Cantor to Buy Ranieri Manager of Distressed Commercial Mortgages

Aug 07, 2014 12:01 am ET

Aug. 7 (Bloomberg) -- A subsidiary of Cantor Fitzgerald LP agreed to buy a Ranieri Real Estate Partners LP commercial- mortgage business that’s led by onetime Deutsche Bank AG executives Jon Vaccaro and Eric Schwartz.

Cantor Real Estate LP is acquiring RREP Recovery Partners Manager LLC, Cantor Fitzgerald said in a statement. RREP, a New York-based unit of the company headed by mortgage-bond pioneer Lew Ranieri, manages a $200 million fund that invests in distressed real estate loans. The terms of the purchase weren’t disclosed.

The transaction brings two well-known real estate finance veterans into the Cantor fold while extending the firm’s reach into the “middle market” of commercial-property lending in the U.S., said Sheryl Lee, a spokeswoman for New York-based Cantor Fitzgerald. RREP’s average loan investment is $1 million, with the largest less than $20 million, she said.

“RREP expands Cantor’s commercial real estate investment platform and opens up opportunities to bring additional sources of capital to the business, from clients that wouldn’t otherwise be a part of the firm,” Lee said in an e-mail.

About half of the $200 million fund is invested, according to Vaccaro. Plans under discussion include the possible formation of a mortgage real estate investment trust, he said in an interview. There’s no timetable for creation of that company, he said.

Mortgage REIT

“Given the track record of this particular fund, one would expect that we could go out and raise additional capital,” Vaccaro said. “The most efficient capital today is probably a debt-focused REIT. There’s not that many of them in commercial real estate -- there’s a few -- and given all the real estate- related businesses that are affiliated to Cantor, it makes a lot of sense.”

Vaccaro and Schwartz’s “transition to a larger-scale platform like Cantor’s is a natural evolution,” Ranieri said in the statement. “Both Jon and Eric have been good partners and friends, and we wish them continued success.”

Before co-founding Ranieri Real Estate Partners in 2010, Vaccaro was global head of commercial real estate at Frankfurt- based Deutsche Bank, and Schwartz was co-head of commercial real estate in North America for the bank.

Cantor Fitzgerald Chief Executive Officer Howard Lutnick moved the investment bank into real estate in 2009. The firm securitized $3.1 billion of mortgages the first half of the year, or 8 percent of the market, ranking it third, according to Commercial Mortgage Alert.