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Going private

Tim Callahan, the former CEO of both Equity Office and Trizec, has formed a private real estate firm focused on the US office market.

Last June, Tim Callahan realized he would soon be out of a job. As the president and chief executive officer of Trizec Properties, Callahan had just helped negotiate the sale of the company to The Blackstone Group and Brookfield Properties in an $8.9 billion (€6.8 billion) transaction.

So before the deal even closed in October, Callahan sat down with a few of his colleagues to talk about what to do next. The result: Callahan Capital Partners, a private real estate investment firm focused on the office market.

Callahan Capital's strategy will be similar to the one pursued at Trizec: a strong operationally-focused model concentrated on the top ten US office markets, with a particular eye towards large portfolios. Joining Callahan will be familiar faces: William Tresham and Michael Colleran, Trizec's former chief operating officer and chief financial officer, respectively, as well as two former vice presidents at Trizec, Steve Budorick and Evan Boris.

“We have a good reputation as good operators,” says Callahan. “And what has been done on the public side, we can do on the private side.”

Callahan is widely credited with leading the turnaround at Trizec, which he joined as the CEO in 2002. He had previously served as the president and CEO of Equity Office Properties, which he helped take public in 1997. Because Callahan decided not to raise a fund—“I didn't want to go out of business for nine months,” he says—financing for CCP's transactions will be provided on a deal-bydeal basis from institutions and private individuals, several of whom have already approached the company. “We have not seen any lack of capital for us to do sizable transactions,” Callahan says.

After the sale of Trizec, Callahan notes that he was “anxious to form a private firm,” particularly because it offers more flexibility than in the public markets and gives him the ability to focus on a longterm strategy. But he adds that the balance of power between the private and public markets, currently titled towards the private sector, could shift. And he is not averse to taking advantage of those types of opportunities.

“We've been asked to look quite a bit at some public company opportunities,” Callahan says. “I've been asked frequently if I would get back into the public sector. We ran a public company very well and I would get back into that again.”

RREEF shuffles management
Stephen Steppe, the chief executive officer of North America at RREEF, has transitioned to the role of chairman of RREEF North America. There, he will focus on the investment and transaction side of the business. Replacing him in the CEO position is Timothy Gonzalez, previously the head of acquisitions for North America. In other moves, Brian McAuliffe will take over Gonzalez' role, while John Robertson is becoming CEO of global securities. RREEF, the property and infrastructure arm of Deutsche Bank, has approximately €55 billion ($72 billion) of assets under management, 55 percent of which are located in the US.

CPP welcomes IPC pro
The Canadian Pension Plan has hired Zach Vaughan, a former director of acquisitions at IPC US REIT, to be a portfolio manger focused on US real estate opportunities. Toronto-based IPC, which invests exclusively on US properties, is currently on the auction block. At the end of January, the company announced that it was looking for a buyer. Vaughan reportedly spent five years at the Toronto-based company. CPP has more than $100 billion (€77 billion) in assets under management, approximately 5 percent of which are currently invested in real estate.

Liquid Realty adds three
San Francisco-based private equity real estate secondaries firm Liquid Realty has added three new professionals to its growing staff, including Brendan MacDonald, John Wai and Bryce Popoff. MacDonald, who is joining as an associate, was previously at Babcock & Brown. Wai, a fund controller, worked most recently at Pricewaterhouse Cooopers, while Popoff, a senior accountant, was previously at Citco Fund Services. Liquid Realty was founded in 2002 and is led by Scot Landress, the former global head of real estate investment banking at Bank of America. The firm currently has over $1 billion (€770 million) of equity commitments under management.

New Boston Fund names director
Boston-based real estate investment firm New Boston Fund has hired Patrick Shooltz as regional director for acquisitions and development for the mid-Atlantic region. Shooltz was previously senior vice president for business development at West Group, a real estate firm based in McLean, Virginia. Founded in 1993, New Boston Fund has invested approximately $2.5 billion (€1.9 billion) of equity through seven private equity real estate funds.

Starwood Capital hires new VP
David Friedman has joined Greenwich, Connecticut-based private equity real estate firm Starwood Capital as a senior vice president for asset management. Prior to Starwood, Friedman was an executive vice president with Capital Properties and a vice president for the Louis Dreyfus Property Group. At Starwood, he will report to Jeffrey Dishner, the firm's chief operating officer.

Blackstone acquires EOP for $39bn
The Blackstone Group has won the bidding war for Sam Zell's Equity Office Properties after the real estate investment trust's shareholders voted to approve the private equity firm's offer of $39 billion (€30 billion). Shareholders will receive $55.50 in cash per share. New York REIT Vornado dropped out of the bid for Equity Office, saying in a statement that the premium it would have to pay was “not in its shareholders' interest.” The battle for Equity Office kicked off in November, when Blackstone agreed to buy the largest owner of office properties in the US for approximately $19 billion plus $17 billion in debt.

Rubenstein acquires $500m in Atlanta offices
Philadelphia-based Rubenstein Properties Fund has acquired approximately 3 million square feet of office space in Atlanta's Central Perimeter market from Equity Office Properties. The purchase price was approximately $500 million (€386 million). The portfolio, which is 78 percent leased, includes around 2.5 million square feet of office space, 500,000 of which is being sold off to two third-party buyers.

BPG acquires $314m PA apartment portfolio
Yardley, Pennsylvania-based private equity real estate firm BPG Properties has acquired a 22-property apartment portfolio from real estate company National Properties for $314 million (€243 million). The portfolio is composed of 3,437 units located in Eastern Pennsylvania cities like Allentown, Reading and Harrisburg, as well as the Philadelphia suburbs. The multi-family acquisition, which is the largest transaction in the firm's history, came out of BPG Investment Partnership VII, a $550 million vehicle, with additional equity from an unnamed institutional co-investor.

Tishman, Walton Street in $200m LA office buy
New York developer Tishman Speyer and private equity real estate firm Walton Street Capital are teaming up to develop offices in the Playa Vista area of Los Angeles. The joint venture is acquiring 64 acres of land from Playa Phase 1 Commercial Land Company for around $200 million (€154 million). Located in the eastern part of the Playa Vista project, the land will reportedly allow for the development of two million square feet of office space. The plot includes the historic district that was formerly the location of the Hughes Aircraft Company.

Divco acquires TX office park from RREEF
San Francisco-based DivcoWest has acquired an office park in Austin, Texas from RREEF, the private equity real estate arm of Deutsche Bank, for a reported $49 million (€64 million). Situated in the northwestern part of the city, the 28-acre Parmer Business Park sports 256,737 square feet of rentable office space spread over six one-story buildings, as well as 1,600 parking spaces. The property was completed in 2001.