Guggenheim Structured Real Estate rebrands, spins out

The former fund manager of GSREA II, a fund that struggled greatly in the financial downturn after the collapse of Lehman Brothers, has changed its name to Talmage and expanded its business model.

The platform and team formerly known as Guggenheim Structured Real Estate Advisors (GSREA) has separated from its Guggenheim Partners parent and rebranded itself as a newly independent firm with an expanded focus.

Doing business under the name Talmage, the New York-based entity is now an advisory firm and special servicer in addition to being a commercial real estate fund manager. Talmage also has a hedge fund capital-raising business and trades in CMBS, something it wasn’t active in when it was GSREA. In addition, as part of the rebrand, Talmage has moved its headquarters to 430 Park Avenue.

According to a statement released by the re-branded organisation, Talmage is “an active investor in, and advisor/special servicer on, large and complex commercial real estate transactions”. Since doing business as GSREA in 2003, the firm has made in excess of $10 billion of commercial real estate fixed-income investments, acted as the special servicer on $10 billion of transactions and advised on more than $30 billion of loan restructurings and modifications.

“We invest side-by-side in all of our investment vehicles and provide bespoke services for our investors (such as customised separate accounts) and for our special servicing and advisory clients,” the statement added. At press time, representatives from Guggenheim Partners did not return calls seeking comment.

Ed Shugrue, CEO of Talmage, said the firm changed the name to reflect both its expanded services as well as its independence from global financial services firm Guggenheim Partners. “Guggenheim is only a minority of our business, so it made sense to rebrand ourselves and make it clear that we’re independent,” he said, although he pointed out that Talmage still manages money on behalf of Guggenheim. 

Shugrue offered another reason for the name change: “Our corporate name [GSREA] doesn’t roll off the tongue, so we put the name Talmage together because it’s easier to say.” 

Prior to this rebranding, the firm had faced considerable problems with Guggenheim Structured Real Estate (GSRE) II, a $770 million vehicle it had raised in 2006. Investing in commercial property debt in 2008 just before the bankruptcy of Lehman Brothers and the global financial crisis, the fund ultimately collapsed. Various media reports in late 2008 stated that GSREA had asked investors in GSRE II for $300 million of new equity to meet margin calls and reduce debt. 

According to documents from the New Jersey Division of Investment, which committed $50 million to GSRE II in early 2006, the Garden State’s investment board wrote off its commitment, listing the current market value of the investment as zero.

Despite the struggles of GSRE II, the firm did launch a follow-up fund. GSRE III closed on $1.25 billion in 2007 and is currently fully invested.  

Although Shugrue did not deny the bad press associated with GSRE II, he insisted the name change and rebranding were not connected to the vehicle’s demise. “Lehman went out of business in 2008. Fannie [Mae] and Freddie [Mac] were both closed. These are well-known facts. It doesn’t make us feel any better, but the reality is markets evolve and products evolve. So in addition to creating pain, 2008 created extraordinary investment opportunities for us,” he said.  

Rounding out Talmage’s executive team is Grant Rogers as chief operating officer, Neil Koenig as chief financial officer, Jonathan Block as director, Daniel Abram and Brendan McCormick as senior vice presidents and Sara Peterkin as associate.

Shugrue declined to comment on Talmage’s current fundraising activities, but sources familiar with the situation have revealed that in addition to harvesting returns on behalf of GSRE III, Talmage is preparing to launch a $350 million opportunistic recapitalisation fund with a hard cap of $500 million to target non-distressed assets.