FEATURE: Across the divide

One might have thought that private equity real estate firms would have hired talent with gusto from depleted banks since the onset of the global financial crisis of 2008. After all, plenty of deal flow for opportunity funds has stemmed from strained real estate loans, including commercial mortgage backed securities (CMBS), beginning with the US in 2009 and then later in Europe. However, in reality there exist only a few examples of senior people from the real estate finance and structured product groups at banks that have transitioned to becoming investment professionals at private equity real estate firms.

There is no single reason why, according to those PERE has spoken with. However, as Simon Samuels of London-based Brockton Capital said, whilst the underlying asset class is the same, the equity side of the business is very different to the debt side.

Samuels is one of the few examples of the switch happening at all. He joined Morgan Stanley in 2000 and stayed there for eight years with the real estate finance team in the London office. He was head of UK origination and structured real estate debt finance and prior to that was at another bank, Natwest, where he worked within the property finance group. However, in 2008 he joined Brockton Capital as a partner in the London-headquarters.

So why is he one of the few exceptions? Samuels pointed out that he is a chartered surveyor by training and so started his life as a “property guy” unlike many property lenders. His entry to real estate banking occurred in 1998 when he was seconded from his job as a surveyor at DTZ to Natwest. He left the surveyor and ended up working as a real estate lender for the next ten years. But he said: “It was always my game plan to go to the principal-side.” He added: “I remember thinking at the time that the chartered surveyor background had probably given me the knowledge of the underlying fundamentals that would otherwise have taken a decade as a traditional non-property banker in real estate finance to pick up.”

The implication of Samuels’ comment is that professionals remain in real estate lending because that is where their experience lies. After the global financial crisis, the majority of real estate finance professionals stayed with those banks, though some clearly left the industry altogether or joined real estate debt funds. PERE has also been told that there are some examples of lenders whose move to a private equity real estate shop did not work out. They left the organization unsuccessfully. One view that has been voiced to PERE is that the different cultures between the two types of organization can prevent a transition from becoming successful. At a bank, one is used to working in a rules-based environment, whereas at an entrepreneurial private real estate investment firm each day starts with a blank piece of paper. 

A slightly contradictory opinion from one current senior professional at a European real estate lending house said he knew of hires made by private equity real estate firms since the global financial crisis and those people were still there. However, he pointed out the hires tended to be at a junior level. “I think there are more than people realize, but it is very rare for it to happen at a senior level,” he added.  

The organizations that have hired in Europe at a junior level include The Blackstone Group, Apollo Global Management, Kennedy Wilson and Starwood Capital Group. But, as experts pointed out, there are few examples of senior hires. The two major examples would be Peter Denton who joined Starwood in its London office to lead a new real estate debt platform in Europe, and Fortress Investment Group, which hired Cyril Courbage, the former head of Deutsche Bank’s European commercial real estate group, to help advise on European investments across its credit and real estate equity funds. Hiring of senior talent to help private investment firms for new credit enterprises has also been the experience in the US, where the cycle has been far ahead of Europe. Just as in Europe, the US has yielded a few examples of senior figures from real estate finance joining private equity real estate firms, but they have tended to be for new credit strategies. The standout example of this is Doug Tiesi, who is credited with RBSSI 2010-MB1, the first US multi borrower CMBS since the 2008 global financial crisis while working at his long-term employer, The Royal Bank of Scotland. In January 2014, he decided to join Silverpeak Real Estate Partners’ credit venture, Silverpeak Real Estate Finance in New York as chief executive officer. Silverpeak set up the lending platform at the end of 2013. But the instances remain few and far between. Interestingly, Kohlberg Kravis Roberts & Co (KKR) just hired several people from Rialto Capital to kick-start its new real estate debt business rather than hiring from the banks. 

With a fresh wave of potentially distressed CMBS to come due in the US this year and with great potential deal volume in Europe yet to come, the industry will be interested to see if any more folk from lenders cross the divide and become principal investors. 


The exceptions 

Which real estate professionals have made the rare switch from real estate finance to private equity real estate firms? Here are ten examples



Fortress Investment Group

Cyril Courbage was head of the European commercial real estate group at Deutsche Bank that encompassed real estate lending as well as principal investments and was there for 10 years. However, in 2012 he joined Fortress Investment Group in its London office to be responsible for both debt and equity investments for the firm’s credit and equity funds. At Fortress, he worked on the recent €1 billion Project Vemeer deal, taking control of 65 Dutch assets out of a CMBS structure after Morgan Stanley provided a loan in May 2007 to Fordgate Group. 


Silverpeak Real Estate Partners

Doug Tiesi is credited with RBSSI 2010-MB1, the first US multi-borrower CMBS since the 2008 global financial crisis while working at his long-term employer, The Royal Bank of Scotland. The $300 million securitization is even said to have been a key catalyst for the revitalized US CMBS market. Before moving to New York, he ran the same firm’s real estate finance business in Europe, which wrote more than $20 billion of business. Prior to that, he worked at Dutch bank ABN Amro, which became the third largest CMBS loan securitizer in Europe at its peak. In January 2014, however, Tiesi ceased to work for banks to join Silverpeak Real Estate Partners’ new credit venture, Silverpeak Real Estate Finance as chief executive officer. Silverpeak set up the lending platform at the end of 2013.


Allianz Real Estate

Christoph Donner spent four years as senior managing director and chief credit officer at Aareal Bank as well as eight years at Hypo Real Estate which later became Deutsche Pfandbriefbank where he was head of underwriting and a senior credit executive in the German lender’s New York office. However, in October 2014 he joined Germany’s global insurance company Allianz as chief executive officer of real estate investments in America.


Brockton Capital 

Simon Samuels was at Morgan Stanley for eight years where he was an executive director within the real estate finance team that specialized in securitized products. He was also its head of UK loan origination. Prior to that, he was at Natwest that became part of the Royal Bank of Scotland. However, in 2008 he joined London-based Brockton Capital as a partner where he remains.


Starwood Capital Group

Peter Denton has an array of real estate lending banks to his name. In the 2000s, he used to be head of UK real estate banking at BNP Paribas and before that was at German bank, WestImmo. Prior to that, he had spells as managing director EMEA Real Estate at Barclays Capital and also worked for nine years at Deutsche Bank and Eurohypo. However, in 2012 he joined Starwood Capital Group in London when it launched a debt business. He remains at the firm as senior vice president, head of debt, Europe.


Fortress Investment Group 

Anthony Tufariello is best known for his 21 years at Morgan Stanley. He held a number of senior positions at the bank, including being a member of the firm’s management committee and co-chair of the global large loan credit committee. His most recent role there encompassed managing a complex business which included client agency businesses, principal lending activities (commercial real estate, residential lending, warehouse lending and secured cash flow lending) as well as managing the trading desk across CMBS, ABS, CDOs and residential products. Since 2004, he was also the global head of the securitized products group focused on the US, Europe and Asia and prior to that headed the securitized products group in North America from 2001 and co-headed the real estate debt capital markets group plus twinning as sole head of ABS, CMBS and non- agency mortgage trading. However, in November 2008, he joined Fortress Investment Group and recently became co chief investment officer of the firm’s credit real estate business.


Colliers International

Doug Smith is a veteran Japan real estate banking professional who worked at Shinsei bank for nine years before next joining Deutsche Bank in October 2007. During his time there he was involved in a number of large-scale financings in Tokyo, including the purchase of the Shinsei Bank head office building, a waterfront hotel and a portfolio of office buildings. However, he swapped to a buy-side career when he left DB to join Fortress Investment Group in October 2010 to work closely with Thomas Pulley. He has only just left Fortress and has since joined Colliers International, the property services firm, in a business origination capacity.


Cale Street  

Ramon Camina-Mendizabal joined Goldman Sachs in 1999 as an analyst and was made up to managing director in 2010 ultimately heading the bank’s real estate financing business in EMEA. However, in 2014 he left the bank to become a cofounder at Cale Street Partners, the London headquartered bank established last year primarily by Edward Siskind, former head of Real Estate Principal Investment Area (REPIA) at Goldman. The new firm has at least $1.5 billion of equity to make investments in Europe.


Cantor Real Estate 

John Vaccaro played no small part in Deutsche Bank growing from a $3 billion commercial real estate division in 1997 to more than $40 billion at its peak around the credit crunch. He was global head of commercial real estate and was in charge through the 2000s right up until the peak when DB was making large loans to the likes of Harry Macklowe. But in 2010, he moved to join Lewis Ranieri to set up Ranieri Real Estate Partners, which only last year was sold to financial services firm, Cantor Fitzgerald for its new real estate investment platform Cantor Real Estate that kicked off in 2013.



Pine River 

Jack Taylor is one of the most notable figures in US real estate finance to have started out at a bank before moving to real estate investment management houses. Taylor used to be head of the CMBS business at Kidder, Peabody & Co and led eWebber and was even a founding governor of the Commercial Mortgage Securities Association. But he then switched to Five Mile Capital Partners as portfolio manager for a flagship fund in the 2000s before joining Prudential Real Estate Investors in 2009 to lead its global high yield debt platform. In November last year, he moved on again, this time to join Pine River to set up a real estate business there.