How Private Equity, Real Estate Evolved Over Crises

By Carl Gaines

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The Deal Economy 2012 Panel talked
about the private equity environment.

NEW YORK CITY-The Deal Economy 2012 Conference kicked off Thursday morning with a spirited discussion between Bain Capital’s Stephen Pagliuca and Vornado Realty Trust’s Michael Fascitelli. CNBC’s Kayla Tauche moderated the discussion—“30 Year Retrospective in Dealmaking.”

Pagliuca and Fascitelli, classmates at Harvard, spoke about the private equity environment when they first left school.

“Private equity was a couple of firms—very few people doing this practice,” Pagliuca said. “It was much more venture capital. The industry really evolved.”

Pagliuca pointed to the global nature of today’s economy as a factor that has really changed the playing field. “It’s become a very international and global business and assets have grown dramatically,” he said. “We started out with our first fund, which was $35 million—today our fund complex is over $60 billion. There has been a huge sea change in what is called private equity.”

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The globalization of the world economy has also affected the nature of the recoveries—and two touched upon this as well.

“Everything in the world seems to be happening quicker,” Fascitelli said. “The recovery of asset prices in New York was much faster… This particular economy may drag on with slow growth for quite a while but the cycles of opportunity seem to be getting shorter.”

With 2013’s New York City mayoral election looming, Fascitelli said that “Vornado has a huge investment in New York and Washington, DC.” In fact, he said, “90% of our asset value is in those two places or surrounding areas.” With political parties and local governments exercising control over factors like crime, development and regulations that can affect property values, Fascitelli said that he was keeping an eye on which way the wind was blowing politically.

Categories: Northeast, Multifamily, Office, Retail, Acquisitions/Dispositions, Capital Markets, Development, New York