02/24/2012

Landis, 2 Others Exit Rialto, Form Debt Shop

Three executives left B-piece buyer Rialto Capital this week to set up their own high-yield debt shop, which will team up on investments with fund operator Greenfield Partners.

The executives are Bill Landis, Nelson Hioe and Michael Suchy. At Rialto, Landis was chief operating and investment officer, Hioe was a managing director of acquisitions, and Suchy was a director on the acquisitions team. All are partners of the new company, Raith Capital of New York.

Raith is forming a joint venture with Greenfield, a real estate investment manager in Norwalk, Conn. Greenfield will supply an unspecified amount of capital for the joint venture, which will be Raith’s investment vehicle.

Rialto, a subsidiary of Miami homebuilder Lennar, has been the most-active buyer of subordinate classes of commercial MBS deals since issuance revived after the market crash. The three executives focused on lining up such acquisitions, as well as on the purchase of whole loans.

The buzz is that Rialto has started interviewing candidates to replace the departed staffers.

Raith will invest in both loans and bonds tied to commercial real estate. Like Rialto, it will pursue B-pieces from new-issue CMBS deals, legacy CMBS, and portfolios of distressed loans.

Just last month, a group of executives broke away from another B-piece buyer, LNR Property of Miami, to launch their own firm, dubbed Eightfold Real Estate Capital. The Miami company, backed with $100 million from Boston hedge fund shop Abrams Capital, will buy CMBS B-pieces and other commercial real estate debt, including B-notes and mezzanine debt. It will also provide “rescue capital” to distressed borrowers.

Before Landis joined Rialto, he was a managing director at Deutsche Bank, where he ran the syndicated and principal-side financing business for the commercial real estate group. Hioe joined Rialto in 2009 after a stint at Blackstone analyzing real estate investments in several property types. Before starting at Rialto in 2010, Suchy was a vice president in Deutsche’s commercial real estate group, where he focused on loan structuring and syndication, and on loan workouts.

During the downturn, Rialto teamed up with Greenfield and AllianceBernstein to win designation as a qualified asset manager for the U.S. Treasury Department’s Public-Private Investment Program, which was set up in 2009. Under the program, the Treasury formed partnerships with private-sector players to buy illiquid mortgage bonds from banks.

Rialto, which was formed in 2007 under the direction of chief executive Jeff Krasnoff, beefed up its management team in September by hiring veteran real estate executive Jay Mantz to oversee real estate investments. Mantz, who spent 18 years at Morgan Stanley, was named president, a title previously held by Krasnoff. Landis, who had joined Rialto in 2008 as chief investment officer, then took on responsibility for Rialto’s asset management business, while also assuming the title of chief operating officer.

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