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May 20, 2011
SQUARE FEET | THE 30-MINUTE INTERVIEW: Ronald Dickerman
The New York Times
by Vivian Marino
Mr. Dickerman, 47, is the founder and president of Madison International Realty, a real estate private equity firm, which through its investment funds holds ownership stakes in buildings around the world, including several in the New York area, among them the Chrysler East Building and 520 Madison Avenue. The company has also had investments in the Seagram Building over the years.
Q Tell me about your business.
A I think we do something very unusual in the world of commercial real estate and investing: we acquire ownership interests in Class A assets from existing investors looking for an early exit strategy. Our objective is not to seek control of the properties — it’s to provide liquidity, which means buy their interest. We’re not a loan-to-own shop.
...Q You recently announced a deal to acquire a 49 percent interest in 15 retail and entertainment properties owned by Forest City Ratner.
A They came to us, I think, in September 2010 to fund their go-forward investments. You may know that the Atlantic Yards development is something like $4 billion.
These properties are as core as core can be. They’re 99 percent occupied; the average lease term is over eight years.
Related coverage...
Atlantic Yards Report, Why did Forest City Ratner sell a 49 percent stake in its malls? To help pay for Atlantic Yards, and to combat investor "fatigue"
In a "Square Feet" interview in the upcoming Sunday New York Times Real Estate section, Ronald Dickerman, founder and president of the private equity firm Madison International Realty, explains his business and talks about the deal announced at the end of March to acquire a 49 percent interest in 15 retail and entertainment properties owned by Forest City Ratner.
So what do companies like Forest City do with the cash?
"To redeploy into other investment opportunities, to fund other liabilities within their portfolio," responded Dickerman.
In other words, to help pay for Atlantic Yards.
...Madison investors see a rate of return "between 17 and 18 percent gross," so that suggests Forest City Ratner gave up something significant.
Asked if his firm adds value to its holdings, Dickerman said no:
We invest in core Class A assets where the building itself is relatively stable and the deal is not distressed. What’s distressed about the transaction is the fatigue of the underlying investor.
Posted by eric at May 20, 2011 11:38 AM