West L.A. Real Estate Firm Checks Into Investing

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In the cloudy skies of commercial real estate, CB Richard Ellis Group Inc. sees a ray of sunshine – in the investment banking sector.

The real estate company, with headquarters in West Los Angeles, has opened an investment bank office in New York with three employees. It’s the first U.S. effort for the company, which has had investment banking operations in Europe for several years.

The New York operation will focus on mergers and acquisitions, public and private equity offerings, debt restructuring, recapitalizations and financial advisory services to real estate companies.

The payroll will grow gradually as the bank builds out offices in other cities.

Glenn Carlin, who left Bank of America to take a job as co-manager of the new bank, said that two factors influenced the timing of the launch: First, many companies and executives in the troubled real estate market need investment banking services for their regrouping efforts. And second, the turmoil on Wall Street has reduced the number of competing investment banks.

The demise of Lehman Bros. and Bear Stearns, the merger of Merrill Lynch with Bank of America, and a change in legal status to “bank holding companies” for Goldman Sachs and J.P. Morgan has opened opportunities for others to enter the investment banking sector, Carlin explained.

“CB Richard Ellis clients have been asking for these services,” Carlin told the Business Journal.

Prospective clients include real estate investment trusts, private equity funds, publicly traded homebuilders, hoteliers, casinos and large private development companies.

Stan Ross, chairman of the USC Lusk Center for Real Estate, agreed that commercial real estate companies need services right now. He said CB Richard Ellis will face competition for that market, but that it’s in a leadership position due to its expertise in real estate matters.

“There are a lot of companies going into this space, so CB Richard Ellis will have a lot of competition,” Ross said. “A conventional real estate brokerage doesn’t generate a lot of revenue these days, while a restructuring consultancy does. Combine that expertise with a company that can bring capital, marketing and leasing capabilities to the deal, and they have a lot to offer.”

So far, investors have responded positively. After the news was announced Oct. 21, CB Richard Ellis stock jumped 2.2 percent to $13.26. The following day it rose an additional 2.7 percent to $13.62, a high for the year.

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