A Modern-Day Samson?: The Secrets of Simon Ziff

In fact, Steven Wolf, the chief investment officer for U.S. equity at Ares Real Estate Group, confessed to experiencing distinct “hair envy,” during their first encounter in graduate school.

“I remember the hair from our first meeting. He’d like you to think it was his blue eyes, but nope, it was the hair,” said Starwood Property Trust President Jeff DiModica.

Beneath the hair, though, is a powerful mind. Since he joined the real estate capital advisory firm in 1989 (which was then called Ackman Brothers & Singer), he has overseen the arranging of $50 billion in debt, according to Ackman-Ziff’s website.

Commercial Observer expected the unconventional when heading to Ziff’s office at Ackman-Ziff, located at 711 Third Avenue between East 44th and East 45th Streets. And CO wasn’t disappointed. In one corner stands a life-size cop statue, feet planted, one hand on the gun on his right hip. (“He protects me from my competitors,” Ziff explained.) A chess table sits underneath a giant photograph of Pennsylvania State University’s Beaver Stadium; look closer and you’ll see a plane flying overhead, carrying a banner that reads, “Marry me, Hope. Love, Simon.” (Yes, that was a photo from his proposal.) On the wall, in between photographs of his wife Hope and three children (Jessie, 21, Remi, 19, and Bobby, 12) is a photo of Renée Zellweger. She is holding hands with a Ziff doppelganger, musician Doyle Bramhall. (“My double life,” he said, smiling.) Dispersed in between everything else sit numerous small hybrid bonsai trees, a nod to one of his favorite pastimes.

“I collect Japanese maples. I can go out any day and happily just prune branches,” Ziff, 52, said. If he wasn’t in the real estate business, he reckons he’d be a landscaper, or a movie producer.

A small-town boy from Philipsburg, Penn., Ziff’s family was in the clothing business. His grandfather and uncle manufactured high-style men’s suits, while his parents sold clothes (his natural negotiating skills surfaced early when Ziff helped his mom sell her interest in the manufacturing business to his uncle).

Ziff grew up near the Penn State campus, where he would eventually grab his B.A., just like his dad, uncles and sisters.

Knowing that he wasn’t going to stay in Philipsburg his whole life, Ziff decided to pursue real estate, initially with the hope that it would give him a job in either Pittsburgh or Philadelphia. “I got the bug for real estate during the first semester of junior year,” he said.

Mass Mutual recruited him for its real estate training program in his senior year at Penn State—moving him to Springfield, Mass., for a year—before he was accepted into the NYU Masters in Real Estate program.

“He had a warmth and openness about him,” said Wolf, who attended NYU with Ziff in 1988. “You could just tell that he was going to be successful.”

The next year, Ziff answered a New York Times ad to join Ackman Brothers & Singer.

“The day Larry Ackman interviewed me he was writing a check for half a million dollars to the Harvard Business School for an endowment in business ethics that he contributed to. He became an important mentor,” Ziff said. “The most important thing I learned from Larry Ackman was that good business ethics are good business. Having been in the business as long as I have, I don’t think that most people subscribe to that school of thought. But it’s a great way to build a business and still sleep well at night.”

Years later, Ziff made the decision to  stick with Larry Ackman, rather than Andy Singer, when the partnership split up. “I had a good opportunity with both,” he recalled.

There were a number of both positive and negative factors to consider back then, but the relationship with Ackman’s son Bill Ackman and Bill’s business partner David Berkowitz was a big positive.

“Secondarily, Larry agreed with my thesis that size mattered, long term, in order to compete,” Ziff said. “That proved out to be incredibly important as our size and national scope gave us a huge advantage with foreign and domestic sources versus a four- to 15-professional firm.”

Singer went on to start the Singer & Bassuk Organization, and Ziff rarely, if ever, crosses paths with the boutique brokerage now, he said.

Ziff has had his hands full lately.

Ackman-Ziff arranged $5 billion in financings last year and just had its busiest quarter since 2007, racking up over $1 billion in transactions in the first two months alone. The firm has a robust pipeline of deals and has broadened its business both geographically and in terms of the capital stack opportunities coming its way. Ziff is currently working on growing the firm’s three businesses: debt, joint venture equity and investment sales. He does so with the backing of a 50-strong team.

The company is in heavy people-growth mode and when CO interviewed Ziff, he had a hefty pile of résumés on his desk. Of the 200 curricula vitae Ziff looked at, he saw 12 candidates that seemed to fit the bill, but “we won’t know until we get them in here and talk to them.”

But, long before Ackman-Ziff became the power brokerage it is today, the young Ziff had some impressing to do.

Ivanhoe first met Ziff 25 years ago when they worked on a transaction together. “I had spoken with him on the phone and expected someone much older. Simon at that point was young but looked even younger. I was questioning, ‘Was someone speaking for him on those calls? Has he even graduated high school? What’s going on here!’ ”

Ziff’s first meaningful transaction at Ackman Brothers & Singer was representing a mall developer based in Johnstown, Penn., named George Zamias in 1992. Zamias’ construction lender had gone out of business, stalling a project, and Ziff drove six hours to meet with him. “I bonded with him as a small-town guy from central Pennsylvania, and within a few weeks, he flew to New York on his private plane and hired us.” Ziff placed the $76 million construction loan with a Japanese bank, he said.

Today, Ziff continues to transact with foreign lenders. “While we’re a New York-centric firm, I think we’ve done a better job doing deals with foreign debt and equity capital sources than some of our peers that actually have offices around the world,” Ziff said.

On average, Ackman-Ziff sees 10 capital sources come through its doors every week, but Ziff isn’t racking up passport stamps. “Generally if a foreign investor is serious in U.S. real estate, they find us, or we get them to meet with our team in New York or California,” he said.

Brokerages are presumably fighting over foreign lenders and investors right now, but “in a world of competitors he walks a very different walk,” said Ethan Penner, the founder of MREC Management, a lender and friend of Ziff’s. “He can balance being a competitor and achieving on behalf of his constituents with not being so competitive that it permeates every facet of his life.”

Fierce competitor, yes—but Ziff is nothing like the macho figures of finance, or the staid ones.

“Usually people’s quirks are the things they hide. The unique thing about Simon is that he wears those quirks on his sleeve,” said Jeffrey Fine, a managing director at Goldman Sachs, who grew up with Ziff, spent a summer in college working for him and calls him a mentor.

A defining moment for Ziff personally was relinquishing some control of the day-to-day dealings of the firm.

“It’s not easy for everyone to have smarter people or more talented people around them because you fear you’ll lose your relationships,” Ziff said. “I had to make the decision to let go and let great people be great.”

Despite having almost 10,000 contacts in his Rolodex, when it comes to getting a deal done Ziff calls on few. “There are firms trying to get as many quotes as they can on a transaction because it makes them look good. We think that’s a bad strategy; we should know the top five or 10, and we shouldn’t exercise too many people.”

DiModica has worked on several debt deals with Ziff over the years and appreciates Ziff’s strategy. “He gives it to me straight, and sometimes it’s not what you want to hear, but what you have to hear,” DiModica said.

Marty Burger, the chief executive officer of Silverstein Properties, worked with both Ziff and Russell Schildkraut, a principal at Ackman-Ziff, on the refinancing of 120 Wall Street.

“He has a broad reach into all of the financial sources, but he quickly runs a process to figure out who will rise to the top,” Burger said of Ziff.

“He’s an expert on the business side. He really knows how to get a lender and a buyer together,” said client Gary Rappaport, the chief executive officer of Rappaport, the Washington, D.C.-based real estate firm.

Despite the current landscape for construction loans being as dry as Gandhi’s sandal, Ackman-Ziff is taking them on, selectively, and getting them placed. “We’ve had a very good run on large construction loans over the past three years, and we just got another two committed,” Ziff said. Those deals include a $228 million development loan from PNC for RXR Realty’s restoration of Pier 57, and a $500 million in debt and joint venture equity for Douglas Development’s redevelopment project at 655 New York Avenue NW in Washington, D.C.

Ackman-Ziff has a proprietary approach to arranging construction loans, where the company handles its own syndication up and down the capital stack.

“Simon was one of the first to recognize the value-add that an intermediary could bring to the syndication process of large loans,” said Schildkraut, who was hired by Ziff 20 years ago. “Fifteen years ago, Ackman-Ziff started assisting banks in the syndication of large loans, when a lead bank called us a few days in advance of a closing and told us that they could not sell down the loan. Simon put the deal together in a matter of days.”

Indeed, creativity is the word that comes up second most, after hair, when discussing Ziff, although Ziff personally thinks his greatest creativity lies in “making [clients and colleagues] believe that I am creative.”

Regardless, Ziff is “way above average in terms of solving problems in difficult deals,” Ivanhoe said. Burger added, “When I talk through a complicated transaction with Simon, he brings a fresh perspective that I usually haven’t thought about, whether it’s a creative structure or a financing source I hadn’t considered. I think he needs all that hair to keep the creativity in his great mind.”

This doesn’t appear to be a singular theory.

“He thinks three-dimensionally and keeps his creativity in his hair—he’s feeding it and keeping it warm in there in case anything crawls out,” said Ziel Feldman, the founder of HFZ Capital Group, who has done business with Ackman-Ziff on numerous occasions.

And, brokers don’t get far without being a people person.

“He cares about us as people and not just as clients,” said Stephen Garchik, the president of SJM Partners (who couldn’t resist adding that “he has the best hair in the business”).

But, like everyone, he has flaws, although no one said anything that serious.

“He’s a terrible dresser. My advice to him is get a stylist and use less [hair] activator,” said Jesse Sharf, the co-chair of Gibson Dunn and Crutcher’s real estate practice, who has transacted with Ziff many times.

“If you play golf with him, ban BlackBerrys and iPhones—because he can’t help himself. I refuse to play with him if he doesn’t put it away. He never stops, always connected,” Wolf said. Ziff has a 9.5 handicap, by the way.

As for regrets, Ziff said, “I wish I invested more of our fees in the 1990s and 2009 and less of our fees in 2006 and 2007.” More importantly, “I wish I discovered good hair product in high school and focused on my DJ career instead of real estate. I guess that’s why I have a son.”