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BOSTON-Casting his ship amidst choppy economic seas, veteran real estate investor Paul Marcus has started a new company that will follow a range of paths in three East Coast markets. Although he will continue to co-own and operate pieces of a four million-sf portfolio bought or built with colleague Jon Davis since 1993, the founder of Boston-based Marcus Partners outlines an ambitious platform of his own, now seeking deals. Davis, meanwhile, announces re-launch of the Davis Cos., the entity in place before Marcus was named president in 2006 and the handle changed to Davis Marcus Partners.

“It’s a positive for everyone,” Marcus tells GlobeSt.com. “There are new and promising things happening every day, and we look forward to pursuing the opportunities we think are going to be out there.” The effort is underpinned by a staff featuring acquisitions ace William McAvoy; design/construction specialist David Fiore, who will lead the firm’s Connecticut office; and Mark Stroud, a 25-year industry professional who is running the Florida operations. All were at Davis Marcus Partners, as was SVP of Development Jan Machnik, and SVP of Construction and Development Peter Scoba. Finance Director Lori Shea joins the firm from Lyme Properties.

About three-quarters of the 40 Davis Marcus Partners employees are staying on at the Davis Cos. Its leader reports his firm is hiring several senior real estate professionals to fill in the gaps of those departing for Marcus Partners, which will be headquartered at 75 Park Plaza in Boston’s Back Bay. Davis is already hitting the ground running with his resurrected firm, unveiling the purchase of a $75-million loan pool backed mainly by properties in the southeast. “Things are great,” says Davis. “We are excited and energized by what we see.”

The loan pool, financed by a major life insurance company, demonstrates that the Davis Cos. will consider multiple geographies, but Davis explains that the firm’s bailiwick will be from southern New Hampshire to metropolitan New York, the same territory he has concentrated on for more than three decades.

As for his former colleague, the experienced lineup is among the reasons Marcus expresses confidence about being able to juggle three distinct markets, each of which, he concurs, vary in dynamics and potential investments. Although he accedes there are challenges in all three, Marcus says he is encouraged by the condition of southern New England’s real estate sector. The firm will explore everything from new construction and value-add renovations to building and loan purchases in all three markets, but Marcus says the problems inherent in Florida present far more distressed options such as overleveraged development projects. “The world is unwinding there, but the opportunities are endless,” he says.

As part of the breakup agreement, Marcus Partners will operate 300,000-sf of product in Florida purchased in the Davis Marcus era, while an affiliate of the Davis Cos. will take care of the properties still under that wing in Connecticut and Massachusetts. Marcus sees niche development in select Connecticut communities and value-add projects, or those in need of repositioning, as the focus on that state, similar to the approach planned in Massachusetts.

As for the hometown scene, Marcus is upbeat about Massachusetts even though tenants seem to have caught a massive case of cold feet in the first half of 2008. “My feeling is that it will be slow longer than just a couple of months,” he opines, relaying that rental rates for office space have “flattened” and predicting demand could stagnate into early 2009. But restricted supply and growth in core segments, such as life sciences and high-tech, are reasons to believe the region will rebound sooner than others, according to the developer. “I actually think Greater Boston is going to pull through this,” he says. “The good companies are doing really well and the fundamentals are quite healthy.”

Davis concurs, calling the tenant base “very sound and solid” overall. “Right now, it just seems that people are waiting for the other shoe to drop,” he says in assessing the recent dip. Evidenced by the loan purchase–one he explains was not secured as part of a “loan-to-own” strategy–Davis says his company is also angling to take advantage of deals emerging from the difficult environment. “As in past real estate cycles, we’re trying to stay ahead of the curve and to adjust our investment strategy to meet the challenges and the opportunities that the market presents us,” he says. The loan package, for example, was acquired at favorable terms and using third party financing that will allow the firm to turn a profit holding the paper. The collateral is located in Georgia, Louisiana, Ohio, South Carolina and Virginia.

The Davis Cos. is also stocked with 600,000 sf of prime properties acquired before Marcus came on board. Those include the firm’s headquarters at One Appleton St. in Boston, 200 High St. in the city’s Financial District, plus a building in Cambridge’s Porter Square and another in Kendall Square, 201 Broadway. Both Marcus and Davis also stress that their parting was amicable, even to the point that they may do joint ventures in the future. “Paul and I have had an extraordinary partnership and many great successes over the last 15 years,” says Davis. “We remain friends and I wish him well.”

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