Lunch at the Tribeca Grill with Marc J. Warren
Published by The New York Sun on 2005-05-12
When investment banker Marc J. Warren looks at commercial real estate these days, the world looks promising indeed.
"This is a very good time to be in the business," he said yesterday over lunch. "Low rates and relatively easy terms made for a record year in 2004. And 2005 is shaping up as even better for borrowers."
As executive director of the global commercial real-estate group at UBS Investment Bank - the investment-banking subsidiary of UBS, A.G., one of the world's biggest banks - Mr. Warren certainly knows what he's talking about.
His bank lends more than $5 billion annually for commercial real-estate. That's a neat slice of commercial market securitization - the creation of bonds from loans - in America, which so far this year has amounted to $40.3 billion, compared to $28.7 billion during the same period in 2004. Overall, the 2004 record that Mr. Warren talks about translated into $93.1 billion, compared to $77.8 billion in 2003.
"Such securitization is growing even faster abroad," Mr. Warren said. The year-to-date figure outside America is $24.1 billion, compared to $10.9 billion during the same period last year. Globally - including America - the figure for 2004 was $127.6 billion, compared to $98.7 billion in 2003.
So what does the executive director of UBS's commercial real-estate group actually do?
"A lot of my time is spent on cultivating and retaining clients," Mr. Warren said. "Sometimes, in order to get that first deal, you've got to do something out of the box."
"Such as offering to show clients a property on Sundays," he said. "This business is just too competitive, and occasionally something on which you've worked very hard falls through, It's also disappointing when your profit margins are squeezed by competitors. Fortunately, we've done quite well at UBS."
That may be an understatement. UBS has one of Wall Street's largest balance sheets in large loans for securitization and whole loan sale, floating-rate loans for securitization and portfolio purposes, and what Mr. Warren characterizes as "mezzanine and forward commitment investments, as well as other opportunistic investments." That means finalizing about 40 loans each month.
He's marking the completion of five years at UBS. Earlier, he was a director in the real-estate products group of Credit Suisse First Boston in New York. Mr. Warren specialized in debt financing using the firm's own capital. He also handled commercial mortgage-backed securitizations, and real-estate mergers and acquisitions work. He was the co-head of all client relationships, origination, and underwriting for transactions for CSFB's New York office.
And for three years before being named a director at CSFB, Mr. Warren was the senior member of a team that was responsible for the investment bank's debt investments in the retail, office, and industrial sectors of the market.
"These investments involved debt, participating debt, and mezzanine structures as well as forward commitments," he said.
When he was at CSFB's real-estate group, Mr. Warren was involved in several major transactions. They included representation of NBC and General Electric in various mergers and acquisitions. He was involved in GE's $440 million investment in Rockefeller Center. He was involved with seasoned loan pool securitizations for the bank and its outside clients including Wells Fargo Bank, Mutual Benefit Life, and Heller Financial. He dealt with nearly $1 billion in lines of credit to various CSFB clients.
He came to CSFB in 1993 with already established credentials at Heller's offices in Chicago and New York. At Heller, Mr. Warren was responsible for the sourcing, structuring, negotiation, and closing of debt, equity, and debt/equity investments on a variety of property types, as well as non-performing loan portfolio bids from distressed sellers such as the RTC and FDC, among others.
Mr. Warren established Heller's manufactured housing community business in 1987. That enterprise became one of the industry's largest source of debt capital and was the basis for Heller's entrance into the securitization business.
But why real estate?
"Growing up in Omaha, I had no idea that I would end up in a big city like New York," Mr. Warren said, noting that he and his brother Mitchell - who runs a not-for-profit organization called the AIDFS Vaccine Advocacy Coalition in New York - were children of middle-class parents, Martin and Marilyn. It was only when he attended the University of Wisconsin in Madison and came under the influence of a mentor, Professor James Graaskamp, that Mr. Warren joined the real estate and urban land economics program.
He also studied art and architectural history at the university, and, indeed, at one point even entertained the notion of becoming an art historian.
"But real estate proved a wonderful choice," Mr. Warren said.
A wonderful choice indeed. Real-estate mortgages and commercial securitization constitute a tenth of America's economy of $11 trillion annually. Real-estate investments have typically outpaced investments in equities. Mr. Warren acknowledged yesterday that the business has been great for investors.
"There have been no Enrons, no downturns such as those at General Motors and Ford," he said. "We're all about bricks and mortar. It's a solid business."
But it's a business that demands more than a reasonable portion of his workday. Nevertheless, Mr. Warren makes time for community work. He is on the boards of the JCC of Manhattan, the Jewish Communal Fund - a $630 million donor-advised charitable body - and the University of Wisconsin Real Estate Alumni Association. He is also active in the UJA Federation of New York, and sits on its real-estate management committee, among others.
"When I was young, I would often see my parents help victims of tornadoes in the Midwest, where we lived," Mr. Warren said. "That left a strong impression on me."
His wife, Barbara Benenson, is also in business, a partner in a knitwear enterprise called White and Warren. They have two young children, Rachel and Benjamin, and, Mr. Warren quickly added, also a menagerie of pets, including two Golden Retrievers.
Where's he headed next?
"The business will get bigger, although margins may become thinner because of the competition," Mr. Warren said. "But there are always creative opportunities in real estate."
Would he consider moving into the European or Asian markets, where property values are booming?
Mr. Warren reflected on the question.
"I'd rather be in New York with my kids," he said. "And business is very good in New York."
Senior Writer and Global-Affairs Columnist