Thirty-four years ago, Howard Michaels was knocking on doors in the 2.3 million-square-foot Starrett-Lehigh office building, hawking copy machines for the 3M Company.

Those days are undoubtedly over. In 2004, he arranged a $219 million recapitalization of that same building, earning a seven-figure commission for his company, a real estate investment advisory firm known as the Carlton Group.

Carlton has been on an especially hot streak this year. So far in 2011, the company says it has closed $5 billion in transactions worldwide.

In two high-profile deals this spring, Carlton raised over $500 million of equity and debt for developer Harry Macklowe’s soon-to-be condo conversions at 737 Park Avenue and 150 East 72nd Street. And, at the office building 1180 Sixth Avenue, Carlton brought in an anonymous Chinese investor to bail out owner Murray Hill Properties before a planned foreclosure auction by the mezzanine debt holder, Shorenstein Properties.

In July, the commercial property trade publication Real Estate Alert rated Carlton the No. 1 office sales and recapitalization firm in Manhattan for the first half of 2011. Meanwhile, Carlton opened a new office in Athens last month and a London outpost in April, adding to its locations in Chicago, Los Angeles and Florida.

The way Michaels tells it, Carlton’s current level of activity is due to a unique confluence of market factors that play to his strengths.

Michaels is fond of repeating that Carlton specializes in raising “passive, promotable equity” for clients – tapping high-net-worth individuals and institutions to access 80 to 100 percent of the capital required for a real estate project. Now, in a difficult deal-making environment, with many of the pre-recession players out of commission, Carlton is uniquely positioned to clean up.

“The real estate market right now is obviously very volatile,” Michaels said, excitedly pacing across his glass-walled corner office at 560 Lexington Avenue. “But I love it. I couldn’t be having more fun.”

Michaels is also famous for his grueling schedule. One former employee bemoaned Michaels’ mandatory Sunday-morning conference calls — which take place on holidays and long weekends, too.

“Carlton is not for the fainthearted,” he said. “If you’re not serious about work, this is probably not a good place. But if it’s someone who’s motivated and wants to do well, this is a great place to work.”

Other people’s money

Howard Lee Michaels was born in Flatbush, Brooklyn, in 1955. He was “a fat Jewish kid in an all-Italian neighborhood.”

Now fit, if stocky, Michaels has an intense gaze that frequently strays towards his ever-present BlackBerry. His father worked in a retail carpet store, he explained, and as a kid, Michaels helped out on weekends and over the summer. He swept floors at first, eventually working his way up to sales.

Michaels quickly figured out that he liked making money, and he had a knack for it.

“Some guys are good at playing football,” he said. “I was good at business.”

In 1977, he graduated from American University in Washington, D.C., and began the circuitous career path that would eventually lead him to real estate.

He landed the sales job at 3M within three weeks of graduating from college. From there, he moved to Connecticut General Life Insurance, where a cold call led to a job at the Manhattan-based real estate syndicator Island Planning.

Michaels did well at Island. The complex financial instruments of today hadn’t yet emerged, and syndicators — who pooled together funds from multiple investors — dominated the market.

Perhaps more important, he’d discovered the skill set he would cultivate for the rest of his career: scrounging up capital for real estate deals.

“I was always good at raising money for projects,” Michaels said.

In the depressed real estate market of the early ’90s, Michaels became a partner at a Long Island-based company called Carlton Brokerage. Along with the other owners, he created a new company called Carlton Property Auctions.

“It was a difficult time to sell anything,” recalled Peter Hauspurg, chairman and CEO of Eastern Consolidated, who organized an auction of distressed commercial assets with Michaels in 1993. The two recruited sellers to take part in the auction, compiling “a thick book of distressed properties,” Hauspurg remembered. “We ended up with hundreds of assets.”

Some 1,000 people showed up to the event, held at the Starlight Room on the top floor of the Waldorf-Astoria. “It worked — we sold a lot of property,” Hauspurg said.

Michaels continued expanding Carlton’s auction business. In the mid-’90s, he parted ways with his partners, formed the Carlton Group (they retained Carlton Brokerage) and moved it into Manhattan. By that time, the industry was changing, as securitization replaced syndication. In 1994, J.P. Morgan was widely credited with creating the first credit default swap — a financial instrument that serves as a type of insurance policy against default–and changing the face of modern finance.

Carlton, along with its clients, began delving into these more complicated transactions.

“That was a great segue for us, because a lot of our auction clients were the investment banks,” Michaels explained. “When those banks changed their focus, we took those relationships and started doing financing.”

Then, in 1998, an old client from Michaels’ syndication days asked him for help raising the subordinate capital for the purchase of an office building in Washington, D.C. “Within 48 hours, we got four offers for them,” he remembered.

The deal wound up fizzling, but Michaels had figured out a way to set himself apart from his competitors.

“What does everybody in real estate want? OPM — other people’s money,” Michaels said. “So I decided I was going to become the best person at arranging deals with other people’s capital.”

That strategy, he said, has allowed Carlton to do some of the industry’s highest-profile deals.

For example, Michaels said: “In 2006, when Harry Macklowe wanted to pay off Vornado and [George] Soros, who had some very expensive mezzanine on the General Motors Building, I brought in Jamestown, who gave him a $300 million check to pay them off and build out the Apple Store. And when Charlie Kushner needed $335 million to pay off his mezzanine debt on 666 Fifth Avenue, I brought in a dozen lenders who gave him $525 million.”

More recently, at 737 Park Avenue, Michaels “got the buyer to recognize what the market would give him,” said one Carlton client who asked not to be named. “He found the equity, which was a miracle, if you ask me. He got quality debt for a condo conversion, and the market was disintegrating at the time, too. That was a hard, hard deal. I don’t believe anybody else could have gotten that deal done.”

Competitors note, however, that the largest firms have only a few brokers who specialize in Carlton’s niche. “Even if he only had 12 guys, he’d be larger than all of them,” said one. “Howard could well be one of the biggest players around in that sector.”

Whatever the size, today’s economic climate is particularly beneficial to Carlton and similar companies, Michaels said.

Before the recession, “it was a different market to compete in, because you had all the super real estate banks controlling the market,” he said. “You had Lehman, you had Wachovia, you had Bear Stearns, you had Credit Suisse, you had Goldman.”

Buyers and owners who had relationships with these players could “get all of their capital needs met,” he said.

“We’re getting a payoff for the last 25 years of traveling the world, and going to every conference, and having relationships with investors throughout the world who now have money to invest in U.S.-based deals,” Michaels said.

Marine-style business

Carlton has no shortage of satisfied customers.

Murray Hill Properties’ Norman Sturner openly credits Michaels for saving the day at 1180 Sixth Avenue and at One Park Avenue, where Carlton arranged the financing for Vornado’s $180 million recapitalization of the 925,000-square-foot office building, which had been on the brink of foreclosure.

Both properties were “in financial crisis,” before he hired Carlton, Sturner said.

Michael Ashner, the chairman and CEO of Winthrop Realty Trust, hired Michaels to manage the firm’s attempted foreclosure at Stuyvesant Town in 2010 with the other senior mezzanine lender at the project, Pershing Square Capital Management. (The deal didn’t go through, but Ashner said that had “nothing to do with” Michaels. The parties ended up making a deal with CW Capital instead.)

“It was a very complicated foreclosure, and [Carlton] did an excellent job,” Ashner said.

“Whenever we’re involved in these mezzanine foreclosures, we use him and his firm.”

One element of Michaels’ success is his industry connections.

“His Rolodex is as good as anybody’s,” Sturner said. “His tentacles go out to everybody.”

But Michaels and others say his success is chiefly a function of persistence. One broker described Carlton’s technique as “calling 100 lenders, and finding someone interested in the deal.”

Michaels “doesn’t stop on Friday afternoon and resume on Monday,” Ashner explained. “If a thought occurs to him, he pursues it on Saturday evening, and he’ll call you. International time zones don’t affect him.”

While Sturner and Michaels were working on 1180 Sixth and One Park, “he and I spoke literally five times a day, seven days a week,” Sturner said, “and when we couldn’t speak, we would text.”

On some occasions, Michaels said, he has even put up deposit money from his own funds to facilitate a client transaction.

He does take time off, he said, to be with his five children and his second wife, Jennifer Bayer Michaels. But it’s clear that work is never far from his mind. On a family trip to a Murano glass factory in Venice this summer, for example, Michaels ordered an 18-carat gold sculpture of a bull for the Carlton office.

That means Carlton’s deals tend to be more difficult transactions.

“If it’s a vanilla deal, Howard will have a hard time getting that deal,” said one executive. “These are the tough deals he does — people don’t give him the easy deals.”

“Anybody can raise money for a fully occupied building with lots of cash flow,” Michaels said. “That’s not what we do. We’re like the Marines — we do the tough deals, we do the big deals, we do the time-sensitive deals.”

Bark worse than bite

Michaels’ Marine-like mentality may be the key to Carlton’s success, but it’s incredibly difficult on his staff, some say.

“He works people to death,” said one industry observer, voicing an opinion shared by the many former Carlton employees now spread throughout the industry.

There are the long hours and Sunday morning phone calls — of which Michaels says, “we start on Sunday — what can I tell you?”

Clients and fellow brokers say Michaels is often charming and funny — with a few rough edges — in his dealings with them. But with his staff, it’s a different story.

He added: “If people don’t do their homework and don’t come to work prepared, they probably shouldn’t be working at Carlton.” His clients are incredibly demanding, he said, and “not everybody is willing to put in the effort that’s required, so we can’t keep people forever if they don’t produce.”

Those who know him well say his bark is worse than his bite, and that his aggressive demeanor conceals a caring persona.

He added: “Carlton is one of the most successful real estate advisory firms. Whatever we’re doing works.”

The foregoing is a redacted reprint from a major publication, which printed the foregoing story earlier this year

Carlton Partner, Michael Campbell attributes Carlton’s success to a tireless work ethic and fierce client advocacy which provides our clients with around the clock service and access to Carlton’s international rolodex of investors throughout the world.

A summary of the recent Carlton closings are as follows:

• A major development transaction in the Meatpacking District of Manhattan where Carlton arranged equity and debt for our client’s acquisition and ultimate development of one of the last great retail sites in the Highline/Meatpacking District in Manhattan.

• On the West Coast, we just closed a performing first mortgage note sale, secured by an iconic office tower in San Francisco. This loan was sold on behalf of a major institution to a large institutional investor.
•  We recently closed the financing secured by three Hilton branded hotels located in the Midwest.

• We also recently arranged the equity capital for our client’s acquisition of a nine-figure performing note, which is part of a billion-dollar multi-tranched debt and equity stack.

• We also have four different European transactions under hard contract for in excess of $400 million in expected closings.

We also have a number of transactions that are under hard contract and will be closing within the next 30 days aggregating over one billion in proceeds.

We are particularly proud of our ability to continue to transact large complicated transactions amidst all of the economic volatility and uncertainty which is prevalent in the marketplace.

We have been raising large amounts of equity and debt capital with the same team for longer than just about anyone.  This allows us to have consistent, dependable, reliable relationships throughout the world, which in turn, permits us to selectively access different capital partners for the appropriate transactions. Our clients know that when they come to us, they can count on a reliable and timely execution. We employ creative strategies and are often able to come up with structures and valuations which require an instinct not generally possessed by our competitors.

We work until the deal is done, regardless of the potential impediments to success. Moreover, given the severe economic turmoil and distress, it’s essential to have a long rolodex in order to access investors who can see through the headlines and evaluate and act on true economic opportunity which has allowed our transactions to be completed.

Finally, there are still some great year-end investments to participate in and I encourage you to call me if you have capital that you are looking to invest before the end of the year.

We look forward to speaking with you and discussing on a confidential basis any large transactions where Carlton can raise equity and or debt for you.

Thank you and we hope that you enjoy the holiday season in between your deal making.

Howard L. Michaels

Present market conditions are highly favorable to talented and well-connected intermediaries, who are in great demand by highly successful borrowers. We are seeking one or two talented equity and debt professionals to help us execute our multibillion dollar pipeline. The successful candidate should also have excellent industry contacts with high net worth and international investors, as well as having a high level of structuring and capital markets expertise. “Big Deal” rolodex is a must and we prefer professionals who have experience both domestically and overseas.

Current market conditions favor solid advisory and investment banking professionals, as a disparate capital market is forcing an increased reliance on professionals who can access capital. As you know, Carlton has a “big deal platform” and we execute some of the best transactions in the market. Solid base with excellent upside depending on experience.

We look forward to speaking with you.

Please fax cover letter and resume in confidence to 212-661-1295 or email it to robertgaeta@carltongroup.com and hlmichaels@carltongroup.com

The four individuals are Laura Prager, formerly of Credit Suisse and Bank of America; Ken Montgomery, who previously ran funding at CIT and ING; Rich Cooney, previously a partner at Greenwich Group International; and Daniel I. Bildner, who was at Greenberg Traurig, LLP for 12 years and was most recently Vice President and General Counsel at Armstrong Capital Management LLC.

Mr. Montgomery has 15 years of extensive investment and management experience, including the implementation of repositioning and restructuring strategies for complex real estate transactions, as well as the sourcing and structuring of acquisition and disposition transactions for both investment managers and funds.

Prior to joining Carlton, Mr. Montgomery was a Director of Structured Finance for CIT’s Commercial Real Estate Group and ING Bank’s Commercial Real Estate Finance Group where he was responsible for the East Coast for both firms. Throughout his career, Montgomery has been involved in the origination, underwriting, closing and management of over $5 billion of closed real estate transactions.

Ms. Prager, who is an equity and debt large loan specialist, will work with Mr. Michaels in securing equity for our clients and take advantage of the over 500 pension funds, insurance companies endowments and other off market equity capital sources which Ms. Prager has by virtue of being a Managing Director at I Cap where she advised clients on buying out LP structures.

Mr. Bildner, Managing Director and General Counsel of The Carlton Group and its related companies, is the chief legal officer of Carlton, and involved in Carlton’s advisory, consulting, principal transaction, workout and restructuring businesses. He has over 15 years of experience in the real estate industry. Mr. Bildner is also restructuring and workout specialist having successfully restructured over $1 billion of CMBS with some of the largest servicers in the United States.

Most recently, Mr. Bildner was Vice President and General Counsel of Armstrong Capital Management LLC, an owner and operator of nearly three million square feet of retail, shopping center, office, and multifamily properties, where he oversaw and led the acquisitions, financings, and joint ventures of the company. Prior to that, Mr. Bildner was a partner at the international law firm of Greenberg Traurig, LLP, where he practiced in the Real Estate Department for 12 years handling numerous complex acquisition, financing, construction and joint venture matters.

Mr. Cooney is a real estate investment banking professional with 19 years of experience in the structured finance, sale, development, acquisition, recapitalization and asset management of institutional quality real estate. He has completed more than $6.5 billion in transactions on behalf of both private and public institutions domiciled in the U.S. and abroad. Prior to The Carlton Group, Mr. Cooney was the Founder and Managing Principal of The Bluestone Group, a boutique real estate investment banking firm. Before that, he was a partner at The Greenwich Group International LLC.

“He is a tough-minded, hard negotiator, who has a great track record of representing clients on the sale, refinancing, or recapitalization of large assets,” Campbell says.  “Rich also adds to our substantial overseas investor network, as he has substantial experience in working with international investors who are interested in deploying capital into the United States,” Campbell says.

Cooney will work directly with Messers Michaels and Campbell, focusing on loan restructures and in the Carlton Large Loan Group, which specializes in providing large amounts of equity and debt for large, complicated transactions.

Cooney has a B.S.B.A. in finance from Georgetown University and an M.B.A in finance and real estate from the Leonard N. Stern School of Business at New York University.
About The Carlton Group
The Carlton Group is an international real estate investment banking firm with offices throughout the United States and London. Founded in 1991, Carlton has consummated in excess of $80 billion in transactions. Carlton is one of the world’s most successful intermediaries in providing equity and debt capital solutions, as well as providing sophisticated investment sale services. The firm also specializes in providing commercial loan restructuring and recapitalization services. Carlton’s expertise includes arranging passive promotable equity for individual real estate transactions and raising entity level equity capital for institutional sponsors. Carlton also executes an aggressive international advisory platform, which is currently executing well over one billion dollars of equity, debt and investment sale advisory business throughout Europe and Eurasia.

If you are familiar with the European markets and have excellent equity and debt relationships, you should contact us so you can join our capital markets team to assist European lenders and/or owners in the sale, recapitalization, and/or restructuring of assets located outside of the United States.

We look forward to hearing from you.

“We are extremely proud of the deals that we have been able to close over the last 60 days” said Partner Michael J. Campbell. Our success is attributed to a lifetime of equity relationships that Carlton has developed which gives us tremendous access throughout the world to bring in different investors who are suited for a particular investment. Just recently, we called on a London based lender that provided $250 million of debt capital which represented 100% of the purchase price. On another deal, we brought in a $20 billion balance sheet lender that provided our client with $90 million in first mortgage financing even though the purchase price was only $70 million.

We have also been able to access capital from “family offices” and major private equity investors who are anxious to invest with quality operators to take advantage of the high yield returns which can be generated right now in the real estate sector. In addition, with many of the CMBS shops either folding or curbing their activity, Carlton’s access to non-traditional capital sources who are willing to fund now is providing a true value-add service to our clients.

In addition, Carlton has recently added several new, senior level capital markets professionals including Rich Cooney who was formerly a partner at the Greenwich Group and Managing Director Ken Montgomery who headed up East Coast lending operations for CIT and ING. Both Rich and Ken are marvelous additions to the team as they bring a ton of domestic and international relationships to the Carlton team. Carlton also recently added Kyle Morque who is a senior real estate professional and who assisted the Moinian Group through $3 billion of restructures. Kyle and Ken will be working together along with new General Counsel Dan Bildner (who was formerly at Greenberg Trauig for a dozen years) to lead and bolster Carlton’s significant Restructure Group. Carolyn Pianin also joins the Carlton Team as a Managing Director with a senior position on Carlton’s analytics team. Carrie was previously a Director at Square Mile where she had a significant role evaluating and underwriting potential investments for the highly successful investment firm.

Carlton already has been involved in over $2 billion of successful, commercial loan restructures and capital raises as evidenced by the big successes which Carlton has earlier this year at One Park Avenue, 1180 Sixth Avenue and 450 West 33^rd Street.

In addition, Carlton is presently representing clients on over $2 billion of investment sale, debt and equity assignments and we look forward to working with new clients and meeting new investors who are anxious to invest today to take advantage of the marvelous, high yield opportunities which exist in real estate today.

For additional information regarding Carlton’s advisory services, please contact Carlton Chairman Howard L. Michaels.

Moreover, in order to provide the best capital solution for our client, Carlton accessed a major balance sheet lender as well as a $10 billion overseas fund who in separate transactions provided a very high level of acquisition financing (from 100%-130% of the purchase price).

In addition, we also raised a high percentage of the total equity by bringing in an international family office and a major private equity fund that funded a majority of the transaction equity.

This combination of investors and lenders again demonstrates the keen ability of Carlton Chairman Howard L. Michaels and his elite team of private equity real estate bankers in organizing a mutually beneficial capital structure for our client.

These two transactions continue on the heels of over $2 billion of equity and debt recapitalizations of prime Manhattan assets which propelled Mr. Michaels and the Carlton Team to the Number 1 rated Manhattan office, investment sale and recap broker and Number 7 in the United States for all asset types beating out most of the large, national brokerages.

Carlton excels because of its aggressive client advocacy and our 25 year dedicated practice of accessing international and domestic investors and other nontraditional capital sources rather than relying on the typical CMBS capital sources which are now faltering in light of the volatile capital markets.

In addition, Carlton also has expanded and is currently executing well over $1 billion of debt and equity transactions in the United Kingdom, Eastern Europe and Asia which also keeps Carlton in constant contact with international investors looking to invest here in the Unites States.

With summer coming to an end and sellers contemplating bringing assets to market, I encourage you to contact us to either assist you with your next recapitalization, investment sale or any equity or debt which you need to facilitate your next transactions.

In addition, reliance on CMBS lenders is a fool’s errand, as loan levels and spreads are becoming increasingly unattractive.

Notwithstanding, borrowers who have an opportunity to either restructure or buy their loans back at a discount still have huge capital requirements that need to be fulfilled.

In addition, if there is a silver lining, it is that borrowers and owners may now have a window of opportunity to strike a better deal with their lenders and servicers, who are now even more anxious than ever to monetize over-leveraged loan positions and restructure transactions or enter into mutually acceptable DPOs in order to monetize these loan positions.

At Carlton, we possess tremendous relationships with domestic and international capital sources, who are well capitalized and who are eager to invest directly into today’s volatility.

Moreover, like any deregulated capital markets business, there is a huge disparity in how different lenders and investors price their capital. Now, more than ever, utilizing strong intermediaries, who can generate the best possible terms for you is essential.

As you may have seen, we have closed over $500 million in non-cash-flowing transactions in the last 30 days alone, which contributes to over $4 billion of closings within the last few months. Our client dedication and access to reliable equity and debt sources are second to none and I strongly encourage you to contact us to discuss helping you take advantage of the current market opportunity and accessing the best possible terms for your next acquisition and/or recapitalization.

Moreover, as the summer starts to come to an end and everyone starts to eye September and the beginning of the end of the year, reliance on credit worthy and reputable capital sources who can close on a timely basis will significantly increase.

At Carlton, we have spent the last 25 years building our relationships all over the world with dependable debt and equity capital sources that are eager to invest in today’s volatile environment. We specialize in having excellent relationships with balance sheet lenders who can provide large amounts of senior debt at very competitive interest rates.

In addition, we have great equity sources both offshore and domestically, who can move very quickly to fund transactions through creative, preferred and common equity structures which can be beneficial to you. We have also had great success in closing transactions this year where we have proved in excess of 90% of the all-in capitalization to our clients.

In sum, the U.S economic and investment outlook is fundamentally sound, with growth expected, particularly in the major markets. We have closed several billion dollars in transactions this year alone with investors from Asia, Canada, the U.K and obviously investors from the U.S.A as well.

We are tireless advocates who will work 24/7 to bring home the best possible capital structure or asset sale for your next recapitalization, acquisition or disposition. People deal with people, not corporations and we have a highly sophisticated, aggressive client advocacy for large, complicated transactions which require a singular focus and dedicated team to create a way above average result for you.

We have also created a new Investment Management Division run by former EOP partner, Ms. Sybil Ellis which specifically focuses on providing advisory services to buyers and other non controlling investors who require either targeted acquisition advisory advice, valuation, dispute resolution or any other services which you may require.

If you are an investor or a borrower, we encourage you to contact us so we can help you achieve your real estate objectives.

This position ostensibly co-invests with clients and has been recently capitalized through an institutional joint venture with $200 million of equity capacity.

The successful candidate must have substantial experience in valuing, pricing and acquiring real estate and distressed debt. Substantial experience originating high temperature loans as well as sophistication with inter-creditor documentation and multi tranche finance structures required.

Our merchant banking division has either invested in or acquired approximately $300 million in acquisitions in the last six months and we are looking to significantly ramp up our activities.

Excellent guaranteed compensation with profit participation.

Please fax cover letter and resume in confidence to 212-661-1295 or email it