Former Morgan Stanley chief Mantz joins Rialto Capital

Jay Mantz, the former head of Morgan Stanley Real Estate Investing, has joined Miami-based US distressed real estate company Rialto Capital Management as president to oversee the company’s property investment management business.

In an announcement today, Lennar Corporation, which owns Rialto, said Mantz would report to Jeff Krasnoff, Rialto's chief executive officer.

In the same announcement, it was revealed that Bill Landis, who joined Rialto in 2008 as its chief investment officer, was taking on responsibility for overseeing Rialto's asset management business with a new title of chief operating officer. He will also report to Krasnoff.

Mantz rose to prominence in property by holding the most powerful position in real estate investing at Morgan Stanley between 2000 and 2005 before being made global co-head of Morgan Stanley Merchant Banking, which included real estate, private equity and infrastructure investing activities.

He left the organisation after 17 years earlier this year.

Krasnoff said: “We are very excited that Jay has joined us at Rialto. We have worked and invested side-by-side with Jay during his almost two-decade tenure at Morgan Stanley and have had the opportunity to recognise first-hand what a great leader and business builder Jay is.”

Stuart Miller, chief executive officer of Lennar, added: “The addition of Jay and his unique capabilities furthers Lennar's strategy of growing our existing Rialto franchise, and in particular expanding our access to capital and new investment opportunities to create value for our partners and shareholders.”

In turn, Mantz said he had known Krasnoff and Miller for close to twenty years and called the operating platform he was joining “already a best-in-class” business when it comes to value investing.

The roots of Rialto lie in LNR Property Corporation, which was established by Krasnoff and Miller in 1990 and was an early pioneer in the commercial mortgage-backed securities industry. LNR was spun out by Lennar as a separate public company in 1996 and was taken private in 2004 for $4.4 billion. Rialto was then founded by Lennar in 2007 to take advantage of the recent turmoil in the residential market.

Last November it held a first close on its Rialto Real Estate Fund, garnering $300 million in equity commitments, to which Lennar contributed $75 million.

The vehicle is focused on distressed equity and debt investments in the US and in February 2010 acquired what was then the largest portfolio from the US banking regulator, the Federal Deposit Insurance Corporation. Rialto invested $244 million for a 40 percent stake in two portfolios with a combined unpaid balance of $3 billion. Within that, Rialto bought 5,166 residential acquisition, construction and development (ADC) loans, and 345 commercial ADC loans. The loans were from 22 failed banks in 10 states, including Georgia, Florida, California and Texas.

Lennar and Rialto have also invested $71.2 million in AllianceBernstein’s Public-Private Investment Program (PPIP) fund, which had raised $1.2 billion from private investors to buy real estate loans and securities through the US government's stimulus programme.

Lennar Corporation itself was founded in 1954 as a house building company and provides affordable, ‘move-up’ and retirement homes primarily under the Lennar brand. It also has a financing arm providing mortgage financing among other services.

As one of the country's largest homebuillers, it has been struggling of late with third quater profits falling 31 percent as a result of the weakened market.