The release of more than 5,000 pages of detailed placement agent fees and contracts by the California Public Employees’ Retirement System (CalPERS) was welcomed today as the only way of eradicating so-called finders in the industry.
As the private equity real estate industry digested the full extent of CalPERS’ release yesterday, Dan Vene, senior vice president at Rowayton, Connecticut-based placement agent CP Eaton, told PERE it was a “necessary” and right thing to do.
The full disclosure, upfront, of everything a manager does and pays for in relation to placement agents should be supported. Dan Vene, senior vice president,
The full disclosure, upfront, of everything a manager does and pays for in relation to placement agents should be supported.
Dan Vene, senior vice president,
“The full disclosure, upfront, of everything a manager does and pays for in relation to placement agents should be supported,” he added.
CalPERS yesterday published 600 placement agent disclosures as part of its review of placement agents’ interaction with the pension. The disclosures revealed that ARVCO Financial Ventures, a placement firm run by former CalPERS board member Alfred Villalobos, received more than $58 million in fees from fund managers for work securing commitments from the California pension.
A little-known New York firm called Tulling, which made the second highest amount, collected about $17 million. Donald, Lufkin & Jenrette made about $12 million and Credit Suisse collected about $11 million.
Around 90 percent of CalPERS’ managers voluntarily took part in the exercise, revealing payments relating to new investment proposals since May 2009, when the pension created a placement agent disclosure policy. Some managers, though, provided information on past fundraising efforts.
• Capmark paid Credit Suisse Securities a one-time upfront payment of $27 million for the Capmark Structured Real Estate Fund, formerly known as GMAC US Structured Real Estate Fund. CalPERS’ pro-rated share was not disclosed.
• RLJ Development paid San Francisco-based placement agent Presidio Partners a total of $10.6 million to raise its $743 million RLJ Lodging Fund II and the $1.2 billion RLJ Real Estate Fund III. Fees related to CalPERS commitments were $453,288 and $1.25 million respectively.
• CIM Group employed ARVCO Capital Research between 1998 and 2000 to help raise capital from numerous investors for its CIM California Urban Real Estate Fund I, an appointment which was discussed by CalPERS’ board owing to Villalobos’ former work with the pension. Despite terminating the relationship in 2000, before CalPERS committed $125 million to Fund I, CIM was obliged to pay ARVCO a total of $9.6 million owing to “certain tail fee obligations”. The fees also related to a subsequent $280 million CalPERS commitment for CIM’s Fund II, the documents stated. CIM employed Banc of America Securities as placement agent between 2002 and 2003, paying the firm a flat fee of $500,000. CalPERS and CalSTRS were carved out of the BoA agreement. CalPERS’ pro-rated share was not disclosed.
• DivcoWest Real Estate paid Credit Suisse First Boston a total of $6.3 million for placement services relating to its $644.6 million Market Street Capital Partners fund. CalPERS’ pro-rated share was not disclosed.
• MGPA paid M3 Capital Partners a total of $3.13 million for CalPERS’ commitment to its 2005, $1.3 billion MGPA Fund II – which involved two separate vehicles MGPA Asia Fund II and MGPA Europe Fund II.
• ARA Managers paid Gilford Securities $1.6 million for CalPERS’ commitment to the ARA Asia Dragon fund.
According to other disclosures, CBRE Investors employed Presidio Partners to raise its Strategic Partners UK Fund II, while IL&FS also hired Presidio for its IL&FS India Realty Fund II. UrbanAmerica hired Utendahl Capital Partners for its fund, UrbanAmerica II, and Savanna Investment Management hired Park Hill Group to raise Savanna Real Estate Fund I.
In raising Stockbridge Real Estate Fund, and various other co-investment vehicles, Stockbridge Capital Group hired placement agents although all fees were paid by May 2009. CityView also said its predecessor entity, American City Vista, hired Waverly Capital as consultant. The relationship was terminated in 2004 and all fees paid. No other financial details were provided.
CalPERS stressed the disclosures had not been analysed by the pension nor verified.
Top 10 fees to placement agents
(as relating to CalPERS' commitments)
ARVCO —- $58.94 million
Tullig — $16.95 million
Donaldson, Lufkin & Jenrette Securities — $12.31 million
Credit Suisse First Boston — $10.81 million
UBS Securities — $8.76 million
DAV/Wetherly Capital Group — $5.93 million
Presidio Partners — $3.52 million
M3 Capital Partners — $3.14 million
Denning and Company — $3 million
Lazard Freres & Co — $1.75 million