Carlton Group completes $3 billion in sales, recaps and acquisitions in 2011

Howard Michaels and his Carlton Group finished up as one of top New York City deal makers in 2011, with over $3 billion in Manhattan sales, recapitalization and acquisition transactions. In addition, Carlton is off to a strong start this year, currently controlling over $2 billion of new Manhattan office, hospitality, and retail exclusives. Carlton came out of the box strong in early 2011, with two of the biggest deals early in the year, white-knighting Norman Sturner and Murray Hill Properties on One Park Ave. and 1180 Avenue of the Avenues. These two deals aggregated close to one billion dollars in total transaction value. Both of these transactions were under deep distress, as RXR had bought the senior mezzanine on One Park Ave. and was committed to completing a UCC sale to foreclose out Sturner's interest in the property and gain control of the asset. Within a few weeks after being retained, Carlton was able to negotiate a discounted payoff of the subordinate mezzanine capital stack, clearing the way for Carlton to bring in Vornado and Morgan Stanley to provide over $450 million to recapitalize Sturner's interest and allow Vornado and Murray Hill to maintain joint ownership and management of this iconic one million s/f asset. Michaels saved the day on Sturner's prized 1180 Avenue of the Americas office asset. On this transaction, Michaels brought in a major Asian investor, who, along with an investment bank, provided nearly $400 million of equity and debt capital to Sturner, allowing him to pay off the first mortgage and mezzanine lender at par. The mezzanine lender had hired CBRE to find an investor and was literally two weeks away from completing a UCC foreclosure. Murray Hill remains the manager and owner of this highly valuable, stabilized asset, along with its Asian partner. Michaels then went to work for Scott Lawlor of Broadway Partners, exclusively advising Lawlor on the recapitalization of 1.6 million sf at 450 W. 33rd St. This transaction also ended very well for the Sponsor, with Brookfield stepping up to partner with Lawlor, allowing him to stabilize the capital stack and buy out Broadway's institutional equity partner at a significant discount. The capital stack at the time Carlton was retained was close to $800 million. Perhaps Michaels' greatest accomplishment of 2011 was helping to resuscitate famed developer Harry Macklowe's illustrious career, by arranging in excess of one-half billion dollars in equity and debt capital, allowing Macklowe to capture two New York residential jewels, 150 E. 72nd Str. and 737 Park Ave., both of which are slated for condo conversion. Michaels and Macklowe had teamed up several years before, when Michaels brought Macklowe a huge German equity investor, allowing him to successfully complete the $1.4 billion recapitalization at the General Motors building. This recapitalization gave Mr. Macklowe the capital necessary to pay off his high temperature mezzanine debt and the funds to build the Apple Store and Madison Avenue retail expansion. On 737 Park Ave., Michaels pulled off a "near miracle," by bringing in an overseas investor who partnered with Macklowe, agreeing to put up a $10 million "hard deposit" in literally four days. This allowed Macklowe to go hard on his 737 Park contract, beating out a "who's who" of elite New York City developers, who were all vying to win this prized asset. On 150 E. 72nd St., Michaels continued his string of Manhattan successes by bringing Macklowe a first mortgage, balance sheet lender, which gave Macklowe a $90 million first mortgage, which was $20 million more than his purchase price. Michaels also arranged a favorable equity deal with an international family office investor who partnered with Macklowe, allowing the tandem to proceed with the conversion. This asset had a transaction value of approximately $120 million and a condominium sell-out, which is double that amount. Carlton's success also extended far beyond Manhattan transactions, completing $7 billion in worldwide 2011 transactions. The firm enjoyed significant successes, completing deals throughout the United States and internationally. Of particular note was Carlton raising offshore and domestic equity and debt capital for a New York Stock Exchange company, which acquired $1.5 billion of senior and subordinate debt positions. Both of these transactions were highly complicated and time-sensitive, by virtue of the multi-tranched capital stack and bid deadlines. Carlton was able to access off-shore, institutional co-investment equity and debt, with a significant source of the capital coming from overseas. These two capital raises and note acquisitions will ultimately facilitate the intended control of over 5 million sq. ft. of prime, U.S. real estate. In addition to raising equity and debt, and executing investment sales, Carlton also specializes in representing institutional investors in the loan sale business. In fact, 20 years ago, when the company was founded, it was called Carlton Property Auctions, and specialized in valuing and creating accelerated marketing solutions for distressed assets. This prior experience has laid the foundation for many of Carlton's current successes and provides Carlton with a distinct advantage over many of its competitors. Carlton's 2011 loan sale successes included representing RREEF Advisors in achieving a par payoff on the sale of its mezzanine loan, which was secured by the Westin Hotel in San Francisco. The company also represented Paulson and Company and Winthrop Realty (a New York Stock Exchange REIT) in the $4 billion CNL/MSREF corporate mezzanine UCC foreclosure sale. At the conclusion of the UCC transaction, the Paulson/Winthrop partnership was able to successfully complete the foreclosure of the corporate mezzanine interest, which allowed them to gain control of the equity in order to control the restructure and workout of these tremendous hospitality assets. The MSREF properties include some of the finest hospitality assets in the world, including Ritz Carlton Grand Lakes in Orlando, Florida, The Arizona Biltmore in Phoenix, Arizona, the Grand Wailea in Maui, Hawaii and the Doral Golf Resort in Miami, Florida (which is now under contract to Donald Trump), among others. 2012 will start off strong for the Carlton Group. It presently controls a half a dozen Manhattan exclusives, valued well in excess of $2 billion. Overall, the company is executing approximately $6 billion of domestic and international exclusive mandates. In sum, Carlton is one of the top real estate private equity bankers in the U.S. and has participated in some of the largest and highest profile transactions in the country. Overall, the company has completed over $85 billion in transactions, including the recapitalization of Sears Tower, arranging the acquisition equity and debt, and subsequent sale of Bank of America Tower in San Francisco, the $1.6 billion financing of the Cabi Portfolio, and many other large, multi-tranched transactions. Specifically in Manhattan, the firm has historically been one of the most successful investment advisors ever, completing well in excess of 30 million square feet of New York City transactions. Certain of Carlton's successes in Manhattan include the recapitalization of the General Motors building, arranging acquisition and recapitalization equity and debt for the Starrett Lehigh building, the $800 million condo conversion at the Manhattan House, the $500 million condo conversion at River Terrace, the $811 million recapitalization at 11 Madison, the 2008 equity recapitalization and retail condo sale at 666 Fifth, and many, many other large notable Manhattan transactions.