Private Equity Real Estate Firms

SPECI AL REPORT
Over the past two decades, private

equity real estate has been trans-
formed into a global asset class, driv-
en in large part by a relatively small
number of investors, power brokers
and thought leaders. Over the next 12
pages, Private Equity Real Estate pres-
ents its picks for the 30 most influen-
tial. From fund managers to institu-
tional investors to heads of state, we
select those men and women who
have had the greatest impact on the
development of the industryfor bet-
ter or for worse.
30 most
influential
people in
private equity
real estate
Nov layout [pp].qxp 10/23/2006 10:18 AM Page 31
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In 1982, the first year Forbes published its list of the
400 richest Americans, 63 people whose fortunes
came from real estate made the cut. Twenty-four years
later, that number has been almost cut in half.
Such a decline can partially be attributed to the
massive real estate correction in the 1980s. But most
of the blame can be laid at the feet of Bill Gates, Sergey
Brin and Larry Page. In 1982, the minimum net worth
of any member of the Forbes 400
was $200 million; in 2006, it was
$1 billion. In a world dominated
by Microsoft and Google, real
estate just isnt the gravy train it
once was.
Nevertheless, some private
equity real estate professionals
have managed to protect their
fortunes from the ravages of time
and technology. This year, Tom
Barrack, Neil Bluhm and Sam
Zell all found themselves among
the ranks of the ber-rich.
In fact, their inclusion in the
Forbes 400 got us thinking. There
are lists aplenty ranking the
wealthiest people in the world,
the best companies in America or
even the sexiest people alive. But what about the pri-
vate equity real estate industry? Where is its list, its
chronicle of the most important and influential people
shaping the asset class?
The answer can be found in the following pages.
There, PERE presents its picks for the 30 most
influential people in the global private equity real
estate industry. These selections are not just the richest
or most successfulalthough Barrack, Bluhm and
Zell do make our listbut rather those who have had
the most impact in shaping the private equity real
estate industry into what it is today and what it will be
tomorrow.
In compiling this list, our journalists consulted
with dozens of industry practitioners around the
world. Ultimately, however, it was our editorial team
that distilled those responses into the 30 people that,
in our judgment, have had the greatest influence on
this now global asset class.
And global it certainly is. Though our list is domi-
nated by US names17 in all, befitting the industrys
originsmany of those investors are now putting sig-
nificant amounts of capital into international
property. (And one of them, John Grayken, even
became an Irish citizen.) At the same time, the migra-
tion of private equity real estate abroad has led to the
emergence of thought leaders and power brokers
throughout Europe, Asia and the Middle East. From
Robert Tchenguiz to Dr. Seek Ngee Huat, non-US
investors are now exerting greater
and greater influence over the pri-
vate equity real estate industry. If
we were to compile a similar list
15 years from now, it would no
doubt include significantly more
names from outside the US.
Another notable aspect of our
selections is the broad range of
professional backgrounds
included. Though fund managers
predominategiven their signifi-
cant roles in shaping and
implementing overall investment
strategiesour list spans institu-
tional investors, operating
partners, professors, consultants,
politicians and even heads of
state. That is a reflection not just
of the extraordinary breadth and depth of the asset
class, but also of the connections between politics,
economics and the underlying property markets.
A few caveats. First and foremost, the individuals
on our list must have some link to the private equity
real estate industry. That may be stating the obvious,
but real estate is a very large asset class and private
equity one small component of a much larger
industryso Donald Bren, for example, the richest
real estate tycoon on the Forbes 400, would not merit
inclusion.
Secondly, our list does not include numerical rank-
ings; names appear in alphabetical order.
And finally, respondents to our queries were pre-
vented from nominating themselvesa proviso that
nevertheless went unheeded. But no one made the
final cut unless they received support from a number
of sources, including the editorial staff of PERE.
Any blame, therefore, lies with us. If you have any
comments or complaints, please let us know.
But for now, read on. And enjoy.
There are lists aplenty
ranking the wealthiest
people in the world, the best
companies in America or
even the sexiest people alive.
But what about the private
equity real estate industry?
Where is its chronicle of the
most important and
influential people shaping
the asset class?
Under the influence
Private Equity Real Estate selects the 30 people who have had the most
influence in shaping the global private equity real estate industryfor
better or for worse.
NOVEMBER 2006 PRI VATE EQUI TY REAL ESTATE 33 COPYI NG WI THOUT PERMI SSI ON FROM PRI VATE EQUI TY REAL ESTATE I S UNLAWFUL
PERE
PRI VAT E E QUI T Y RE AL E ST AT E
30
Dean Adler, co-founder, Lubert-Adler Real Estate Funds Jacques Attali, former president, European Bank for
Reconstruction and Development Tom Barrack, founder, Colony Capital Neil Bluhm, chairman, Walton Street Capital
Joanne Douvas, head of real estate fiduciary services group, JP Morgan Asset Management Wesley Edens, co-founder,
Fortress Investment Group Richard Georgi, global managing partner, Grove International Nori Gerardo Lietz, co-
founder, Pension Consulting Alliance Eugene Golub, founder, Golub & Company John Grayken, managing partner, Lone
Star Funds Guy Hands, founder, Terra Firma David Hodes and Doug Weill, managing directors, Credit Suisse real estate
private fund group Sonny Kalsi, global head, Morgan Stanley Real Estate Investing Osamu Kaneko, founder, KK daVinci
Advisors Paul Kazilionis and Bill Walton, co-founders, Westbrook Partners Ronald Kravit, managing director, Cerberus
Capital Management John Kukral, co-founder, Blackstone Real Estate Advisors Steven Lee, former CEO, Lone Star Korea
Sheikh Mohammed bin Rashid Al Maktoum, ruler, Dubai Mike McCook, former senior investment officer, CalPERS Dan
Neidich, chairman and co-CEO, Dune Capital Roger Orf, managing director, Citigroup Property Investors Europe Chad
Pike, co-head, Blackstone Real Estate Advisors Joe E. Robert Jr., chairman and chief executive officer, JE Robert
Companies Dr. Seek Ngee Huat, president, GIC Real Estate Arthur Segel, professor of management practice, Harvard
Business School Barry Sternlicht, founder, Starwood Capital Robert Tchenguiz, co-chairman, Rotch Property Group
James Quille, chief executive officer, Macquarie Global Property Advisors Sam Zell, founder, Equity Group Investments
The
SPECI AL REPORT: THE PERE 30
The pioneer
DEAN ADLER, CO-FOUNDER,
LUBERT-ADLER REAL ESTATE FUNDS
Ira Lubert, half of the Philadelphia private equity real estate firm
Lubert-Adler Real Estate Funds, has described his partner, Dean
Adler, as the real estate brains behind
the operation. Another fund manager
told PERE that Adler stood out as a
pioneer in bridging the capital markets
and real estate.
Both statements are backed up by
the success Lubert-Adler has demon-
strated in the real estate markets and
on the fundraising trail. In less than a
decade, the firm has invested more
than $10 billion in US property and
Lubert-Adlers fifth and most recent
vehicle closed on $1.7 billion earlier
this year.
Prior to co-founding Lubert-Adler in 1997, Adler spent 12 years
working as a principal at Philly investment and advisory firm CMS
Companies, where he honed both his real estate and private equity
skills, acquiring both properties and operating companies. Perhaps
its not surprising then that Adlers firm has been involved in a
number of deals involving real estate-intensive retail properties,
oftentimes acting as the property expert alongside LBO shops and
hedge funds: Lubert-Adler worked with Cerberus and Sun Capital
on the deals for both Mervyns and ShopKo, as well as with the
Cerberus-led consortium on the takeover of Albertsons, one of the
largest private equity deals of all time.
The gambler
TOM BARRACK, FOUNDER,
COLONY CAPITAL
As the head of Colony Capital, Tom
Barrack was at the forefront of
investing in the sort of assets-cum-
operating-companies that now
permeate the private equity real estate
industry: hotels, theme restaurants,
pubs and, perhaps his firms most well
known investments, casinos.
The current casino mogul cut his teeth as a principal at the
Robert M. Bass Group after a stint in the Reagan administration. In
1991, Barrack founded Colony Capital, which has gone on to
launch 12 funds and acquire more than $18.5 billion in assets.
Though the firm has not always generated the highest returns
some of Colonys early forays into operating companies were not
entirely successfulBarrack and his team have continually pushed
the border between private equity and real estate.
In addition to recent headline-grabbing acquisitions like the
Raffles and Fairmont hotel chains, Colony has bought a number of
assets off-the-beaten path. Last year Colony was part of an investor
consortium that bought French football team Paris Saint Germain;
in the past, the firm has also invested in vineyards in France and
California, ranch land in Arizona, a piece of Korea First Bank,
shares in property companies focused on Manila and Hong Kong
and a resort on the island of Sardinia.
In 2005, Barrack famously told Fortune he was getting out of
US real estate. Today, the grandson of Lebanese immigrants is
increasingly targeting deals in North Africa and the Middle East.
The lender of first
resort
J ACQUES ATTALI , FORMER PRESI DENT,
EBRD
As the founding president of the European Bank for Reconstruction
and Development (EBRD), Jacques Attali became the lender of first
and only resort for property investors in Eastern and Central
Europe after the fall of the Berlin Wall. Without his leadership, many
real estate projects in the former Soviet bloc countriesnow one of
the hotspots for private equity investorsarguably would not have
come to fruition. According to one industry observer, Attali oversaw
an organization that was motivated not only by money but by re-
creating the market and promoting technology transfer into a
region badly in need of capital.
Attali, the one-time right hand man of former French president
Francois Mitterand, is often credited as one of the great financial
thinkers of his generation. However, described by one person who
dealt with him as grandiose in how he operated, Attalis extrava-
gance also proved his downfall. Amid criticism about the money he
lavished on the EBRDs London headquarters, Attali was forced to
step down from the organization that was his brainchild. By then,
however, the EBRD had already financed several of the earliest
development projects in Central and Eastern Europe, including the
Warsaw Financial Tower.
Nowadays Attali is hoping to recreate the development boom he
instigated while at the EBRD, running PlaNet Finance, a not-for-
profit organization that provides advice and finance to micro-credit
agencies in 60 countries.
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The activist
J OANNE DOUVAS, HEAD OF REAL ESTATE
FI DUCI ARY SERVI CES GROUP, J P MORGAN
ASSET MANAGEMENT
Some LPs prefer to sit back and
let private equity real estate fund
managers invest their money
without much oversight. Others
take a more hands-on role. And a
select few, like JP Morgans
Joanne Douvas, redefine what it
means to be a limited partner.
Douvas, who joined the invest-
ment bank in 1999, has full
discretion over the real estate
investment strategy of the firms
pension system, which gives her
management of a portfolio with a
net asset value of $1.5 billion. But
while other LPs manage more dol-
lars, few have the far-reaching
influence of Douvas, who sits on
the advisory boards of nearly
three dozen private equity real
estate funds. One of the most
vocal critics of the compensation
structure of private equity real
estate vehicles, Douvas has also penned some of the industrys
leading scholarship on reining in opportunity fund fees.
Nobody has done more to align the interests of real estate
GPs and LPs, says one industry participant. Her writings,
lectures and investment policies have laid the foundation for
modern expectations regarding fund management, reporting
and performance criteria. With commitments to real estate
funds tripling in the past five years, Joanne's influence on LP
commitment volume and confidence, which clearly go
together, cannot be overstated.
The independent
WESLEY EDENS, CO- FOUNDER,
FORTRESS I NVESTMENT GROUP
In just eight years, Wesley Edens has built New York-based
Fortress into one of the most respected firms in the private
equity, real estate and distressed investing arenas with more
than $24 billion in equity capital under management. A number
of pension fund consultantswho see the real nitty gritty of a
firms returnsput him near the top of their list.
Though Edens has had a long career in the financial arena,
working at a number of Wall Street investment banks including
Smith Barney, Merrill Lynch, Lehman Brothers and UBS, his
star really took off when he became an independent operator.
When Edens left UBS with his 40-strong team to set up Fortress
in 1998, it was said in the press that Edens was relishing the
chance to invest sans the corporate culture hed been bucking
heads with throughout his career.
At Fortress, Edens has made his name in a number of dif-
ferent fieldsthe firm purchased Michael Jacksons bad debt
last year and was recently named financial advisor to belea-
guered hedge fund Amaranth Advisorsbut his firm has done
particularly well in the private equity real estate arena. In recent
years, it has made significant acquisitions in the German
housing sectorat press
time, the firm was gearing
up to list approximately 20
percent of its holdings in
the German residential
company Gagfah.
In terms of public list-
ings, Edens was making
noises that Fortress might
one day go public as early
as 1998. Earlier this fall,
rumors once again began
circulating that the secre-
tive firm is eyeing an IPO.
The mentor
NEI L BLUHM, CHAI RMAN,
WALTON STREET CAPI TAL
Over more than 40 years, the profes-
sional career of Neil Bluhm has
played out, in some respects, like a
morality play in three acts. First came
the rise to fame and fortune as the co-
founder, along with his childhood
friend Judd Malkin, of JMB Realty,
one of the largest real estate invest-
ment firms in the world. Then came
the downfall: a series of disastrous
investments, including losses in
Randsworth Trust and Cadillac
Fairview, led to open rebellion among institutional investors and the
souring of the companys once stellar reputation. JMB later sold its
institutional advisory business and the longtime partnership
between Malkin and Bluhm came to an end.
Act III was Bluhms redemption. In 1995, he helped found
Walton Street Capital with five JMB alumni; thus far, the private
equity real estate firm has raised five vehicles with cumulative equity
commitments of $3.2 billion. Forbes now estimates Bluhms net
worth at $1.6 billion.
But Bluhms real legacy may not be the two companies he helped
create or the fortune he will likely leave behind, but rather the
people who cut their teeth under his leadership. The list of profes-
sionals who worked at JMB reads like a whos who of the
modern-day private equity real estate industry, including John
Kukral, Marc Mogull and Barry Sternlicht.
And Bluhm has helped launch their careers in more ways than
one. When Sternlicht left JMB after the Randsworth debacle, Bluhm
pitched in $1 million to help launch his new firm, Starwood Capital.
36 PRI VATE EQUI TY REAL ESTATE NOVEMBER 2006
The gatekeeper
NORI GERARDO LI ETZ, CO- FOUNDER,
PENSI ON CONSULTI NG ALLI ANCE
Nori Gerardo Lietz is someone you should be nice toat least if
youre an opportunity fund manager.
As one of the most respected pension fund consultants in the
world, Gerardo Lietz wields enormous influence over where
institutional investors place their real estate capital. A positive
endorsement can open the coffers of some of the largest pension
funds in the US, including CalSTRS, CalPERS and the Oregon
Public Employees Retirement Fund. A negative recommendation
can make the fundraising trail a lonely place.
Gerardo Lietz, who co-founded Pension Consulting Alliance
in 1988, may be the reigning kingmaker of the private equity real
estate industry, but she is also one of its most outspoken critics.
With her distinct combative
style, she has become a light-
ning rod for controversy,
lambasting everything from
the industrys lack of trans-
parency to its fee structure to
the relatively poor perform-
ance of opportunity funds in
the 1990s. At an industry
conference last year, she pre-
sented PCA data showing
that median net IRRs for
funds raised between 1996
and 1999 were as low as 8
percent.
These returns are simply
pathetic considering the risks
undertaken, Gerardo Lietz said at the time.
The silence that greeted her words suggested that Gerardo
Lietz doesnt make a lot of friends in the GP community. But
given her influence, perhaps GPs should try and make friends
with her.
The rebel
RI CHARD GEORGI , GLOBAL MANAGI NG
PARTNER, GROVE I NTERNATI ONAL
Though Richard Georgi is infamous for his brash, hard-charging
mannera former colleague once told The Independent: He's a
nice guy but I wouldn't invite him to my birthday party. And if I did
I would warn everyone firsthe has nonetheless reached the pin-
nacle of the European private equity real estate industry. After
investing $4 billion as the head of Goldman Sachs Whitehall Funds
in Europe during the second half of the 1990s, he later became the
global property emissary to renowned trader George Soros, founding
Soros Real Estate Partners, an opportunistic property platform.
Georgi, a man known for riding a motorcycle to work, once said
his goal was to create the best global private real estate fund in the
world. Though he still has his work cut out for him, he may well be
on his way. In 2004, Georgi and Richard Mully spun out SREP into
an independent entity,
Grove International
Partners. The firm subse-
quently raised a $1.2
billion vehicle, Cypress
Grove International, which
has invested in a variety of
properties from industrial
assets in Italy to residential
housing in Poland.
Though Georgis per-
sonality rubs some the
wrong way, he nevertheless
gets the job done and has
led some pioneering deals, according to a former colleague.
It was once reported that Georgi kept a quote by the Irish play-
wright George Bernard Shaw tucked away in his notebook.
Reasonable people adapt themselves to the world, Shaw wrote
Unreasonable people attempt to adapt the world to themselves. All
progress, therefore, depends on unreasonable people."
The developer
EUGENE GOLUB, FOUNDER,
GOLUB & COMPANY
When the US real estate market collapsed in the late 1980s, many
private investors, to say nothing of national governments, were
caught in the headlights. Eugene Golub, however, entered the fray
almost immediately: Golub &
Company, a Chicago-based devel-
oper, became the first private
American real estate company to
enter the former Soviet states. Not
only did Golub help pave the way for
private equity real estate investment
in Central and Eastern Europe, he
also became the operating partner of
choice for a number of opportunity
funds in the region.
Beginning in Warsaw in 1989,
and then in St. Petersburg, Moscow,
Budapest and Prague, Golub began
building Western-quality offices and
other high-profile developments
where only grey, functional buildings once stood. In addition to
forming a joint venture with GE to develop large-scale properties
in Poland, the Czech Republic and Hungary, the firm recently
formed a similar partnership with Quinlan Private.
During his initial foray into the region, observers said that
Golub was flying by the seat of his pantshe has even been
quoted as saying that there isnt even a translation for the phrase
real estate developer in most of these languages.
Looking back, of course, Golub not only influenced the direc-
tion of private equity real estate in Eastern Europe, he also helped
carve out careers for a few industry luminaries. John Howard, who
heads up Doughty Hansons European real estate funds, worked
for Golub in the 1990s, while Marc Mogull, Howards predecessor,
worked with Golub on financing a project in Russia while at the
EBRD in the mid-1990s.
The lone wolf
J OHN GRAYKEN, MANAGI NG PARTNER,
LONE STAR FUNDS
Starting with 1995s Brazos Fund, John
Graykens low-profile Lone Star Funds
began establishing a track record rec-
ognized throughout the industry as one
of the best. Cutting his teeth in the real
estate division of investment bank
Morgan Stanley and, later, working on
real estate and bad debt deals with
Texas billionaire Robert Bass, Grayken
quickly learned the ins and outs of pri-
vate equity real estate in the US and
Europe. But it has been the high-pro-
file, asset-heavy distressed deals in Asia
that have garnered the most accolades
from investors and competitors alike.
Last year, the firm sold its stake of the Tokyo Star Bank, scoring a seven-fold return in
the process. And by scooping up Japanese golf courses at the bottom of the market, Lone
Stars Pacific Gold International Holdings is now Japans largest golf operator.
But perhaps Lone Star is most associated with its numerous investments in Korea,
where it is reportedly the largest foreign investor. In 2001, the firm acquired the Star Tower
in Seoul for 620 billion won ($480 million; 370 million), the largest property deal in
Korea at the time. More recently, Lone Star has been mired in an ongoing struggle with the
Korean government over the sale of Korea Exchange Bank. The controversy became so
heated that the secretive Grayken adopted a more public PR strategy to combat his firms
negative image.
Of course, Graykens limited partners are somewhat indifferent to the opinions of the
South Korean publictheyre likely smiling all the way to the bank.
The agents
DAVI D HODES AND DOUG WEI LL, MANAGI NG
DI RECTORS, CREDI T SUI SSE REAL ESTATE
PRI VATE FUND GROUP
In the dynamic world of private equity real estate, few things are
hard and fast. But when it comes to raising capital for private
equity real estate funds, there is little dispute about two things:
the level of activity (very strong) and the market leader (Credit
Suisse).
In the words of one pension fund consultant, when it comes to placement agents, theres
only one.
As co-heads of the real estate private fund group at the investment bank, David Hodes
and Doug Weill (not pictured) wield enormous influence over the fundraising markettheir
endorsement goes a long way towards establishing a new GPs credibility and ensuring a suc-
cessful fundraise. And over the past two years, theyve had their fair share of
successesCredit Suisse estimates that its market share of funds using a placement agent was
approximately 55 percent.
Hodes, a veteran of Morgan Stanley ,and Weill, of DLJ, have been building their franchise
since 2000, when DLJ established the group just prior to its merger with Credit Suisse. Over
the past five years, the duo have helped raise more than $20 billion of equity, a substantial
figure considering that many of the worlds largest opportunity funds do not even use a place-
ment agent.
Given the current state of the marketand their standing in itHodes and Weill are cer-
tain to increase that figure even more in the years to come. Of that, there is little dispute.
The financial
engineer
GUY HANDS, FOUNDER,
TERRA FI RMA
It is a rare thing to be able to say that you
brought fresh financing techniques to a
mature market, but Guy Hands can lay
claim to just that in Europe. The former
Goldman Sachs whiz kid, Hands pio-
neered securitizations in the UK, enabling
his his 70-strong Nomura Principal
Finance Group to outbid rivals on under-
valued, asset-backed companies and
property portfolios. Under his stewardship
Nomura became Britains biggest pub
landlord and went on to make a string of
investments including betting shops, uni-
versity housing and army barracks.
By securitizing the future earnings of
property portfolios, Hands was able to
quickly refinance debt and take substantial
profits off the tableafter acquiring up to
57,000 homes from the UKs Ministry of
Defence, for example, Hands used two
securitizations to generate profits of
approximately 1.6 billion.
He spotted opportunities that a lot of
people have followed, said one source.
He led private equity into sectors.
Things eventually took a turn for the
worse at Nomura, and Hands departed to
set up his own private equity firm, Terra
Firma, where he orchestrated the 7 bil-
lion Viterra acquisition, one of the largest
private equity real estate deals ever in
Europe.
These days, Hands is still deploying the
securitization techniques he helped pio-
neer. Over the summer he pulled off
Europes biggest securitization of its kind
by issuing commercial mortgage-backed
bonds to refinance debt used in the acqui-
sition of Viterra and other German
properties.
The lynchpin
SONNY KALSI, GLOBAL HEAD,
MORGAN STANLEY REAL ESTATE INVESTING
Under the watch of K.S. Sonny
Kalsi, Morgan Stanley has become
one of the largest players in Asian
real estate, with a reach that extends
across Japan, India and China.
Kalsi rose to prominence during
his eight-year stint in Tokyo, where
he built up the firms real estate pres-
ence in Asia and became widely
considered as the organizations
lynchpin in the region, according to
other Asia-focused private equity real
estate executives. As head of Morgan
Stanley Real Estate in Asia until early
2006, Kalsi was instrumental in
building the firms Asian real estate
investing business to $21.5 billion, much of it in Japan.
Under Kalsis leadership, however, Morgan Stanley has also
focused much of its recent efforts on Asias two emerging super-
powers, making key investments in local operating companies in
both India and China. Unlike many other private equity real estate
firms in Indiawho have announced commitments to the country,
but who have yet to spend any moneyMorgan Stanley recently
acquired stakes in two local developers, Mantri Developers and
Alpha G. The firm has also invested in Shimao Group in Shanghai.
Kalsis success in Asia has paid off for both his firm and his
own career. Several months ago, the 15-year veteran of Morgan
Stanley was asked to head up the firms global property investing
business, which is comprised of assets under management totaling
$38 billion.
The local
OSAMU KANEKO, FOUNDER, KK DAVINCI ADVISORS
Osamu Kaneko founded Tokyo-based KK daVinci Advisors in
1998, a move that helped spur opportunistic and value-added real
estate investment strategies in Japan. By buying run-down proper-
ties from cash-strapped landlords, Kaneko was able to earn in
excess of 40 percent returns on his early deals, according to
industry lore.
Kaneko, who reportedly founded two US-based real estate com-
panies before setting up shop in Japan, was not only among the
first to raise an opportunity fund in the country, he was reportedly
also among the first to garner investments from foreign capital.
"I can compete with foreigners doing similar business, such as
Secured Capital, Lehman Brothers, or Colony Capital, because I
have more knowledge about Japanese real estate, Kaneko told
Reuters in a 1998 interview. But competing with Japanese real
estate firms would be tough."
Nevertheless, by all accounts, daVinci has excelled and
cemented its place as one of Japans market leaders. While the pro-
jected IRR on daVincis investments have reportedly ratcheted back
to a more modest 25 percent, the $2.8 billion opportunity fund
daVinci is currently raising would be the largest domestic fund ever.
The bigger the fund, the more flexibly we can buy larger prop-
erties, Kaneko told Reuters last year.
Such flexibility is allowing Kaneko to strike noteworthy deals,
including daVincis recent acquisition of the PCCW building for
200 billion ($1.7 billion; 1.3 billion), a transaction that one
Asia-focused fund manager called very impressive.
The ex-partners
PAUL KAZILIONIS AND BILL WALTON, CO-FOUNDERS,
WESTBROOK PARTNERS
When Paul Kazilionis (pictured at left) and Bill Walton left Morgan
Stanley to set up their own opportunity fund in the early 1990s,
they embarked on a partnership that is considered one of the most
successful in the history of the asset class.
In 1994, Kazilionis and Walton formed Westbrook Partners, a
New York-based private equity real estate firm admired as much
among industry observers for its innovative investment strategies as
the outsized returns it generated for investors. With two of the
industrys leading lights at the helm, Westbrook attracted more than
$4 billion in equity commitments over the firms first four funds.
But, in 2003, after years of rumors that a split was imminent,
Walton and Kazilionis parted ways over differences in investment
strategies. Kazilionis continues to invest under a new private equity
real estate firm that carries the Westbrook name, while Walton and
several Westbrook partners left to form Rockpoint Group.
However, the managing members of the original Westbrook,
including both Walton and Kazilionis, continue to oversee ongoing
investments from the firms pre-2003 vehicles.
Though the two real estate pros may no longer be working
together, each one has continued to find individual success. Since its
formation in 2003, Waltons Rockpoint has raised $4 billion for
three opportunistic funds and one structured finance vehicle.
Kazilionis, who has generated 35 percent returns over the course of
his investment career, recently closed Westbrooks third fund since
the split on $1 billion.
The hedger
RONALD KRAVIT, MANAGING DIRECTOR,
CERBERUS CAPITAL MANAGEMENT
As the head of Blackacre Capital, the property investment arm of
Cerberus Capital Management, Ronald Kravit has helped define
the trend of hedge funds entering the world of private equity real
estate. In the process, he and his team have been involved in some
of the industrys most innovative deals in recent memory.
Kravits investment savvy stems from his long track record in
the sector. While working as the chief financial officer of
Houston-based Maxxam Property Company, Kravit helped with
the acquisition of one of the first bulk RTC portfolios. Before he
left to work at George Soros Quantum Realty Fund, Kravit had
overseen the acquisition of more than $350 million in bad debt
from the US government. He later joined Apollo Real Estate
Advisors, before coming over to Cerberus.
At Cerberus, Kravit has led the low-profile firm into a number
of high-profile deals, including the landmark acquisitions of dis-
count retailer Mervyns and grocery store chain Albertsons. But
Cerberus has also been active in the residential sector. Last year,
the firm was part of the investor consortium that acquired the
former El Toro marine base for $650 million, giving it a 3,700-
acre parcel of developable land in Orange County, California.
And reflecting Cerberus ability to invest up and down the capital
structure, the hedge fund recently extended $275 million in
financing to high-rise condominium developer Boca Developers,
which is building projects throughout Florida.
The fugitive
STEVEN LEE, FORMER CHIEF EXECUTIVE OFFICER,
LONE STAR KOREA
By all accounts, Steven Lee, an ambitious 30-something, Korean-
American Harvard MBA, was a rising star at Texas-based Lone Star
Funds. However, few falls in the industrys short history have been
as dramaticor as damagingly influential. Today, Lee is facing
charges for tax evasion and abusing dual tax treaties in Korea stem-
ming from alleged tax irregularities in the firms sale of Korea
Exchange Banknow all the Korean authorities have to do is find
him. They are currently trying to extradite Lee, whereabouts uncer-
tain, from the US.
After the Asian currency crisis in the late 1990s, a select number
of private equity real estate firms, led by Lone Star, entered Korea in
search of distressed properties. Lee was reportedly a key figure in
several of the firms transactions, including its star turn buying
Seouls real estate trophy, the Star Tower. Lone Star acquired the 45-
story landmark for 620 billion won ($480 million, 379 million) in
2001; three years later, the firm sold the building to the government
of Singapore for 900 billion won, approximately 50 percent more
than the original sticker price.
The tax evasion probe prompted street protests in Seoul, with the
animosity directed at the Texas-based investment firm and, to a cer-
tain extent, all foreign investors. Korean politicians and local media
bemoaned the presence of vulture capital, while other private
equity firms in the country, including The Carlyle Group and
Ripplewood, also came under intense scrutiny. Lone Star has refuted
the allegations made against it, but has distanced itself from Lee.
Regardless of his guilt or innocence, however, the case may cause
serious damage to more than just Lone Stars reputation.
The envelope pusher
JOHN KUKRAL, CO-FOUNDER,
BLACKSTONE REAL ESTATE ADVISORS
John Kukral may no longer be running the real estate arm of The
Blackstone Group, but his mark on the companyand on the
industry as a wholecan still be felt.
An alumnus of JMB Realty, Kukral joined the New York pri-
vate equity firm in 1994 after brief stints at both Colony Capital
and Starwood Capital. Though Blackstone had been investing in
real estate since the early 90s, it was Kukral who helped found
the firms private equity real estate arm, Blackstone Real Estate
Advisors, along with Tom Saylak, who left the firm in 2004.
While at Blackstone, Kukral oversaw more than $13 billion in
investments, including the firms recent forays into the hospitality
sector. Based in London for several years, Kukral also helped
establish the firms presence in the European property markets.
Today, the firm is widely considered to be one of the leading
forces in the private equity real estate arena, due in large part to
Kukrals stewardship.
With Kukral at the helm, Blackstone really pushed the enve-
lope of combining private equity and real estate, noted one
industry observer.
Today, that envelope is filled with a lot of cash. Kukral, who
left Blackstone at the end of 2005, laid the groundwork for the
firms fifth real estate vehicle, which raised $5.3 billion earlier this
year, the largest private equity real estate fund ever.
The sheikh
SHEI KH MOHAMMED BI N RASHI D AL
MAKTOUM, RULER, DUBAI
Sheikh Mohammed bin Rashid
Al Maktoum and the state-
owned investment companies he
controls are not only developing
the whole of Dubai, they are
funneling oil money into proj-
ects all over the world and, in
the process, transforming the
competitive landscape of the
global private equity real estate
industry.
In Dubai, Sheikh Maktoum is
carrying on the legacy of his
brother, Sheikh Rashid bin
Saeed Al Maktoum, the man
largely responsible for the push
to modernize the emirate, by
carrying out some of the most
extensive development plans the world has ever seen: huge swaths
of reclaimed land, a theme park the size of Singapore, the world's
biggest marina, tallest tower, biggest shopping mall and on and on.
At the same time, Dubai is opening its doors to foreign
investors as it looks to become the financial center of the Middle
East. The laws have been changed to allow foreigners to buy resi-
dential property and REIT legislation is already in place. But more
significantly, Sheikh Mo, as he is affectionately known by mem-
bers of his inner circle, is spreading the wealth well beyond Dubai,
emerging as a giant purchaser of real estate in his own right.
Most people talk, he has said in the past. We do things.
They plan. We achieve. They hesitate. We move ahead."
Given the size of his wallet, Sheikh Mo will be moving far.
Private equity real estate firms may be looking over their shoulder.
The internationalist
MI KE MCCOOK, FORMER SENI OR I NVESTMENT
OFFI CER, CALPERS
In close to five years at the California
Public Employees Retirement System,
Mike McCook transformed the largest
pension fund in the US into a global pow-
erhouse among institutional investors in
real estate. Though he left his post earlier
this year, McCooks influence on CalPERS
investment strategyand, by extension,
the institutional investor community as a
wholewill resonate for years to come.
Under his tenure, CalPERS grew a pri-
marily domestic-focused real estate
program into a diversified international
portfolio with investments in more than
20 countries around the world, including
key emerging markets like China, India,
Brazil and Eastern Europe. At the same time, McCook more than
doubled the number of programs in CalPERS real estate portfolio.
By the looks of it, his strategy is paying off: The pension fund
achieved a whopping 39 percent return in 2005, the last full year
under his management. And over the five-year period ending
September 30, 2005, CalPERS saw real estate returns of more than
16 percent.
Our performance has exceeded every benchmark that we had,
McCook told PERE earlier this year. When you do that and there
arent a lot of complaints, from either partners or union sources,
then you must be doing your job right.
Like many LPs, McCook is now looking to translate that success
to the private sector. The 33-year real estate industry veteran
recently became the president of San Francisco-based private equity
real estate firm Kenwood Investments, which specializes in residen-
tial and in-fill mixed use projects in California.
The godfather
DAN NEI DI CH, CHAI RMAN AND CO- CEO, DUNE CAPI TAL
For many years, the name Dan Neidich was synonymous with the private equity real estate
industry. As the founder and head of Goldmans Whitehall Street Real Estate Funds, Neidich
oversaw the growth of one of the largest and most influential real estate franchises in the
worldunder his leadership, the investment bank raised $12 billion of equity, invested in
approximately $60 billion worth of assets and participated in some of the most prominent trans-
actions in the industrys history.
In building such an empire, Neidich earned a reputation as a fierce and ruthless negotiator
The Wall Street Journal referred to him as Goldmans rottweiler. In the acquisition of
Rockefeller Center, for example, Neidich butted heads with Sam Zell, who later sued Goldman
over its multiple roles in the deal. During the restructuring of Cadillac Fairview, Neidich report-
edly pushed through a plan that so infuriated CalPERS, an unsecured debt holder, that the
pension fund temporarily stopped doing business with Goldman.
No wonder Neidich was sometimes referred to as the godfather of private equity real
estate.
Even in retirementNeidich left Goldman in 2003the dons influence can still be felt. By
forming Dune Capital with fellow Goldman alum Steve Mnuchin, Neidich become one of the
first high-profile figures to cross over from private equity real estate into the hedge fund arena.
COPYI NG WI THOUT PERMI SSI ON FROM PRI VATE EQUI TY REAL ESTATE I S UNLAWFUL 40 PRI VATE EQUI TY REAL ESTATE NOVEMBER 2006
The market maker
ROGER ORF, MANAGI NG DI RECTOR,
CI TI GROUP PROPERTY I NVESTORS EUROPE
Globalization has to start somewhere. In the case of European pri-
vate equity real estate, it arguably began when US investment banks
moved their principal real estate investment arms across the
Atlanticin other words, it began with Roger Orf.
By setting up the European arm of Goldman Sachs Whitehall
Funds in 1991, Orf was at the vanguard of the internationalization
of private equity real estate, one of the most important trends in the
brief history of the asset class. He later went on to cement his posi-
tion as a conduit for new equity into Europe when he set up Pelham
Partners, which invested in European property on behalf of Apollo.
Later he moved to Lone Star, where he headed the US firms push
into Europe, orchestrating the acquisition of more than 5 billion
worth of German non-performing loans and 1 billion worth of
assets in France and Germany. Nowadays, Orf can be found at
Citigroup, after being handpicked by Joe Azrack to run the
European arm of Citigroup Property Investors.
Despite spending a decade and a half at the head of some of the
largest firms doing business in Europe, Orf is still making headlines.
After partly financing Guy Hands 7 billion acquisition of the
Viterra portfolio, Citigroup PI is working on plans to float the com-
pany.
One person familiar with Orf said: He is a leader at making
markets where there wasnt a market.
The young gun
CHAD PI KE, CO- HEAD,
BLACKSTONE REAL ESTATE ADVI SORS
Chad Pike, still in his thirties, is
running Blackstones real estate
operations in Europe, making him
one of the youngest stars in the
asset class. Though he is often
compared to two other young
gunshis counterpart in the US,
Jon Gray, and the co-head of
Morgan Stanley Real Estate, John
Carrafiellit is Pikes unique posi-
tion in the relatively inefficient
European property markets that
gets him the nod.
Pike, along with Gray, has
moved Blackstone away from just big office buildings and
hotels in Chicago, Paris or London into buying entire compa-
nies, says one source. Under his watch, Blackstone has
invested in new areas such as development projects, student
housing, pubs and German residential properties. His highest-
profile deals have included the 1.3 billion acquisition of
WCM Beteiligungs German residential portfolio, as well as
the joint acquisitions with Blackstones private equity team of
pub chain Spirit Group, UK nursing home operator NHP and
theme park owner Center Parcs.
We are trying to figure out where we can get in front of
the big wave, Pike said in 2004.
These days, Pike and his team have plenty of capital to
catch the perfect ride. Earlier this year, Blackstone raised the
largest opportunity fund ever, Blackstone Real Estate Partners
V, which closed on $5.3 billion. Last year, the firm also raised
1.6 billion for its second European property vehicle.
The frequent flier
J AMES QUI LLE, CHI EF EXECUTI VE OFFI CER,
MACQUARI E GLOBAL PROPERTY ADVI SORS
James Quille has always been a man on
the moveand for good reason. The
firm he currently heads, Macquarie
Global Property Advisors, is one of the
most active foreign players in Asia, a
region that Quille himself has been
investing in since the early 1990s.
After working as a project manager
in Zambia and Australia, Quille joined
real estate, construction and financial
services company Lend Lease in the
1980s. Years later, when the firm began
developing its own fund platform,
Quille was chosen to head up the
effort, Lend Lease Global Properties,
which raised an Asia-focused fund.
When Lend Lease decided to get out of the business, Quille led a
management buyout of the platform, eventually teaming up with
Australian bank Macquarie to form MGPA.
The firm has since taken to Quilles globetrotting ways, focusing
on opportunistic investments throughout Europe and Asia. In 2005,
the firm acquired the Platinum Tower office block in Shanghai, one
of the first large-scale acquisitions by a foreign private equity real
estate firm in China. Earlier this summer, it announced the acquisi-
tion of three buildings in the central business district of Kuala
Lumpur; the firm is also eyeing deals in Thailand and Singapore, to
say nothing of the major economies of Japan, Hong Kong and main-
land China.
With more than $1 billion raised for its last vehicle, Quille and
Macquarie have most likely just started racking up their frequent
flier miles.
The professor
ARTHUR SEGEL, PROFESSOR OF
MANAGEMENT PRACTI CE,
HARVARD BUSI NESS SCHOOL
MBA candidates enrolled in Arthur Segels class at
Harvard Business School would do well to pay
attention. After all, the professor teaching the Real
Property Asset Management course at the famed
university did not get to his position by writing
thick tomes on economic theory or the evolution
of the real estate investment trust market; he was
in the trenches, spending 15 years building and
running TA Associates Realty, a Boston-based
institutional real estate advisory firm with more
than $8 billion under management.
But more important than the work he did then
is the work hes doing now. Given the popularity
of real estate, students are clamoring to get into
Segels class, which has featured guest speakers
such as Pension Consulting Alliance co-founder
Nori Gerardo Lietz. The HBS Alumni Bulletin
reported that more than 500 MBA students,
including 50 from other Harvard graduate
schools, wanted to register for a class that can
only accommodate about a third that number. So
what advice is Segel giving the thronging real
estate moguls of tomorrow?
Asia is definitely where the action is going to
be over the next generation, he told the HBS
Alumni Bulletin. I tell all my students: Go East.
Segel practices what he preaches. He recently
founded Xander Funds, a private equity real estate
company focused on India. So, in addition to
shaping the private equity real estate minds of
tomorrow, Segel may soon be competing against
them as well.
The philanthropist
J OE E. ROBERT J R. , CHAI RMAN AND CHI EF EXECU-
TI VE OFFI CER, J E ROBERT COMPANI ES
There is no shortage of interesting stories in
the world of real estateJoe E. Robert Jr. is
proof of that. Robert got his start in the busi-
ness when the builder he was working for
went bankrupt in the middle of several proj-
ects. Seizing upon the opportunity, Robert
worked with the lenders to dispose of the
companys non-performing loans. Later,
Robert worked with his father to buy a com-
mercial mortgage REIT that had gone belly
up, though he was later fired. Armed with
$10,000 and a yellow legal pad, Robert
began looking at ways to raise money to buy
bad loans and JE Roberts Companies was
born.
Robert first made a big impact on the
industry in the days of the Resolution Trust Corporation, when he purchased
and worked out more than $11 billion in RTC assets. Since then, the
McLean, Virginia-based company has expanded into Europe, launched its
own specialty finance REIT and raised three opportunity funds, becoming
one of the most diversified private equity real estate firms in the world.
Talking to PERE last year, Robert summed up the firms strategy:
Whoever turns over the most rocks wins at the end of the day.
But Robert isnt only known for his real estate acumen: In addition to
being a mainstay on the capitals social scene, Robert is a recognized philan-
thropisthis Fight for Children charity raises money to provide education
and healthcare opportunities for youngsters and he recently donated $25
million to the Childrens National Medical Center for Surgical Care in
Washington DC. Last year, he received an award from the Horatio Alger
Association of Distinguished Americans, an honor that recognizes people
who have overcome humble beginnings and adversity. Past recipients have
included Maya Angelou, Bob Dole and Colin Powell.
The Singapore sage
DR. SEEK NGEE HUAT, PRESI DENT,
GI C REAL ESTATE
Dr. Seek Ngee Huat likes to keep a low profile.
Unfortunately, sometimes he doesnt have much of a
choice. As the head of the real estate program at one of
the most powerful institutional investors in Asia and
beyond, Seek is among the most-watched property
investors in the world. His influence extends from his
base in Singapore to China, Japan, India and well onto
the other side of the globe, with GIC active in both the
European and US markets. Earlier this year, the institu-
tional investor announced its expansion into Brazil.
For many years, he has ably guided the fund's over-
seas expansion into North Asia and Western Europe
and smartly harvested investments in the USA, says
one fund manager who watches Asia closely.
Both Seeks success and his secretiveness come in
large part from the institution he works for. GIC, the
investment arm of the government of Singapore, has
approximately $100 billion under management, though
no one outside the organization quite knows for sure.
GIC Real Estate, which became an independent entity
in 1999, manages approximately 10 percent of the
overall portfolio.
Seek, who joined GIC in 1995 from Jones Lang
Wooton, has helped turn that portfolio into one of the
largest in the world. From its initial real estate invest-
ments in 1982, GICs property holdings have now
grown to more than 140 investments spread over 30
countries. And while Seek maintains a low profile, the
assets that his firm has acquiredsuch as the AT&T
Corporate Center in Chicago, the Shiodome City
Center in Tokyo and the Seoul Finance Centercer-
tainly do not.
NOVEMBER 2006 PRI VATE EQUI TY REAL ESTATE 43
The hotelier
BARRY STERNLI CHT, FOUNDER,
STARWOOD CAPI TAL
In early 1991, 31-year-old Barry Sternlicht was out of a job. Seven
years later, he was the chief executive officer of the largest hotel com-
pany in the world. Along the way, Sternlicht not only completed one
of the most dramatic comebacks in the history of the asset class, he
also created one of its most successful deals.
Following a stint at JMB Realty, where he led the firms disas-
trous investment in UK property company Randsworth Trust,
Sternlicht launched Starwood Capital in 1991. Four years later, the
firm acquired Hotel Investors Trust, a near bankrupt REIT, in a deal
that some observers would later call the buy of the century. By uti-
lizing the hotel companys advantageous tax structure, Sternlicht
was able to go on an aggressive acquisition spree and turn an invest-
ment of $83 million into Starwood Hotels & Resorts, a company
with a current market cap
in excess of $12 billion.
I went into hotels
because I really thought it
was the right asset class to
go into at the time,
Sternlicht told PERE last
year. Nobody wanted
them.
Today, of course, the
landscape is significantly
different, due in large part
to Sternlicht himself. Yet
while private equity and
real estate investors pile
into the hospitality industry, Sternlicht is still hoping to retain his
Midas touch. Following last years acquisition of the European hos-
pitality company Socit du Louvre, Sternlicht is developing an
international luxury brand of hotels, Le Crillon, based on the com-
panys famed Hotel de Crillon in Paris.
The warrior
ROBERT TCHENGUI Z,
CO- CHAI RMAN, ROTCH
PROPERTY GROUP
As the son of an Iraqi Jew who
settled his family in Iran before
fleeing the country after the
Shah fell, Robert Tchenguiz has
seen his fair share of ups and
downs. But with a last name
that means Genghis in Persian,
Tchenguiz may be able to handle such setbacks better than most.
Today, Tchenguiz is one of the most ubiquitous and influential
investors in the European property markets through his R20 investment
vehicle. Worth an estimated 400 million together with his elder brother
Vincent, he owns an eclectic mix of businesses ranging from pubs to
supermarketshe bought supermarket chain Somerfield for 1.8 billion
last year in conjunction with Apax and Barclays Capitaland is one of
two controlling shareholders in Scottish whiskey maker Whyte &
Mackay.
He is a visionary and very astute at identifying value, said one
industry observer. He has moved from real estate to private equity invest-
ments very successfully.
Another business acquaintance said: He started off by having a repu-
tation of being neither private or having equity, but in investment terms,
making a little cash goes a long way.
Such is Tchenguiz reputation that he is almost always cited by news-
papers as a potential bidder when takeover rumors start circulating
around a pub group or property-intensive retailer. Earlier this year he tried
(but failed) to take over pub and restaurant group, Mitchells & Butlers.
But given his background, it doesnt seem such setbacks will slow
Tchenguiz down anytime soon.
If you came [to our office] at 9:30 tonight you would find people
working, he told Management Today earlier this year. We work very
hard. I spend 90 percent of my time here. I spend more time here than I
do at home.
The elder
statesman
SAM ZELL, FOUNDER,
EQUI TY GROUP
I NVESTMENTS
It is perhaps unfair that Sam
Zell comes at the end of our list.
In many respects, his name
should be at the beginning. One
of the most successful real estate
investors in the modern era, Zell
helped lay the foundation for the private equity real estate
industry. In the late 1980s, he teamed up with Merrill
Lynch to raise $410 million for Zell/Merrill Lynch Real
Estate Opportunity Partners I, the first private equity real
estate fund ever.
Though Zells contribution to the asset class is impos-
sible to ignorea significant number of industry observers
put him near the top of their recommendationshis influ-
ence extends beyond the opportunity fund arena. As
chairman of Equity Office Properties, Equity Residential
and Equity Lifestyle, he is considered the father of the
modern day REIT industry. Via his private equity real
estate affiliate, Equity International, he is becoming one of
the leading property investors in Latin America. And
through the establishment of academic programs at The
Wharton School and the University of Michigan, he is
helping to shape the real estate moguls of tomorrow.
Despite all these accomplishments, however, elder
statesman may not be the most apt description. Often
dressed in jeans and a sweater, Zell still rides a motorcycle
to work and peppers his conversation with expletives. In
other words, he doesnt play the part of a polished
diplomat.
Then again, this is real estate, not politics. Zell plays
the part just fine.

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