Inside Marcus & Millichap's Institutional Property Advisors Platform

SAN FRANCISCO-The Institutional Property Advisors subsidiary of Marcus & Millichap has been building momentum recently with $1.5 billion of apartment closings in the past six months and over $1.3 billion of new apartment listings. Along with the momentum—and the retirement of long-time partner Linwood Thompson—has come a need for a new leader to head the IPA subsidiary. Marcus & Millichap CEO John Kerin several months ago named Hessam Nadji, head of strategy at the company, to both oversee the expansion of IPA as its interim director and to lead the search for a permanent head for the subsidiary. Says Kerin, "We saw a need for a market maker that can bridge the gap between institutional assets and private capital and positioned ourselves to bridge the two markets." Nadji recently talked with GlobeSt.com about the thinking that he, Kerin and others in Marcus & Millichap's management team put into the formation and business plan for IPA -- as well as what the company is looking for in someone to lead the subsidiary.

GlobeSt.com: When and why did Marcus & Millichap launch IPA?

Nadji: Our official launch was in October 2010. We established IPA because, although we have long been a leading broker for investment real estate in the private capital market below $20 million, both our client base and our agent base have grown in size, tenure and sophistication over the years. Many private investors that we have worked with have substantial portfolios and equity that make them viable buyers for larger, institutional assets. Many of them have also become hybrid investors with institutional capital as well. The IPA distinction communicates our recognition that major investors require a different level of service and a nationally coordinated, actively managed platform because the majority of the client base is active in multiple markets. We want to do a better job in segmenting our sales force and align the right agent with the right client in all price ranges, product types and market areas.

GlobeSt.com: What are some details of the overall approach and the specific services that IPA offers that are tailored to institutional clients?

Nadji: Our primary goal is to align with institutional investors’ need to formulate a portfolio/market strategy, see acquisition opportunities that really match their parameters, and sell properties not only for the highest value but also through the best process that raises probability, meets timing and satisfies other internal objectives. The decision-making processes and internal requirements are also very different among institutions since they have to satisfy their investors, and we can become a resource for them in that process, not just another broker hoping to get the next listing. To accomplish these objectives, we offer services ranging from underwriting, to account management, team coordination on multi-market assignments, and integration of comprehensive research with each client’s specific strategy. In particular, we believe firmly that the role of the intermediary in the institutional space can be greatly enhanced by in-depth research, market analysis and strategy.

GlobeSt.com: Most of IPA's deals thus far have been multifamily sales. Why start with apartments, and will IPA expand into other property types?

Nadji: We started with apartments because we have the most significant track record in larger, institutional deals in that sector. Many of our retail, office/industrial and other specialty agents are actively doing larger, institutional deals and have a strong track record in doing so, but we were the furthest along in apartments on a broad scale. The IPA will be expanded to have retail and office/industrial components, but we are keenly aware that we need to do this right so the timing will not be rushed.

GlobeSt.com: You've explained what IPA does for your clients. What is the benefit for Marcus & Millichap, other than the obvious goal of driving more business?

Nadji: It’s a “best-of-both-worlds” branding strategy that allows us to compete more effectively not only within the institutional arena but as importantly in our core business.

GlobeSt.com: How does IPA fit into Marcus & Millichap's overall corporate growth strategy?

Nadji: The longer-term plan for the IPA platform is to be the ultimate source of capital solutions for institutional investors. We are not limiting our vision to remaining a top-ranked transaction firm, and we will be expanding the research/strategy component as well as capital markets solutions whether it’s debt, equity, transaction restructuring or other services that are required.

GlobeSt.com: Where are you looking and what expertise are you looking for in searching for someone to lead IPA?

Nadji: We are actively looking for candidates from the capital markets and among large national players that can bring this expertise and leadership to IPA. We are expanding our leadership team right now, both at IPA and company-wide, by tapping talented individuals within our own management ranks and by looking outside the firm as well.