markets and the over-leveraged corporate sector have resulted in a huge supply of transactions. The undeveloped nature of the European market – which at $4 trillion has twice the level of owner occupied commercial property of the US – suggests that this deal supply will continue.”