A Distinguished Career followed by an

Unfortunate Disagreement that remains

Undecided

I enjoyed a long and rewarding career as an institutional real estate investor. Focused closely on raising and investing capital, I tried to leave the rest to others.

1. RAISING & INVESTING CAPITAL

Recognized by Columbia Business School as my MBA class's Real Estate Merit Scholar and 25th Reunion Chairperson, I worked for leading investment houses, founded the first private equity firm of its kind, shared credit for developing investment strategies that reshaped the real estate industry, raised billions from institutional investors, led or approved billions in investment decisions around the globe, authored white papers, spoke internationally at industry conferences, received numerous accolades...it was a highly productive career.

From early childhood to 1984, I had many kinds of businesses and jobs. 

From 1984 to 2000, I started as an aerospace engineer with the title Junior Rocket Scientist, helped a professor win a NASA grant for International Space Station design, and was awarded Top Secret clearance to work on President Reagan's "Star Wars" missile defense system. 

After business school, I acquired or financed billions of dollars in investment grade commercial real estate for top tier investment banks and opportunistic investment managers. 

In 1989, I helped run my first real estate secondary investment, the $600 Million GP-led recapitalization of a trophy office building. All these years later, that would be considered  a large secondary purchase.

In 1991, I co-founded an RTC-focused "vulture capital" (aka, opportunity) fund. We did not close a lot, but I learned plenty.

In 1993, I was one of perhaps ten people globally developing the Commercial Mortgage-Backed Securities industry. I underwrote and approved loans and other investments, and helped initially educate CMBS investors and rating agencies. We also financed and brought public new-style Real Estate Investment Trusts, and formed a ground-breaking mezzanine fund with similarities to secondary investment funds. Maybe my favorite jobs ever.

From 1998 to 2000, I was the Global Head and Managing Director of real estate investment banking at the nation's largest commercial bank. I made the bank lots of money, but found it to be a deeply dysfunctional giant.

In 2001, after failing as founder of three Dot-Com start-ups, I had the idea for Liquid Realty Partners (LRP), the first and only private equity firm dedicated to real estate secondaries investing. By "secondaries", I mean, we bought stakes in older real estate funds, and put fresh money into older real estate deals. I wrote LRP's original business plan (never strayed from it, prominent in other managers' offering memoranda) in my cluttered home garage. My grade school daughter cleverly named the firm, and her concentric doodle warped into LRP's logo. Came to see myself as a change agent. 

From 2002 to 2007, I raised four LRP funds with $1.5 Billion in capital commitments from a who's-who list of institutional investors. We invested globally in all types of GP- and LP-led deals. Like CMBS, we were a market leader in what has grown into a Trillion-dollar market. Our investors liked my investments, which were clocking +20% annual returns, but not the reporting my team produced. I bought out my partner, and set my sights high. 

In 2006, I led the $800 Million GP-led secondary acquisition of partnership interests in a high-quality United Kingdom property portfolio. The deal was nominated by the press as the best real estate investment of the year. It stood as the largest investment of its kind for ten years. Its size, quality and innovations attracted the world’s largest investors, and made my firm a market leader. Our investors liked its above-market performance and below-market management fees, but continued to complain about my team's reporting, and now their investment decisions. 

From 2007 to 2011, though global real estate values plunged 40%, we provided services that preserved our investors' capital. Ultimately, a lender's attempt to foreclose on our assets was thwarted by my pre-closing negotiations of a discounted purchase price, conservative loan amount, low interest rate and--to the lender's chagrin--borrower-friendly default cure provisions. I found that a satisfying way to leave things.

2. RETIREMENT & WIND-DOWN 

In 2012, feeling grateful for my long strange trip, but fed up with working in a toxic industry, I decided to retire. I commenced winding down LRP by letting go of all but one employee. Changed my login password to "Free".

3. COMPLIANCE & REPORTING

In 2013, a few of our 2006 investors with $1 Trillion in assets asked us to either: (a) return a fee we charged for the services that saved their investment capital, or (b) be removed as manager of the 2006 fund. For context, our fee was a rounding error to them, just 0.002% of their assets. I responded by resigning as manager of all four funds to accelerate my industry departure and sever my connection with that kind of energy. 

In 2014, unable to reach a compromise, my companies filed a lawsuit to protect our fee from investors "seeking to avoid paying fair value for essential services" we provided:

https://storage.courtlistener.com/recap/gov.uscourts.nysd.431825.1.0.pdf

In 2017, after our investors paid us millions to settle everything, the SEC published an allegation that we did not disclose the fee and related information soon enough:

https://www.sec.gov/files/litigation/admin/2017/ia-4641.pdf

Everything beyond these two links is, in my opinion, fake news sensationalizing the SEC's unproven assertions. For instance, I can apply anytime to end my "permanent" bar and go back to work, plus it is easier than ever to do...I just do not want to. 

Nothing went to court or arbitration. We will never know how our lawsuit or their allegation would have been decided. Substantive differences between our arguments were never decided by a judge, arbitrator or other neutral party.

Were our lawyers and accountants right in advocating for us? Or, were the government inspectors correct that managers must report fees before the work is done or paid for? It is a technical and complex legal matter. I cannot say. 

4. EPILOGUE

On a brighter note, I am grateful for what I accomplished, and have moved to higher ground.

I thank the SEC for making our capital markets safer, shutting down its internal court that moved me and nearly everyone else they investigated to settle with them, and taking a more mindful approach to publicity in recent years.

And I say, rest in peace, Peter Lewis, who took his own beatific life precisely one year after he was fired by one of the complaining investors. In my opinion, Peter was the only of our investors ready, willing and able to amicably resolve that unfortunate disagreement.