Most reporter’s call it a secondary lead. The major M&A news of the past few weeks is clearly SL Green’s $6-billion purchase of Reckson Associates Realty Corp. The secondary lead in all news coverage of the event was the parsing out of certain suburban properties to a joint venture between certain Reckson executives and Manhattan-based Marathon Asset Management. But Marathon’s part in the deal–and how it got to the table–is not an issue to bury. The fact remains that the part of the transaction now in the hands of the JV, weighing in at some $2.1 billion, is huge in and of itself. In the following exclusive interview with, Marathon managing director and senior portfolio manager Jon Halpern, who also heads the real estate equities strategy for Marathon, turns a deserving spotlight on his firm’s involvement in the deal. Along the way, he provides some color on the firm’s history as well as his own, two considerations that are directly linked to the success of the deal at hand. Who from Reckson is in the JV?

Halpern: The leaders of the operating partner of the JV group are Scott Rechler [Reckson's chairman and CEO]; Michael Maturo [president and CFO]; and Jason Barnett [senior EVP and general counsel]. How did you parse out those assets that would not go to SL Green and how did Marathon end up at the table?

Halpern: Reckson management’s participation was considered only after auction participants indicated they would pay more if there was an alternate solution for certain assets they didn’t want to acquire. That was when Scott called Marathon to gauge our interest. In the strict terms of the agreement, as part of the merger, SL Green would convey certain assets, including properties in Westchester, Long Island and New Jersey, to a joint venture owned by an affiliate of Marathon and certain management of Reckson.

In terms of our involvement, we typically invest with great local operating partners. That’s core to our investment philosophy. But there’s also some deep history here. I come from a four-generation family business, Halpern Enterprises, that was actively engaged in class A office and residential development, with a focus on Westchester and the Hudson Valley. In 1995, I sold the commercial side of the family business and merged it into Reckson. I was a board member of Reckson from 1996 through ’99. So it wasn’t a cold call.

Halpern: In fact, many of the assets that are part of this investment were assets I had either managed as part of the family business or as part of Reckson. So Marathon, in terms of our hands-on experience is uniquely qualified. We’ve worked closed with this team many times before and we know we work well together. And that’s the reason why were able to respond with lightning speed. Tell me about Marathon. Is hedge fund an appropriate term?

Halpern: It’s really not, but it’s an interesting question. We view ourselves as a global investment manager. Almost all of the investments in the real estate equity group are medium- to long-term, and all are at the value-creation, opportunistic level. Currently, we are developing around the world a mix of hotels, retail and residential as well as real estate operating companies in North America and Latin America. As a real estate equity investor, we have a very large office portfolio in Paris. We recently got involved in residential development in India and mixed-use projects in Shanghai. By their nature, these are all long-term, patient investments that require a hands-on operator and an experienced real estate focus. And that’s Marathon?

Halpern: Yes. We have offices in New York, London, Hong Kong and Southern California. We currently have $7.5 billion in equity capital under management and, with a little leverage, that represents $13 billion in assets globally. I emphasize global because we have a global reach and it applies as much to our real estate strategy as anything else. Talk about that strategy.

Halpern: Marathon actually operates under five strategies: We have a very active emerging-markets strategy with more than $1 billion invested in Asia, PacRim, Latin America and Europe. There’s the special-opportunity strategy, which is the largest at $3 billion, focusing on global high-yield investing, bonds, private equity and distress opportunities. There’s a convertible arbitrage strategy. While most of its focus is on the credit side, there is a growing private-equity practice as well and it’s very opportunistic.

Then there’s real estate operations, which is made up of equity and finance groups and currently represents more than $2 billion in investments. Finance was founded about three years ago, and my partner Ron Bernstein and I kicked off equities a year later. Our focus was to build an opportunistic, diversified global real estate investment machine and leverage those other synergies Marathon had already established. By year end we’ll have invested several billion dollars at the asset level in North America, Europe, Latin America, Asia, India. Who are your typical investors? And what about holds?

Halpern: We manage funds for investors around the world, in many different asset classes from insurance and banks to large family offices. Marathon and its senior employees are currently the largest investors in our funds. Our average hold for our core investments in North America and the other more developed markets around the world is three to five years. In emerging markets, the hold period tends to be a bit longer, typically five to seven years. That’s driven not only by the investments themselves but also by the foreign direct-investment laws and the flexibility of capital repatriation. Getting back to the Reckson deal, what needs to be done?

Halpern: The real estate equity group is the team partnering with Reckson management, so we were right there in the trenches working with them in the last few weeks to bring the deal together. Always at our side is the real estate finance group, which will play lead with Scott, Mike and Jason to secure the slightly more than $1.2 billion that needs to be secured for closing. What about the value-add?

Halpern: Value-creation opportunities are where we earn our stripes, and in this portfolio there are some vacancies and some opportunities to increase rents, so the team has to work hard to reposition those assets to compete more aggressively in the marketplace. There are also some development properties in the portfolio so there’s work to be done there. One of the portfolios we’re acquiring as part in the acquisition includes a large tract of land in the Catskills, which is multi-year, long-term development. So there’s a real mix, including many stabilized properties, but even this requires keeping our finger on the pulse of the investment and a keen watch on the downside. We’re in a market today where there’s more possibility of things going wrong in the macro environment than things going right. What are the vacancies and what sort of capital will go into upgrades?

Halpern: I don’t have exact numbers, but upgrades across the portfolio will be in the tens of millions over a two- or three-year period. In terms of vacancies, there are some properties in development that are 100% vacant. So there’s work to be done, but that too is our sweet spot.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Dig Deeper



Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join now!

  • Free unlimited access to's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including and

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2024 ALM Global, LLC. All Rights Reserved.