Ten Months on Job, Blackstone Duo Racks Up $35 Billion in Dealsby
They work for Jon Gray, who built the global real estate unit
New York's Stuyvesant Town was latest U.S. property purchase
A massive deal completed at warp speed is a hallmark of Blackstone Group LP’s property unit, the biggest of its kind in the world. The pace and hours required just might be a little difficult to sustain past 40, said Jon Gray, head of real estate at the world’s largest private equity firm. He’s 45. “I’m the old man,’’ he said.
Since January, when Nadeem Meghji and Tyler Henritze, both 35, were named co-heads of U.S. property acquisitions, Gray has relied on them to find -- and figure out how to acquire -- properties around the country. The most recent was Stuyvesant Town-Peter Cooper Village, the latest in more than $35 billion of deals led by the duo this year. They’ve bought Willis Tower in Chicago, the country’s second-tallest building, along with office properties in Southern California and Seattle.
The two work hard and play nice, said Roy March, chief executive officer of Eastdil Secured, the real estate investment banking unit of Wells Fargo & Co. “Private equity funds tend to have the image and taint of being predators, and these guys come off as being partners.”
Meghji and Henritze, who live three blocks apart in Soho, sometimes stalk their targets for years before pouncing. Meghji spearheaded Blackstone’s move into apartments, the hottest part of the real estate market since the financial crisis, and has helped buy $20 billion worth of shopping centers since 2011. Henritze’s focus has been on lodging; he also helped lead the Blackstone-Wells Fargo acquisition for $23 billion of General Electric Co.’s real estate holdings, and led the talks for last month’s $6 billion agreement to buy Strategic Hotels & Resorts Inc. In February, he sold New York’s Waldorf Astoria hotel to Anbang Insurance Group Co. of China for $1.95 billion. It was, he said, his most challenging transaction this year.
“You had an historic asset’’ being sold to a foreign buyer contemplating converting part of the hotel to condominiums. What’s more, Hilton Worldwide Holdings Inc. would continue to operate the hotel for 100 years. The deal required not just the standard purchase contract but four other governing documents for things such as trademarks, licensing and property management. Plus, every time Henritze spoke with Anbang Chairman Wu Xiaohui in China, a junior analyst at Blackstone named Jenny Wang had to translate. “Talk about an added complexity,’’ he said, laughing. Throughout the evening before the sale closed, Henritze was still hammering out details with Wu, with Wang interpreting.
StuyTown had been in limbo since its previous owners forfeited during the credit crisis; the firm in charge of resolving the property on behalf of bondholders had planned a foreclosure auction last year when a group of junior lenders sued and the sale was halted. Once the suit was settled last month, Meghji engaged parties including U.S. Senator Charles Schumer and representatives for StuyTown’s 30,000 residents. The deal worked partly because Blackstone won tax relief in return for keeping about half of the 11,241 units affordable. The agreement is for Blackstone to buy the property for $5.3 billion in a partnership with Canada’s Ivanhoe Cambridge Inc., and when the sale closes in December they’ll be among New York’s largest residential landlords.
Negotiations took less than a month but involved dozens of people with a range of interests and concerns, in addition to dozens of Blackstone staffers. “Every deal is like a SWAT team,’’ Meghji said.
Blackstone doesn’t always come out on top. It just lost to Starwood Capital Group for a 23,000-unit portfolio of apartments, mainly in Florida and Denver; Starwood on Monday said it agreed to buy the portfolio from Equity Residential for $5.4 billion.
The StuyTown deal turned around fast; for Henritze and the Cosmopolitan of Las Vegas, it was a slow burn. Blackstone had been tracking the hotel and casino since Deutsche Bank AG repossessed it in 2008, and finally made it happen last year, with Blackstone paying $1.73 billion in its first casino acquisition.
But before the deal was approved by state regulators, Henritze and two other executives had to be licensed by the Nevada gaming control board, which required turning over years of tax returns and all brokerage statements, providing character references and information on addresses “going all the way back to college’’ at the University of Virginia, he said. “The conclusion was we were all pretty boring people.’’
Henritze grew up in Atlanta, the second-oldest of six. His father, two brothers and a sister are in real estate, and another sister works for a private equity firm. He joined Blackstone in 2004 after a stint as an analyst at Merrill Lynch & Co. Meghji was born in Vancouver, where his parents had emigrated in 1972 from Kenya as part of the East African diaspora following Idi Amin’s expulsion of Indians from Uganda. He has an older sister and retains Canadian citizenship. After studying electrical engineering at Columbia University, he got law and business degrees from Harvard.
“Law didn’t suit my temperament,’’ Meghji said. While working for a small real-estate fund based in Houston, he had watched, fascinated, as Gray pulled off Blackstone’s largest buyouts in 2007, Equity Office Properties Trust and Hilton Worldwide. He approached Blackstone for a job and was hired in 2008.
In some ways, they’re following the usual path at Blackstone. When he won the $39 billion bidding war for Equity Office and acquired Hilton, the last deal where he led day-to-day negotiations, Gray was 37.