The Real Estate Comes First

By Paul Bubny

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Launched as Apollo Real Estate Advisors in 1993 with a single $500-million opportunity fund, AREA Property Partners today is an investment and asset manager offering a suite of products across North America, Europe and Asia. Yet despite its enviable track record in fund raising—$13 billion to date of equity commitments, which have gone into approximately 570 transactions worldwide with an aggregate value of more than $65 billion—the firm’s principals and joint venture partners alike maintain that its core strength is real estate acumen.

“We began with the premise that a company should have not only financial skills but also on-the-ground real estate knowledge as well as real estate finance talent,” says founder and chairman William Mack. Mack was already a 30-year industry veteran when he launched the New York City-based AREA, which has gone under that name since 2008.

Adds senior partner Lee Neibart: “When we started putting together the firm, we were convinced that building a team of property people, as opposed to financial people, was the right strategy. We wanted owners, developers and asset managers who had grown up in the field and understood real estate from the bottom up. That’s been a consistent strategy of ours over the past 20 years.”

It’s a point of differentiation that’s appreciated by longtime AREA partners such as Philip Riordan, senior managing director of General Electric Pension Trust, based in Stamford, CT. AREA and GE have done deals across all sectors over the past decade, Riordan says, adding that with AREA, “it’s not about the financial engineering; it’s about the real estate, the property, the fundamentals. We’ll talk first about the property and then about how financial engineering can be used appropriately and prudently.”

By the same token, he adds, “they’re very sophisticated on the financial side. When it comes to the capital stack, they get it.” That understanding, Riordan says, encompasses “the life cycle of an investment,” looking past either the present-day attributes of a good capital stack or the distractions of a bad one. Dave Johnson, president and CEO of Aimbridge Hospitality, observes that the AREA team’s long-term commitment “puts them in a position to see opportunities” that others may not…

...To read the rest of the story, visit the November 2011 issue of Real Estate Forum.

Categories: International, Acquisitions/Dispositions, Capital Markets, National