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C-III's Robert Lieber On NAI Global Acquisition and Growth Plans

NAI Realvest — Thu, 09 Feb 2012 20:01:00 GMT

http://info.realvest.com/bid/123364/C-III-s-Robert-Lieber-On-NAI-Global-Acquisition-and-Growth-Plans

Randyl Drummer, for CoStar Group, published this interview on February 1, 2012.

Former Lehman Banker and NYC Deputy Mayor Teams With Uber-Investor Andrew Farkas In Bid to Re-Conjure Entrepreneurial Magic of Storied Insignia Financial CRE Firm

Real estate investment firm C-III Capital Partners LLC last week completed its acquisition of Princeton, NJ-based NAI Global. The long-awaited closing came seven months after the transaction was announced in June, leading some to wonder if the deal had fallen by the wayside. But C-III was hardly idle during that time, acquiring three other companies and making a major play for cash-strapped CRE services firm Grubb & Ellis Co.

As reported by CoStar last week, the transaction pairs NAI Global’s network of commercial real estate firms totaling 5,000 professionals and 350 offices in the U.S. and 55 countries around the world with an even broader range of financial and property management services offered by C-III, including loan origination and servicing.

C-III Capital has been on an acquisition spree since announcing the NAI transaction in June. The firm acquired the special servicing and CDO management businesses of JER Partners in August, and then turned around and bought two affiliated apartment property management businesses in the populous Texas and Southern California markets in November.

Also late last year, C-III joined fellow investor Colony Capital in negotiations with Santa Ana, CA-based Grubb & Ellis. However, those talks expired on Jan. 15 without a deal, and 10 days later C-III closed on its purchase of NAI Global, which will be convening its annual conference next week in Las Vegas.

In the first full interview granted to an industry news outlet since the NAI Global acquisition, C-III Executive Managing Director Robert Lieber spoke with CoStar News on the NAI acquisition and how it plays in the company’s broader growth strategy.

Lieber, who left his position as deputy mayor and economic development czar under New York City Mayor Michael Bloomberg in 2010 to join Insignia Financial Group founder Andrew L. Farkas in the new C-III venture, has a unique vantage point. As an investment banker for Lehman Brothers in 1991, Lieber met with Farkas in a New York conference room to line up financing for launching Insignia Financial. Farkas went on to build the firm through a series of rapid acquisitions into one of the world’s largest CRE services companies before selling the company in phases over three years for $1.4 billion, with the largest and final piece sold to CBRE in 2003.

CoStar: How does the NAI acquisition fit into your firm’s strategy of building a fully diversified commercial real estate services company?

Robert Lieber: NAI fits very nicely into our strategy, which is building a global, diverse real estate services platform at C-III Capital Partners. It’s a strategy not entirely different or distinct from what Andrew Farkas did in the 1990s when he created and built Insignia Financial Group. We think that the NAI portfolio of members provides us a unique opportunity to service the broader middle market, not just in the country, but globally. It’s an exciting opportunity. C-III has a portfolio of properties that we are responsible for managing. While NAI Global is going to have to compete for that business on market terms like anyone else, we think that having NAI Global and our platform behind them gives the ability to grow the business and distinguish themselves in terms of the quality of the services they provide.

CoStar: Are you planning to make more acquisitions? What opportunities do you see?

Bob Lieber: There are lots of opportunities to continue the growth curve we’re on, whether it be buying other special servicers or buying other property managers or service providers in the real estate business. It’s all very complimentary with what we’re trying to do as we build out our platform. We’re in a growth and acquisition mode. There are many parts to the business that we are considering.

CoStar: C-III Capital Partners’ strategy appears to be to link real estate financial services with property transaction and property management services more closely than ever, judging from the previous acquisitions of Centerline Capital and subsequent expansions into mortgage origination, investment sales and title insurance, and the special servicing and CDO management business of JER Partners. Is that an accurate assessment?

Bob Lieber: We are not linking financial services to property services. What we’re doing is building out a full tool bag of real estate service functions that we can provide for owners and managers of properties. Whether it is industrial, multifamily, office or hospitality, you need people who can run the day-to-day parts of the business at the property management and asset management levels. You’re also going to need different kinds of service providers on the transaction side that can provide financing, and arrange and execute sale opportunities. It’s more about trying to build out the services side to a real estate platform.

Our long-term plan is to make C-III a business that provides services for owners in the broader real estate market.

CoStar: Your association with Andrew Farkas goes back to the early1990s. Is it safe to say you weren’t entirely convinced at first that it was a great strategy to buy troubled businesses and build them into what became Insignia Financial, obviously one of the most successful companies in commercial real estate?

Bob Lieber: The magic of Andrew Farkas is his visionary perspective. When someone comes to you and says, "I’m going to become the toxic waste processor of the distressed limited partnership industry and amass a sizeable portfolio of assets under management," the first thing you say is, "That’s interesting." And then you ask, "Has anyone ever done that before?" When no one else has done it before, you say, "Well how are you going to do that?"

I’ll never forget the first day he came in and we were sitting in that conference room on the 16th floor in 1991. I knew something about the limited partnership business, and as I listened to him, I thought, "How does that work? He’s passionate about it and it seems like he’s thought it all through, I wonder if this is really going to work or not?" It worked in spades.

And that’s what Andrew did when he was out buying general partner interests in busted, troubled, failed limited partnerships. Andrew had a unique perspective and saw that the ability to try and aggregate and control this platform, which gave unique advantages to the limited partners in terms of their resolution alternatives, and opportunities for the general partners and the entity that was acquiring them -- a winwin situation.

The conversation is continued here.

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