NEW YORK: Cantor Fitzgerald’s commercial real estate venture hired Michael DeMarco from Vornado Realty Trust to be chief investment officer as the firm seeks to boost its mortgage business.
DeMarco, previously an executive vice president at Vornado, started last month at Cantor Commercial Real Estate (CCRE), said Anthony Orso, chief executive officer of the unit.
Howard Lutnick, New York-based Cantor Fitzgerald’s CEO, has expanded into real estate as the business of stock and bond trading slows. CCRE, started in 2010 with Los Angeles-based CIM Group, lends to commercial property buyers and then sells the debt to companies that package it with more loans and sell slices to investors.
“They’ve been able to gain a pretty significant market share within the CMBS origination business fairly quickly,” said Brendan Browne, an analyst at Standard & Poor’s, using the acronym for commercial mortgage-backed securities.
DeMarco, who was an investment banker in the real-estate group at Lehman Brothers Holdings for 13 years, reports to Orso in New York. Before joining Vornado in 2010, DeMarco was a partner at Fortress Investment Group.
“As we expand our platform, [DeMarco’s] role is to help us grow on all fronts,” Orso said.
CCRE originated US$3.1 billion of commercial real-estate loans that were packaged into securities last year, more than double the total in 2011, according to Commercial Mortgage Alert, an industry newsletter.
The firm reported a pre-tax return on average assets of more than 12 per cent, before distributions to shareholders, in the third quarter of last year, the most recent data available, S&P’s Browne said.
CIM Group, which invested US$350 million in the business, controls 55 per cent of CCRE’s capital, with 32 per cent held by the State Teachers Retirement System of Ohio, and 11 per cent by Cantor Fitzgerald, Browne wrote in a February report. Management controls the remaining 2 per cent, he said.
CCRE’s limited partnership agreement allows for Cantor or CIM to dissolve the business since it didn’t have an initial public offering or sale by July 18, Browne said. The firm will probably attempt to diversify its businesses and prepare for an IPO, Browne wrote in the report.
CCRE raised US$250 million in a bond sale in February, according to data compiled by Bloomberg. It hired Chris Milner, formerly of BlackRock, in March to start an investment-management group.
(BLOOMBERG)
