All Busy on the Eastern Front: Adam Hakim and James Murad Discuss Their Market Niche
By Cathy Cunningham March 28, 2018 2:35 pm
reprints
“Less deals, more capital: You do the math,” Adam Hakim, a managing director at Eastern Consolidated, said of the current lending environment. “You’ve gotta find a way to win business.”
Ain’t that the truth. And it’s not just lenders who’ve had to wrestle deal share away from their peers lately, capital advisers like Eastern Consolidated are singing for their supper, too.
Behind Eastern Consolidated’s doors at 355 Lexington Avenue sits the partnership of Hakim and Director James Murad, whose opposite personalities and individual competencies in transactions have proven to be a winning combination as they traverse the debt-arranging playing field with their team of eight.
“My first impression of Adam was that he looks like a smaller version of Bruce Springsteen,” Patrick Crandall, a director at CapitalSource, said of their first meeting in 2003. “He’s a bit of a character to say the least.”
And The Boss has a really smooth relationship with his partner in debt financings, Murad.
“It’s kind of a yin-and-yang thing,” said Michael Lavipour, a managing director at Square Mile Capital Management of the duo. “Adam has a nose for the deal and gets to the bottom of it quickly. James is very detail oriented—which Adam is not at all.”
Since joining Eastern Consolidated in 2015, the pair’s average deal size has been growing. Transactions averaged the $100 million mark in 2017—including financings for McSam Hotel Group, Delshah Capital and Cape Advisors—and upcoming closings include a $350 million construction loan for a 66-story luxury condo tower in Manhattan (Hakim and Murad couldn’t provide further details prior to the deal closing).
The pending construction loan will be their biggest deal yet, referred to them by Eastern Consolidated Chairman and CEO Peter Hauspurg. “There’s a natural flow of information here as you’re walking down the hall,” Murad said.
That may be the case but, when it comes to locking down deals,“they are as tenacious a broker as is out there,” Crandall said. “New York is a very competitive environment on many levels of the real estate business, and the debt and equity side of it is as competitive as any. They’ve carved out their niche, they absolutely stick to their knitting and are very good at it.”
That particular niche is the financing of transitional assets and construction deals. Hakim and Murad aren’t pursuing the plain vanilla transactions, but rather the complex, sticky deals with lots of personality—fittingly, perhaps.
“I think Adam [finds them] more interesting than bread-and-butter type financing work,” Crandall said. “I think he finds the personalities more interesting, and it’s a better fit for him. Some of the life companies and banks are pretty buttoned up…and Adam is certainly not that.”
“Adam is a unique animal,” Lavipour said. “He creates deep relationships, and that matters when things invariably don’t go exactly according to plan. In construction deals things invariably change—there are changes to design or costs go up— and he shepherds you through the process. So if something goes wrong or there’s a change he’s involved not only in getting the deal closed, but in figuring out a solution along the way.”
And Murad is vital in keeping things moving along smoothly. “Without James to actually push things through, I think a lot would fall through the cracks. When James went on honeymoon recently and Adam was trying to fill the role of transaction manager, it was not good,” Lavipour said and laughed.
Hakim, 51, graduated from the the University of Michigan in 1988 with a degree in finance (his 18-year old daughter, Emery, was just accepted to the university, too. His 15-year-old, Reed, is a freshman in high school). His father was a developer in the Hamptons and so real estate was something he “fell into.” But not straight away. His father wanted him to try his hand at a career on Wall Street so he worked as a foreign exchange trader for a short while.
But, being chained to a desk didn’t suit this social butterfly. “I didn’t like being married to a desk. You were late at 7:01 a.m., and at 6:59 p.m. you couldn’t leave. That felt like prison to me,” he said.
Murad, 27, married his wife Alexandra last December and the two reside in Williamsburg, Brooklyn with their adopted Dalmatian-mix, Marlo. While Hakim was earning his stripes as a broker, Murad was studying finance and real estate at the University of South Carolina and learning the business through internships, including one with Ace Hotel Group’s acquisitions team.
The two first crossed paths at brokerage GCP Capital Group. Hakim joined in 1997 and Murad as an analyst in 2012.
In his first year at the firm, Hakim made $11,027 and closed one deal on 420 Carroll Street in Brooklyn. The debt arranging business was different back then—buildings were cheaper, deals were smaller and structured finance didn’t really exist. “I had no training,” Hakim recalled. “They just said, ‘Here’s a phone, figure it out.’ It took me three years to really get my arms around things.”
Murad arrived at GCP at an opportune time, initially working with the firm’s partners but overlapping with Hakim where it made sense.
“My business was getting more and more complicated,” Hakim explained. “As one person you can’t be on the phone, going to meetings and handling all of the details. So our relationship kind of just evolved, we worked on one deal and realized our skill sets really complemented one another.”
Craig Wood, a co-founder of property owner Cape Advisors, has worked with Hakim and Murad on several financings, including 537 Greenwich Street and 61 Warren Street and 30 Warren Street in Tribeca. He describes Hakim as “tenacious and scrappy,” adding that “he’s learned to not only identify what is important to a borrower but understand what a lender requires.”
Murad, on the other hand, has “thoroughness and understanding of deals’ metrics… and his straightforward, no-BS approach is refreshing,” Wood said.
Hakim interacted with Eastern Consolidated long before he and Murad joined the firm in 2015. When Hakim was first starting out in the business, Alan Miller—a former broker at the firm—was an “information machine,” for him, teeing up potential business for the young professional, with Hakim paying Miller referral fees in return.
“They’re not a corporate-feeling shop, they’re a family,” Hakim said of the draw to Eastern Consolidated. “That was one of the reasons I came. I’m not very corporate…can you tell? I don’t fit [in that environment]. We liked the synergies of investment sales and retail leasing and we saw a great opportunity to grow the capital markets group here.”
Additionally, Eastern’s focus had historically been on cash-flowing assets whereas Hakim and Murad’s expertise is deeply steeped in transitional deals. “It made a lot of sense,” Murad said.
The brokerage’s office location by Grand Central was an added bonus for Westchester resident Hakim. “I’m 51—I’m done with with driving to work.”
“But you still drove today,” Murad interjected.
“I have a 2011 car, and the [auto shop] gave me a brand new Mercedes loaner,” Hakim explained. “I couldn’t get out of it, it was so nice. I wanted to do this interview in the car, just cruising around.”
The origination engine also continues to purr.
Last year’s deal volume was almost double that of 2016, and the current pipeline for deals that are either in the placement or closing process is almost equal to what it was for all of 2017, Murad said.
Recent transaction highlights include a $215 million construction loan for a luxury residential condominium at 537 Greenwich Street (Bank of the Ozarks provided the financing to Cape Advisors and its equity partner Strategic Real Estate); a $130 million construction loan from Square Mile to finance Delshah’s conversion of a five-building medical facility into a 205-unit luxury rental complex at 30 Morningside Drive in Morningside Heights; and a $121 million construction loan to Sam Chang’s McSam Hotel Group for the development of a 45-story, 526-key hotel at 140 West 28th Street (the first mortgage was provided by Bank of the Ozarks while Square Mile took the mezz piece).
“We do a large amount of repeat business with a small amount of people,” Hakim said of his and Murad’s client roster.
Lavipour first met Hakim pre-Eastern Consolidated, when Hakim was putting a hotel financing together for Chang. Bank of the Ozarks was working on the first mortgage and Hakim was trying to find a lender for the mezz piece (enter, Square Mile).
“He seemed very commercial and not at all institutional,” Lavipour said of the first meeting with Hakim. “But he immediately got what our needs were as a capital provider and tried to find a way to intermediate that transaction with what Sam Chang’s needs were.”
That first deal was a success, and the McSam-Eastern-Bank of the Ozarks-Square Mile partnership has done four subsequent deals together.
“I think it’s because they’re all performers,” said Chang of the combination. “It always goes smoothly, and so we continue to do it.”
“Every borrower says ‘I want the most proceeds and the cheapest financing,’ ” Murad said. “But the real nuances to doing repeat business with clients is figuring out what borrowers’ strengths and weaknesses are and pairing that up with lenders. We do a good job in figuring out not just how to do this [current] deal but executing in a way that everyone wants to do 10 deals together.”
Additionally, Hakim has a knack for understanding personalities and platforms and pairing together people and programs that should be in business together, Lavipour said. “That’s why there’s a lot of repeat business,” he said. “We do a lot with Bank of the Ozarks because Adam was in the mix of brokering that relationship at the onset.”
Chang has been doing business with Hakim since 2004.
“He’s a hard worker and a hustler,” Chang said. “Adam is ‘the starter.’ He always starts a conversation with me, then James follows up to discuss details. Adam starts it and James finishes it.”
Chang noted that Hakim and Murad have really carved out a niche expertise in transitional and construction deals. “Whatever job I assign to them, they always deliver,” he said.
Despite the steady flow of repeat business, Murad and Hakim are closing deals with way more lenders overall, and they’ve seen alternative lenders drop their pricing and go head to head with the banks in competing for deals.
“If we told you the fact pattern for 30 Morningside Drive and said ‘Guess the lender’: It was 50 percent loan-to-cost on a Morningside Heights conversion to residential rentals, LIBOR plus mid-4s pricing and it was done with Square Mile Capital. But a year ago, you’d say it was a bank all day,” Murad said.
And, the steady flow of willing capital keeps them on their toes.
“Unless it’s a relationship lender and you know the metrics that lender can give you for the deal, everyone’s capital and appetites are changing every week so you have to reset every time you have a new deal,” Murad said.
At the time of this interview, Hakim and Murad were reviewing 12 bids for a multifamily deal in the outer boroughs. “Some are cheaper than others but we’re leaning away from cheap options because we know they won’t be there for the construction loan,” Hakim said. “We know that structurally speaking, once you get into the nuts and bolts it won’t work easily for everyone and guys like easy.”
“They bring years of market knowledge and a very direct attitude that’s critical in getting a deal done in an expeditious way,” a lender familiar with the duo said.
If you do get to toast a big deal closing with Hakim and Murad, take heed, warned Crandall: Hakim has an unusual tendency to put ice in very expensive red wine.
“One dinner he introduced us to this developer. It was the introduction dinner and he took us to this very fancy restaurant. We had the premier table and [the developer] orders the wine, a ridiculously expensive bottle of Chateau Lafite. Adam was sitting to my right and I leaned over and said, ‘If you put ice in this wine, I’m gonna kill you.’ ”
Hakim refrained.
“James does all the real work while Adam goes out to the dinners and the lunches,” Crandall said and laughed. “James is super sharp and very capable.”
Today, Hakim and Murad are keeping an eye on the flow of foreign capital into the city (“I received a call from someone in Beijing yesterday who specifically told me that the next wave of money here will go into manufacturing,” Hakim said,) and have ample experience in that respect too, including 537 Greenwich Street, which includes Chinese equity.
“Strategic Real Estate has a lot of assets in the U.S. already, so they came in and we brought in $215 million in debt from Bank of the Ozarks,” Murad said. “But, that’s a project where the Chinese money is already here. We did 615 10th Avenue with XIN Development when the Chinese money was at its peak coming from overseas. But since those two deals we haven’t seen much.”
What they are seeing is Russian capital; in fact they are working on a 700-plus unit Russian multifamily deal in the outer boroughs.
“During my career I’ve worked with a lot of Russians,” Hakim said. “We have five or six very high-net-worth Russians we’ve been working with recently. They’re very hands on and they’re not coming over as dumb money, they’re developers coming over ready with capital and they want a seat at the table.”
Hakim may be well versed in Russian investors’ appetites but the native tongue (or other languages) not so much.
“I always say to myself, if I wasn’t just lazy I’d go get Rosetta Stone,” Hakim said and smiled. His daughter, on the other hand, is fluent in Spanish and quick to let him know when he’s mispronouncing words. “When I start talking in Spanish she says, ‘Dad! You sound like an idiot!’”
Thankfully, being unilingual doesn’t hamper business in the slightest, perhaps to Chang’s dismay: “I hope nobody goes to them so they don’t get busy and can just work for me exclusively!” he said, jokingly.
But Hakim and Murad continue to grow their busy pipeline and are keep an eye on what’s coming next in the real estate cycle.
“I have a great crystal ball, because it always works…in the future though,” Hakim said. “I know what happened yesterday, every single time.”
“Well,” said Murad, smiling, “sometimes.”
