Last month, PERE reported that Doug Sesler had left his position as head of global real estate principal investments at Bank of America Merrill Lynch (BoAML). The business is rapidly winding down. It is really a caretaker job there now. Doug Sesler I’m a big believer that the way you develop good relationships in this business is to do a transaction with somebody. Like it or not, this was a transaction Doug Sesler
With Sesler gone, the final part of the real estate platform’s wind-down is effectively on autopilot. “The business is rapidly winding down,” he said. “It is really a caretaker job there now.”
Sesler, a New York resident who has been in the real estate investment sector in one guise or another for the past 27 years, is now looking to the future and wants to work in principal real estate investing again soon. “I’m just trying to get a feel for what’s out there,” he said. “It could be an operating business or a fund and asset management platform; both are situations I’m looking at.”
When BoA met ML
Shortly after acquiring Merrill Lynch for approximately $50 billion in January 2009, a senior committee of Bank of America executives, including current chief financial officer Joe Price, met with Sesler, then co-head of real estate investment banking, to determine the future of its global real estate principal investments division. Ultimately, it was decided that Sesler would take charge of the platform to oversee its wind down.
In the end, European head Roger Barris led a management buyout of the European business ,while the management of the larger Asia business was handed to Blackstone as part of a deal with the main fund’s LPs, which also included a settlement for actions considered non-fiduciary valued at about $650 million.
“I put forward an entire strategy on how to wind down the global business,” Sesler said. “The spinout of Roger’s business was something I engineered with him. That was the approved transaction for exiting those assets.” Meanwhile, the joint ventures in the US were modified so management responsibility would fall to BoAML’s partners.
Sesler described the decision to pay out (it was not a lump sum, but a series of different payments, some fee-linked) as a “top of the house” decision that “goes up our chain.” Not keen to discuss the settlement at length, he nonetheless said: “You don’t make these decisions lightly. There was recognition that, if you let things fester, the potential impact on the fund’s underlying assets could have cost more. The bigger, swift solution was more logical.”
In the end, BoAML achieved almost 100 percent acceptance from the LPs. “I think they would say we did the right thing,” Sesler said. “A lot of GPs are being accused of abandoning LPs and not really acting as fiduciaries. While I think the fund wasn’t the best result in some people’s portfolios, I think how we handled it was professional.”
Speaking personally, Sesler noted that the process enabled him to develop good working relationships with many of the LPs, something that could be beneficial in his future endeavors, whatever they may be. “I’m a big believer that the way you develop good relationships in this business is to do a transaction with somebody,” he said. “Like it or not, this was a transaction, although not the kind I want to engage in a lot in the future.”
The business is rapidly winding down. It is really a caretaker job there now.
I’m a big believer that the way you develop good relationships in this business is to do a transaction with somebody. Like it or not, this was a transaction