Founding principal of Bryanston resigns amid fundraising

Stephen Smith has left the Chicago-based real estate investment firm just ahead of a final closing on its second opportunistic retail fund.

Stephen Smith has resigned as founding principal and chief operating officer of Chicago-based Bryanston Realty Partners. According to a statement released by Smith, his resignation comes just ahead of a final close on the investment advisory firm's second opportunistic retail fund. 


In a conversation with PERE, Smith insisted that he and the firm he helped found did not part on bad terms. “We had a good run,” he said. “Now was a good time in my career to try something different.” He noted that he has no immediate career plans and currently is evaluating his options.

Smith decided to leave Bryanston before it closed on and began investing Bryanston Retail Opportunity Fund II, a $300 million opportunistic vehicle that the firm expects to close within the quarter. “I did not want to have the fund close on its commitment period then reconsider my commitment to the organisation,” he said. “Now's a good time for me to move on, and I wanted to do that before I made this commitment to investors. I decided it was the fair and appropriate thing to do.”

Smith did admit that he had a difference of opinion with his partners as to how to move forward with Fund II, although he pointed out these “differences were not that significant.” The remaining founding principals, Hersch Klaff and Patrick Peery, declined to comment on Smith's departure. 

Launched roughly one year ago, Fund II is a follow-up to Bryanston's first fund, a $150 million vehicle. Fund II will target distressed retail loans—primarily backed by shopping centres—in the US. It is targeting net IRRs in the 20 percent range. 

The minimum commitment to Fund II is $10 million, and current investors include pension plans, endowments and non-US sovereign funds. The fund is not using a placement agent, which could be a problem as, according to Smith, he was primarily responsible for raising funds while at Bryanston. 

Bryanston was founded by Smith, Klaff and Peery in 2004. According to its website — which still lists Smith as a principal — the firm has been involved in the repositioning of $5.5 billion in real estate assets totalling 85 million square feet of leasable space since its inception.