BLP's real estate department revs up for US Kramer merger
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17 February 2014
The new air of excitement at Berwin Leighton Paisner (BLP) has seeped under the door into its real estate department. The firm's newly unveiled alliance with US firm Kramer Levin, revealed in The Lawyer last week may well have been driven by corporate and finance ambitions in Europe, but with London partners Claire Milton and Vinay Vineik leading BLP's real estate push on the Continent, the department is keen to realise its own ambitions as a result of the New York deal.
It is still early days. The alliance only reached a partnership vote two weeks ago and marketing strategies are now being written across both firms. A joint committee between the firms is being set up (membership still to be finalised) and will meet for the first time in November to consider them.
But don't be deceived. Behind the scenes, the real estate teams, like other practice areas, have already been testing each other out with referrals. BLP has been working with a longstanding Kramer client that is negotiating to acquire, develop and operate a project in London, while Kramer has already advised a BLP client that recently acquired two office buildings and which is considering other real estate investments in New York and elsewhere in the US.
So what is BLP's real estate practice getting? The Kramer Levin name is not so synonymous with real estate as the BLP brand. Of Kramer's $133m (£85m) turnover last year, real estate brought in around 10 per cent. BLP's real estate department accounts for around a third of turnover, putting it at £28.4m for the last financial year and well over £30m if you include construction and engineering, planning and environmental.
Kramer has a medium-sized real estate practice - eight partners to BLP's 36. It is best known for New York work, but advises clients active across the US. The firm is clearly ambitious. Department head Jay Neveloff recently induced the land use team (planning to you or I) at his former firm Rosenman & Colin to join him at Kramer. It gained eight lawyers as part of the deal and a planning capability for the first time. Neveloff is confident that the acquisition will quickly boost real estate fees to 15 per cent of firmwide turnover.
In addition to Neveloff, real estate partners Michael Korotkin and Samuel Linden-baum are among the names that open doors for Kramer.
A rundown of Kramer's key real estate clients makes for an impressive read. The firm has acted for Donald Trump for almost 30 years. On the instit-utional side, it acts for Credit Suisse First Boston (CSFB), Zurich Structured Finance and GE Capital Real Estate. It also has relationships with New York developer Rockrose Development, Related Properties, which is active across the US, and Tishman Speyer Properties. Kramer's finance practice also sits nicely with BLP's small property finance practice.
Neveloff's team would love to help existing clients looking for opportunities in Europe, and especially the UK. Some will be more susceptible than others. GE Capital and Zurich, for example, have significant standing relationships for pan-European real estate. GE uses Allen & Overy and Clifford Chance, among others, while CSFB is known to use Clifford Chance and Linklaters. These are obvious choices for clients looking for a significant structured finance capability. Tishman is also closely wedded to Clifford Chance in Europe.
What BLP is getting is a practice ready to hunt by its side in a whole new arena of clients that it simply could not target before.
As befits the current market, the priority is to target work for US and international funds on acquiring, financing and managing real estate investments in Europe. They will face tough competition, not least because this is a market in which a track record is absolutely crucial.
US developers seeking European projects are another obvious addition to the wish list and one more obviously suited to BLP's strengths. BLP's practice has been much more heavily orientated towards the developing community than the financing community. Its property finance stars Simon Kildahl and Mark Waghorn are exceptions to the rule, which could prove a stumbling block going forward with the alliance.
Milton and her colleagues are not ashamed to admit that they have barely touched the surface in terms of exploiting such opportunities. Less than 10 per cent of the department's work is from activity on the Continent. What funds work it has done in Europe has been serviced by putting together packages with other independent firms. That solution is not inconsistent with the Kramer deal - one advantage of the joint venture approach - and may well continue, particularly where offshore advice is needed. But now it also has its own platform. Developing the Kramer relationship will take priority over other links, including the historic Paisner & Co association with Uettwiller Grelon Gout Canat & Associés (UGGC), based in Paris and Brussels.
Kramer's Milan and Paris operations both have some real estate capabilities. Paris and New York share Colony Capital as a real estate client. Using this as a nexus, there is now the opportunity to introduce other relationships to BLP.
The two firms also tested the water in Italy recently, with a presentation to clients of Kramer's associated firm Studio Legale Santa Maria. Neveloff already acts for a number of its clients in the US.
The willpower is clearly there to make this new alliance work for real estate.
The challenge for BLP will be in its ability to service the kind of real estate work that is coming out of the US, namely structured real estate finance deals and funds work. If it rises to the challenge, the Kramer deal could be just the tonic BLP's real estate practice needs.