Mikulich, Former Lehman Real Estate Co-Head, Is Said to Join Apollo Global

Raymond Mikulich, former co-head of real estate investments for Lehman Brothers Holdings Inc., will join Apollo Global Management LLC to run its North American property business, a person with knowledge of the matter said.

Mikulich, who left Lehman in 2007, had been fund-raising for his new firm, Ridgeline Capital Group, when discussions with Apollo began, said the person, who isn’t authorized to discuss the information publicly. Two other former Lehman employees, Coburn Packard and M. Jess Lipsey, also will join Apollo from Ridgeline, the person said. The executives didn’t return phone calls for comment yesterday.

Joseph Azrack, Apollo’s global head of real estate, has been expanding the business since he joined the New York-based buyout firm from Citigroup Inc. in 2008. Apollo earlier this year agreed to buy Citigroup’s real estate unit in a deal that more than tripled its property assets, a person with knowledge of the agreement said in March. In February, Apollo opened an Asia-Pacific division, led by Grant Kelley in Hong Kong.

“This builds a very strong team at a point where we’re seeing a lot of other mega-global teams fragmenting,” said Steve Coyle, chief investment officer of Global Realty Partners, the unit of New York-based Cohen & Steers Inc. that invests in private real estate funds. “I’ve known Ray to be a very careful investor with an eye towards analyzing both risk and return.”

Executive Departures

Top real estate fund executives have departed Morgan Stanley and Goldman Sachs Group Inc. since the global credit crisis depressed commercial property values worldwide. Lehman, the largest underwriter of mortgage-backed securities at the market’s peak in 2007, filed for bankruptcy two years ago and is liquidating its assets. In June, it sold the management contract for its real estate funds to a group of former executives.

Azrack didn’t return a call for comment yesterday. Rick Matthews, a spokesman for Apollo, declined to comment.

Mikulich, 57, worked at Lehman for 25 years. He left the securities firm, once the fourth-largest in the country, as the commercial real estate market began to weaken and Lehman was raising its largest-ever private property fund.

After he announced plans to leave, Lehman and Tishman Speyer Properties LP completed their October 2007 acquisition of apartment landlord Archstone-Smith Trust for $22.2 billion, saddling Lehman with debt as global credit markets seized up.

“Ray’s timing in leaving, especially with the benefit of hindsight, looks brilliant,” Coyle said.

Mikulich, who joined Lehman in 1982, was head of global property investment banking from 1989 to 1999. In 2000, he and Mark A. Walsh established Lehman’s real estate private equity business and raised its first high-return property fund, raising $1.6 billion for Lehman Brothers Real Estate Partners.

In 2005, Lehman raised $2.4 billion for its second high- return property fund and $1.1 billion for a separate fund to invest in mezzanine loans.

Mikulich and Walsh worked together at Lehman for 19 years. Walsh is part of the group of former executives managing the company’s real estate funds.

To contact the reporter on this story: Hui-yong Yu in Seattle at hyu@bloomberg.net.

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