Howard L. Michaels, age 60, is the Owner, Chairman and Founder of the Carlton Group which has been in business since 1991. As indicated in the below Wall Street Journal article, Mr. Michaels was at the forefront of the securitized finance business going back to 1994 and Carlton, under his leadership, has completed well over $125 billion of structured finance, equity joint ventures, investment sales and principal investments.
Carlton through its principal transactions business, Carlton Strategic Ventures, owns and manages in excess of 3 million square feet as the Managing Member and also has significant investments in well over $1 billion of real estate with clients of the firm.
In general, Carlton is a “situational investor and advisor” and specializes in completing large, often complicated time sensitive transactions. The firm enjoys worldwide relationships which allows it to fund development and transitional assets especially when capital needs to be raised quickly or when a multi-tranche capital stack is required in order to maximize terms and/or pricing.
The firm is well known for arranging joint ventures and equity partnerships between international capital partners and local operating partners. To this point Carlton, within the last 18 months has completed over $6 billion of transactions with Middle Eastern and Asian investors particularly on large Manhattan development and transitional assets.
Mr. Michaels is a graduate of American University and is involved in numerous charities including the National Foundation for Facial Reconstruction, the American Israel Public Affairs Committee and the Friends of the Israeli Defense Forces. Mr. Michaels resides in Manhattan with his wife, Jennifer and has five children.
Examples of certain of the large transactions completed by Carlton include the following:
- $1 BILLION 1568 Broadway (a/k/a Doubletree Hotel in Times Square) – As the exclusive advisor to Maefield Development and its institutional investment partner, we facilitated the acquisition of this $1 billion hotel, retail, LED signage and entertainment property in heart of Times Square.
- $1.4 BILLION GENERAL MOTORS BUILDING RECAPITALIZATION – Carlton arranged a $1.4 billion recapitalization on the GM Building in between Harry Macklowe and a large German fund which allowed Mr. Macklowe to develop the world’s most successful Apple store as well as building out the retail on Madison Avenue.
- $400 MILLION CONSTRUCTION LOAN FOR 432 PARK AVENUE – Carlton arranged a construction loan on the foregoing luxury condominium with a London-based balance sheet investor. 432 Park Avenue is currently one of Manhattan’s most successful luxury condominium and retail properties.
- $1 BILLION HIGH LINE LUXURY CONDO AND HOTEL – Carlton is the exclusive advisor to one of New York’s top developers on their $1 billion acquisition of one of the most valuable development sites in New York. This property will be one the premier luxury condominium and 5-star hotel transaction below 34th Carlton arranged the multi-tranche debt stack bringing in five different lenders and investors which funded a majority of acquisition. Carlton is also the exclusive construction advisor for this transaction.
- $2 Billion JV Equity and construction loan at 20 Times Square (Formerly 701 Seventh Avenue) – Carlton initially arranged $500 million of debt and equity to facilitate this prime development site on the corner of 47th Street and 7th Avenue in New York. Subsequent to the closing, Carlton brought in Marriott Edition and Ian Schrager to build a 42-story Edition Hotel in conjunction with 76K sf of prime retail and an 18K sf LED sign which will be the second biggest LED sign in Times Square. In addition to arranging the acquisition capital we also arranged an $815 million construction loan to build the foregoing.
- $800 MILLION TRIBECA DEVELOPMENT – At 111 Murray Street, Carlton recently organized a consortium of three different Chinese investors who invested $125 million of equity to facilitate the further development of this $800 million 58-story, ground up, Tribeca condominium development for one of the top development groups in Manhattan.
- $616 MILLION STRUCTURED FINANCING TO SUPPORT PARK LANE HOTEL ACQUISITION – Although this asset generated a very small NOI upon acquisition, Carlton was able to arrange a $616 Million structured financing.
- 125 Greenwich Street – We recently closed a $240 million Manhattan ground up development transaction, where we organized six different lenders and investors to capitalize the $240 million acquisition. A Singaporean based bank made the senior loan, an Indian billionaire provided the mezzanine, and a major Chinese investor put up 80% of the equity capital.
- JOINT VENTURE AND PRE-DEVELOPMENT LOAN AT 215 CHRYSTIE STREET – Carlton arranged a joint venture between two prominent developers for the acquisition and construction of a 25-story tower condominium and upscale 370 key hotel. In addition to arranging the partnership between the iconic duo, Carlton also arranged a high leveraged land loan to facilitate the acquisition and predevelopment of what is sure to be one of Manhattans most valuable residential and hospitality properties.
- 1180 Avenue of the Americas – We closed a $100 million equity investment by a large Chinese conglomerate to acquire a $400 million Sixth Avenue office building.
For Carlton Group Chief, Another Frontier
Founder Howard Michaels enters the risky field of real-estate crowdfunding
By PETER GRANT
July 12, 2015
Crowdfunding has become a hot trend in commercial-real-estate finance, so it’s no surprise that Howard Michaels is expanding the Carlton Group into that business.
In his 35-year career in real estate, the New York-based real-estate finance broker and
investor has been involved in most major financing trends, often at an early stage. His first job in real estate was as a representative selling real-estate limited partnerships, before that industry flamed out in the late 1980s with a change in U.S. tax laws.
In the 1990s, Mr. Michaels was among the first to securitize debt as the commercial-mortgage-backed-securities market emerged. These days, Carlton is finding Asian investors to take equity stakes in projects by name developers.
Carlton has its eyes on online fundraising because it allows the firm to advertise online and sell stakes in real-estate deals to investors without the red tape that syndications require. “We’re going to be ramping up that business big time,” Mr. Michaels said.
Carlton rolled out its first crowdfunding site last year, taking advantage of the reduced restrictions on raising money via Internet in the Jumpstart Our Business Startups Act of 2012. Mr. Michaels said the site will soon be relaunched to allow people to make investments as small as $50,000, down from a $1 million lower limit.
Mr. Michaels said he hopes to use crowdfunding to acquire $500 million worth of property in the next year. “It gives us a broader base of investors to go after,” he said.
Of course, Mr. Michaels isn’t the only one to recognize the Internet’s impact on real-estate finance. Scores of firms and startups have rolled out sites, and some, like Realty Mogul Co. and Fundrise, have gotten out of the gate faster than Carlton.
Industry participants predict that many current players won’t survive. “There are hundreds o
f these companies now, but most of them have funded $3 million to $10 million or have done one deal with offline capital, but they’re saying it’s online capital,” said Jilliene Helman, chief executive of Realty Mogul.
Still, Mr. Michaels, 59, has a history as a survivor. He started in sales working for the Long Island carpet store his father managed. After graduating from American University he sold copy machines and insurance, and in 1980 started selling limited partnerships for a firm named Island Planning.
When the commercial-real-estate industry collapsed in the early 1990s, Mr. Michaels developed expertise in auctioning distressed property for a firm named Carlton Property Auctions. After buying out his partners, he moved the firm to Manhattan and renamed it the Carlton Group.
Initially, the Carlton Group focused on providing debt financing as mortgage securitization boomed. But in 1998, Mr. Michaels switched to helping developers raise equity.
“I realized the last thing the world needed was another mortgage broker, because
debt had become a commodity,” he said. “What we saw was that developers were much more eager and willing to pay a lot more money if we could bring them equity partnerships instead of debt.”
Carlton, which has a staff of about 45, has done $125 billion in deals throughout its history, Mr. Michaels said. Like the rest of the industry, it faced some lean years during the downturn.
But business is strong as New York’s real-estate market booms. In the past 18 months, Carlton has brokered $6 billion of development deals, including the $125 million investment an Asian insurer made in Steve Witkoff’s planned condo at 111 Murray St. and the land loan for HFZ Capital’s purchase of an $870 million site near the High Line.
Mr. Michaels also has started taking stakes in deals himself. Carlton owns and manages about 3 million square feet of commercial real estate, and has a minority stake in more than $1 billion worth of buildings, frequently co-investing with clients.
“Every broker wants to be a principal,” Mr. Michaels said. “They see how much developers make.”
Crowdfunding will come in handy when Carlton is doing the buying. In a hypothetical $50 million acquisition, Mr. Michaels said, maybe $35 million would be borrowed, $5 million would come from Carlton and $10 million from crowdfunding investors. “It’s another way for us to capitalize the deal,” Mr. Michaels said.