Singapore’s Temasek Holdings and some clients of US-based asset management group Guggenheim Investment have backed a management buyout of Eastdil Secured, the real estate investment bank owned by Wells Fargo & Co.
In a statement, Eastdil confirmed that it entered into a definitive agreement for a management-led recapitalization in partnership with Temasek and certain institutional clients of Guggenheim Investments.
The terms of the transaction were not disclosed but Eastdil Secured said it will be privately held and its current owner, Wells Fargo, will retain a minority ownership interest. The deal is expected to be completed by the fourth quarter of 2019.
“In partnership with Guggenheim Investments and Temasek, Eastdil Secured will be positioned to further enhance its leading role in the U.S. commercial real estate capital markets, while also strengthening its growing presence in both Europe and Asia,” the real estate brokerage and investment bank said.
Wells Fargo acquired Eastdil in 1999 for $150 million. The real estate investment bank was then merged with Secured Capital in 2006. The management team at Eastdil will continue to own part of the firm’s shares.
For 2018 and year to date 2019, Eastdil Secured holds the top market share for real estate deals greater than $100 million across all property types in the United States. In 2018 alone, the firm advised on 827 transactions for $243.5 billion.
A Wall Street Journal report said Eastdil has held a leading position in major markets like New York and Los Angeles and dominated larger commercial real estate sales in Manhattan and other major markets for years.
However, the firm has lost some ground to competitors recently, including in the crucial New York City market where Cushman & Wakefield surpassed it to be the number one player in office property sales last year with $6.5 billion, while Eastdil had $3.8 billion.
The deal marks Temasek’s first direct investment in a US-based real estate investment bank. The deal will also provide Eastdil exposure to expansion opportunities in Asia, a market where its major competitors have set up a significant footprint.
Eastdil is likely to face fewer regulatory restrictions if it is no longer part of a US bank, according to the WSJ report.
The firm will continue to have its US headquarters in New York City and Los Angeles and its Europe headquarters in London, with additional domestic offices in Atlanta, Boston, Chicago, Dallas, Orange County, San Francisco, Seattle, Silicon Valley and Washington D.C., and additional international offices in Dubai, Frankfurt, Hong Kong, and Tokyo.
Eastdil also said that it will maintain its name and will continue to be led by Benjamin V. Lambert as chairman, Roy Hilton March as CEO, D. Michael Van Konynenburg as president, as well as its current Management Committee.