AMERICAS NEWS: End of an era

Private equity real estate platforms affiliated with big financial institutions are a dying breed. Lehman Brothers Real Estate Private Equity, Citi Property Investors and ING REIM are all changing hands. DLJ Real Estate Capital Partners is the latest platform to be added to the list.

Currently sponsored by Credit Suisse, DLJ Real Estate is set to spin out amid advanced plans for a management buyout.

The Swiss bank first alerted limited partners in DLJ’s four commingled funds, as well as employees of its wider real estate investment group, of the move in April but news of the decision only leaked to the financial press this summer. The spin-out is expected to be formalised in the coming months following negotiations with LPs, people familiar with the matter said, with managing partner Andy Rifkin likely to continue running DLJ Real Estate following a deal. The other senior members of DLJ Real Estate are Carmine Fanelle, Carla Giannini, Robert Cavanaugh and Bill Helm.  

The spin-out marks the end of a 10-year relationship between Credit Suisse and DLJ Real Estate, which inherited the platform in 2000 when it took over investment bank, Donaldson, Lufkin & Jenrette, in a seismic $11.5 billion deal.

According to sources familiar with the matter, the decision was prompted by a difference of opinion over how to scale the business in the future.

Credit Suisse declined to comment, however a person close to the organisation stressed the spin out was part of a “wider strategy” to focus on core businesses. The source added that Credit Suisse had a history of spinning out its operations. “It’s not the first and it won’t be the last,” added the person.

Despite announcing the spinout in April though, other sources have said Credit Suisse had initially remained interested in staying in the real estate investment business. Indeed, Credit Suisse even saw the sale of ING Real Estate Investment Management as a possible means of staying in the space. It was unclear whether Credit Suisse are still in the bidding process for ING REIM, with initial bids for the real estate arm of the Dutch insurance group expected in mid-September.

Credit Suisse has seen a gradual depletion of its real estate alternative investment capabilities not least following the departure of much of the placement business, the Real Estate Private Fund Group, and the loss of Anders Âström and Tomas Otterud from its fund of funds operations.