Howard Michaels, Bankable

howardmichaels Howard Michaels, Bankable

Location: You’re the money guy.

Mr. Michaels: Right.

Where do you get your money from?

Over the last 15 years, we have developed a worldwide network of equity investors and investment advisers who look to Carlton to provide high-quality transactions and [joint venture] partners. In fact, my partner is in France right now at the MIPIM conference. We have six executives there and we are one of the event sponsors.

Looking to raise money?

Looking to match deals and people with money. In 1998, we decided that the last thing the world needed was another mortgage broker, so we focused on OPM, other people’s money, raising the equity for deals.

So this $300 million first-mortgage joint venture that you founded, where do those $300 million come from?

We have a partnership with a $1 billion fund.

Who’s the billion-dollar fund?

I can’t say.

Is it a hedge fund?

I can’t say. A real estate investment fund.

Do you always multi-task like this? [Editor’s note: Mr. Michaels has been fiddling with his smartphone during the entire interview.]

On this kind of stuff? [Laughs] Yeah.

So you’re essentially right now performing the function of a bank?

We are. Not essentially. We are. We are the bank. …I want to be clear, we’re very committed to filling the void in the marketplace and providing first mortgage money up to 65 percent loan-to-value.

Up to $100 million?

Right.

Do you see Carlton ultimately replacing some of the Wall Street institutions that have fallen?

I think there’s a big opportunity to provide services that the investment banks previously provided, and we certainly want to fill as much of that void as we can.

You are, in some sense, the next Lehman?

I wouldn’t characterize it like that, plus I don’t want to have a prophecy that ends in failure. …But we are in the finance business, we’re in the service business; we’ve been in business for 20 years; and we have a long-term view of the business.

I ran into [Eastern Consolidated Chairman] Peter Hauspurg on the way here, and he mentioned that you two had worked together in the ‘90s auctioning off assets. You recently announced you want to start doing oral commercial real estate auctions again. When will that begin?

We are launching an auction Web site which we will release very soon, which will have a competitive online bid function, and we also have the capacity to do oral bid auctions, which is what we did in the early 90s.

So what circumstances would necessitate an oral auction?

Someone’s got a bunch of condos and they need them to move.

And they can’t find anyone else to take them?

I think the conventional sales market right now is very slow, to be kind. [Laughs] So if you pay a lot of money in interest, if you have a loan that’s coming due, if you have pressure to create proceeds and you can’t wait a year for the market to turn around; you might as well do an auction. And who better to do an auction with than a local company?

There’s much talk of all this money on the sidelines? Is there money on the sidelines?

Yes.

Where does this money come from?

There’s a tremendous amount of overseas capital that’s been kicking the tires for the last 18 months and is getting ready, and either has made investments or is looking to make investments in the States. There are certainly pension funds, high net-worth investors, other domestic sources that have been investigating coming into the market. I think if we see some stability in the stock market, I think if the government gets clear on how they’re going to subsidize asset sales, you’re going to see a wave of activity.