With the hiring of Chris Milner as its new head of investment management, Cantor Commercial Real Estate (CCRE) is slowly yet steadily on its way towards entering the investment management business. This means that the affiliate of bond giant Cantor Fitzgerald could be entering the floating-rate business before year’s end and, perhaps by next year, be raising its first private real estate fund. However, the New York-based commercial real estate lender isn’t there just yet.
Indeed, Milner, who joined CCRE early last month, and chief executive officer Anthony Orso currently are in preliminary discussions about how exactly to implement the firm’s investment management business. Although the executives have a number of ideas, they’re quick to point out that they’re still only in the beginning stages of outlining their plan of attack.
“It’s an ongoing process,” said Milner, who formerly was the co-founder of BlackRock’s commercial real estate debt business. “Some joint venture components will be involved, but it’s currently a work in progress.”
CCRE has made approximately $6 billion of loans over the past two years and roughly $4.2 billion in the last 12 months. Having established itself as a real estate finance firm, Orso said the firm believed the time had come to expand its business and work with joint venture partners to create new lending programs.
“Our goal is to ultimately grow into a full-service lending platform that will be seen as the pre-eminent lending firm in the marketplace,” added Orso. “This is just a natural extension of this goal.”
Milner added that, since CCRE has a well-developed fixed-rate conduit business, one of its main objectives as it enters the investment management field most likely will be to launch a floating-rate origination business. At first, the firm anticipates starting out in the core and core-plus arenas, then eventually migrating over towards the opportunistic end of the spectrum. This would be achieved primarily through joint ventures with institutional fixed-income investors.
Eventually, CCRE plans to provide private commingled funds as part of its suite of products. The possibility of a fund, however, is much further down the road. For now, the firm is still in the planning phase for joint venture structures.
“We’re in the early stages coming up with those plans,” Milner added. “We see the marketplace being attractive, but we’ve got a lot of work to do before giving a timeframe.”