Friday, 27 May 2016
Last updated 9 hours ago
May 4 2007 | 12:14pm ET
The sub-prime real estate bust has been making headlines lately, but while some firms are smarting from the meltdown, others are profiting from the shakeup.
“Large institutions and banks are getting weary of the uncertainly in the marketplace and are looking to shed some of their debt,” says William Procida, founder and chairman of real estate private equity firm Palisades Financial. “That is where we come in.”
Procida’s firm, which has completed over $2 billion in transactions since it was founded in 1995 and currently manages two private equity funds, is seeing a tremendous amount of dealflow and can cherry pick its projects.
“We see hundreds of projects, and for each couple of hundred we see we may do one or two,” says Mark Zurlini, president of the Fort Lee, N.J.-based firm.
Because of this, Procida, Zurlini and the four other partners—Ira Bergstein, David McLain, James Calvano and Jack Chimento—do deals nationwide but are currently focusing most of their energy on projects closer to home in places such as New York City, Hoboken, N.J., and Bergen Country, N.J.
“We’re staying away from Florida and Las Vegas,” says Procida, who back in 1990 served as a vice president in The Trump Organization, reporting directly to Donald Trump.
While Palisades Financial provides first mortgages, bridge, mezzanine and equity financing to various types of projects, Procida sees multifamily homes as the big winners in the short-term. And he isn’t alone. A survey released this week by the real estate practice group at law firm DLA Piper reveals that multifamily homes continue to be the most attractive real estate investment opportunity in the coming year, with 26% of the real estate executives surveyed choosing multifamily over other investment options.
While Procida is busy focusing on the deal side, the firm has recently brought onboard a Wall Street veteran to beef up capital raising efforts.
Martin McGinley joined the firm earlier this year as vice president of institutional sales. McGinley, who spent the past 10 years with Knight Capital Markets, is tasked with marketing the firm’s latest fund, the Palisades Regional Investment Fund II. The fund launched last April and has thus far raised $62 million of its target $200 million. It is scheduled to close to new investors at the end of the year.
Investors in the new fund consist of high-net-worth individuals and the six principals themselves, but McGinley is aiming to bring in foundations, endowments and other institutional investors.
“What makes us unique is we’ve been borrowers, we’ve been lenders and we have development experience. It’s the whole package,” McGinley says, adding that he is seeing interest from pension funds and endowments that are looking to diversify with a commercial real estate component in their portfolio. “Our modus operendi is preservation of capital, and we aim to provide above average returns and historically we have done that.”
The firm’s first p.e. fund launched in 2002, and has invested in transactions valued at over $500 million.
By Deirdre Brennan