NKF’s Dustin Stolly and Jordan Roeschlaub Are Laying Siege to NYC’s Capital Markets
The "prom kings" of New York's debt arranging world are expecting to close over $10 billion in 2018
They’re not stereotypical New York financiers. They’re not Ivy Leaguers. They didn’t go to the Wharton School of the University of Pennsylvania. They’re from small towns in swing states. They get things done.
They are Dustin Stolly and Jordan “Jordy” Roeschlaub, vice chairmen and co-heads of capital markets, debt and structured finance at Newmark Knight Frank.
One year ago this month, Stolly left a 10-year-long position at JLL, departing as a managing director within the firm’s investment banking practice (with $25 billion in capital markets transactions under his belt), to explore the possibility of working independently and to also spend time with his baby daughter, Georgie—only a couple months old at the time—Stolly said.
In July 2017 he joined with Roeschlaub, who had been one of NKF’s leading arrangers for the last two years, to form one of the city’s most enviable debt arranging duos.
Ten months and roughly $10 billion in deal volume later ($5 billion in capital markets deals in the first two quarters of 2018 alone), the two expect to arrange $10 billion in transactions by year’s end, Roeschlaub said.
And they’re pulling no punches.
Only last month, the pair advised the sellers on the acquisition financing for 20 Times Square, bringing together some of the industry’s heaviest hitters in what will surely be one of the biggest debt deals of 2018, sources said. Natixis, joined by a consortium of foreign lenders, provided approximately $2 billion in financing to facilitate the acquisition and subsequent refinancing of 20 Times Square, The Real Deal reported. (Stolly and Roeschlaub declined to comment on the deal or their role in it.)
Maefield Development and Fortress Investment Group bought the majority interest in the development in February from Witkoff Group, Winthrop Realty Trust, Howard Lorber’s New Valley Real Estate and the Carlton Group, as per TRD. The deal valued the property at around $1.53 billion; the location will also feature a 39-story Marriott Edition hotel.
All in day’s work for the popular aristocracy of the debt-arranging world. A source told Commercial Observer that just a couple of weeks ago, Stolly and Roeschlaub entered a pitch meeting after Eastdil Secured and were greeted by an unnamed client who said, “this is fun… first the nerd crew and now the prom kings.”
Stolly, at 38, is the older of the two. He sits relaxed, with a stubble and his trademark long slicked back hair (the product of being a “bro’d out” snowboarder, he said, as he likes to get in 15 to 20 days a year on the slopes).
“He flips his hair the whole time,” Warren De Haan, a co-founder of ACORE Capital, said with a laugh. “He’s always flicking his hair back. He’s a very interesting character. Dustin is Dustin. He makes the business colorful.”
In March, the NKF team arranged a $97 million ACORE loan to a joint venture of Rubenstein Partners and Vision Real Estate Partners to facilitate the acquisition and capitalization of a two-building suburban office assemblage called Morris Corporate Center East & West in Parsippany, N.J. At the same time, NKF represented Intercontinental Real Estate Corporation and Ivy Realty in the sale of the office property out of the brokerage firm’s New Jersey office.
Roeschlaub, 34, stands slim, upright and somewhat rigid, the hair seemingly immovable. Upon meeting him, his positive energy and high motor is undeniable. A skier, he also hits the slopes on the weekends. (He surfs as well.)
“Jordy is sharp and he understand the ratios,” said Steve Klein, the CIO of Brickman Real Estate, who’s known Roeschlaub for close to five years, just prior to him joining NKF. “His business is all about LTV [loan-to-value], DSCR [debt service coverage ratio] and debt yield, and he understand what lenders are willing to do, so that’s important. The way it works in lender land is you can go out to like 20 guys for financing and there’s always one lender who hasn’t done a deal in that market that you’re in and they’re desperate to do it. [Roeschlaub and NKF] are good at finding those guys.”
Roeschlaub joined NKF in September 2014 from real estate investment bank Chesterfield Faring. He said he’s amassed roughly $20 billion in capital markets executions throughout his over 10-year investment banking career. He’s built a reputation on being a relentless advocate, something Klein has gotten used to seeing in his five years working with the broker.
“What I really like about them is they’re user friendly, and they just keep pushing. You want an advocate; that’s why we hire them, otherwise I could do it and do a shitty job,” Klein joked. “I know I’m in good hands when I retain them. They get it done and there’s not a lot of drama. I’m happy to pay them because whatever we pay them, they seem to save us money.”
Indeed, just because they’re the prom kings, Stolly and Roeschlaub shouldn’t be mistaken as being laissez-faire.
“We want the biggest bang for our buck,” De Haan explained. “If the processes aren’t running well, then we lose business, but we never feel that with [NKF] or that [Stolly] is a waste of time. When I say, ‘he doesn’t waste time,’ what I mean is he doesn’t send out 50 [deal] packages to 50 lenders; he knows who’s capable of making any particular deal. My probability to win a deal with Dustin is high as he knows which lenders have the best chance. What’s important is he gets lenders to step up and be creative for him because they know [that with him] they have a real shot at winning the business.”
De Haan first met Stolly in 2011, one year into De Haan’s four-year run as chief originations officer at Starwood Property Trust and four-years into Stolly’s 10-year tenure at JLL. De Haan was acquainted with Roeschlaub soon after Stolly joined NKF.
“In [Stolly’s] early days at JLL, he found his groove in the non-recourse construction loan space,” De Haan said. “At that time, there weren’t many people who were experts at it. He developed a great reputation among developers to arrange these complicated construction loans. That, sort of, became his stock and trade.”
Witkoff, who’s known Stolly for 15 years, since the broker’s early days in the city at Eurohypo, concurred.
One example of this is when Stolly engaged with Witkoff and Lorber to arrange roughly $280 million in financing for a Marriott Edition hotel at Sunset Boulevard and Doheny Drive in West Hollywood. Construction on the project is slated to wrap this year, and it will be the first Edition-branded hotel on the West Coast as well as Witkoff’s first project in Los Angeles. The development comprises two towers with 190 hotel rooms and 20 condominium units.
“He did another [financing] for us in West Hollywood, Calif., a hotel and condo deal with a different lender [than who provided the roughly $260 million construction financing in 2015],” Witkoff said. “He did the initial financing [in 2015, while at JLL] and then did a refinancing on it and it was outstanding, complete with a present-value analysis of how we would refinance it in the alternatives.”
Witkoff’s business conversations with Stolly don’t start with an outlandish story or any form of entertainment as the developer would rather not engage in any “boondoggles,” as he called it. “[Stolly] sits down, [in] suit and tie, and says, ‘Tell me about the deal.’ We lay it out for him—45 minutes to an hour. He says to me, ‘This is what you can do in this market,’ almost instantaneously. It’s not, ‘I want this deal, so let me tell you how I’m going to entertain you.’ It’s all business, and my point is: he’s a professional.”
In November 2017, a month before NKF’s initial public offering, the pair locked in $650 million from Blackstone for the 800-foot-tall, 58-story Tribeca condominium tower at 111 Murray Street. The trio of borrowers included Witkoff, New Valley Real Estate and Fisher Brothers. The financing was drawn up, in part, as an inventory loan ahead of all currently in-contract units closing in the first quarter of 2018, as well as a takeout of the existing construction loan provided by M&T Bank, Deutsche Bank and Blackstone in July 2015.
“[111 Murray Street] was a complicated one, a condominium deal and a refinancing at mid-construction,” Witkoff said. “First [Stolly] did the construction deal with Blackstone, then it was a refinancing after sales.”
Witkoff said Stolly and his team don’t require a week to pour over pro formas and another week to answer any questions.
“The guy gets it fast,” Witkoff explained. “If he didn’t get it fast, the lenders would have him figured out pretty quickly. They’d believe he was a charlatan, and they’d dismiss him and so would all of the development community.
“He’s able to sit in the room with lenders and say, ‘here’s the track record of the sponsor, here’s why the underwriting actually makes sense, here’s why those numbers are real, here’s why a construction budget is prudent, here’s why the contingency on that construction budget is more than ample to guard against some sort of overrun,’ ” Witkoff added. “And you believe that he has independently vetted the underwriting… he gets this repeat business because he delivers.”
One repeat customer is Normandy Real Estate Partners, which has developed a calling card for successfully converting buildings into creative offices.
In December 2017, the NKF team arranged a $170 million loan from SL Green Realty Corp. to fund Normandy and Invesco’s acquisition and renovation of 888 Broadway.
Normandy Partner Gavin Evans said the deal on 888 Broadway came with three wrinkles: a large-scale renovation was needed to convert the property from a retail store to an office building, a strategy for which Normandy is known; Normandy bought a condo interest for floors two through six, while the family who owns the store retained the basement and the ground floor; finally, an adjacent building, which was on a land lease, was included in the transaction.
“What [NKF] did was create a market for the structure that we wanted,” Evans said. “With complicated deals, sometimes you over think it and get caught up in a gum of structure, and you stop worrying about pricing. [NKF] did a good job navigating that marketing process. It was complicated in that we were buying a condo interest in one building and a leasehold interest in another and the renovation was taking place while the building was partially occupied by the prior user and seller. The actual loan is fairly simple—an acquisition and renovation loan that’s not over leveraged—we typically borrow at around 60 to 65 percent and this one is at 60 percent.”
Changing of the guard
When Stolly exited JLL in May 2017, he was working alongside Aaron Appel, now the vice chairman and head of debt and equity finance at the firm, and managing directors Keith Kurland and Jonathan Schwartz.
“Peter Riguardi at JLL was a mentor of mine and still is to this day,” Stolly said of the JLL chairman and president. “[JLL] was a fantastic ride. It ended up being the one of the best things that ever happened to me.”
Riguardi told CO that the company had a “great relationship” with Stolly, but noted that Appel had assumed the leadership role as head of New York City Capital Markets—instead of Stolly.
Enter longtime NKF CEO Barry Gosin.
Gosin has been at the helm of NKF since 1979 and believes in a strict business culture that strikes down individuality and promotes cohesiveness and accountability, something for which Stolly had been longing. Gosin was introduced to Stolly through Anthony Orso, the former CEO and co-founder of CCRE, who recently became the president of capital markets strategies at NKF.
Upon meeting Stolly, Gosin instantly drew comparisons to one of his young, capital markets upstarts: Roeschlaub.
“[Stolly] was a great guy who’s got the whole package and who’s very similar to Jordan,” Gosin said. “We’re built on talent. When a great talent pops their head up as an opportunity to recruit, we jump on it. If they’re marginally talented, we don’t. It was easy once I met Dustin. I wanted to hire him.”
Stolly and Roeschlaub’s mutual goal was to transform the firm’s debt and structured finance division into a practice rooted in institutional investment banking, starting with figuring out how to carve out a larger market share in New York, Roeschlaub said. After all, Stolly joined NKF at an interesting time—the firm was ramping up its debt business ahead of a December 2017 IPO.
“It was just about getting the processes in place,” Roeschlaub said. “We each had our own ways of operating—both were good and both were successful—but it has to be systematic for everyone to be aligned.”
The pair started with a “skeleton” team of four people and have since more than tripled the size of their division. It wasn’t until “the last three months [of 2017] when we were focused [only] on new business,” Stolly said. “We haven’t even begun to tap and mine into all the other relationships and resources that have come from other brokers and executives within Newmark.”
Still, they jump-started this year in February 2018, shortly after the Chinese government’s investment crackdown, when they secured $236.6 million from Royal Bank of Canada to finance Northwood Investors’ $305 million purchase of HNA Group’s 1180 Avenue of the Americas in Midtown.
It wasn’t always so rosy for the dynamic duo.
The oldest of four brothers, Stolly was raised by his father in a single-parent household in a small, Rust Belt town called Bellefontaine in Western Ohio.
“My mom moved away to South Carolina, many hours away when we were kids,” Stolly said. “My parents were very young when they had me at 19, with no college education. They had three kids by the age of 25. It was challenging, but we got through it.”
Stolly didn’t exert himself in high school, he said, and nothing in his hometown provided inspiration. “I can’t remember ever bringing a book home once from kindergarten to when I was a senior in high school,” he said.
At 18, he decided he wanted out. “Something clicked at that time,” he said. “I made a conscious decision to make something of myself.”
Stolly enrolled at the University of Cincinnati where he graduated with a BBA in finance.
While at UC, he participated in a number of quarterly internships through a co-op program at the university. One such opportunity happened to be at General Electric, and he was offered a job after his graduation as part of a financial management program deployed by the company.
“I was fortunate to get placed in this program, which is sort of a fast track to a CFO role,” Stolly said. He said he was put in the transportation division, working with locomotives, “in Erie, Pennsylvania, of all places.”
He loaded his belongings into his 1986 vintage Mercury Tracer Hatchback that was barely operable and took off for Erie—“the sign on it when I bought it said, ‘runs good, smokes a lil—$700.’ ”
Late at night, en route to Erie, while slugging Mountain Dew and tearing through beef jerky, he was exiting on an interstate off ramp and T-boned another car (no one was hurt), he said. At the time, he didn’t know that his license had been suspended for previous traffic tickets and he spent a few days in jail.
After his release he continued on his way to Erie. A few months into the program, GE rescinded its offer upon learning of the blemish on his record during a background check. This sent him back to Cincinnati where he moved back in with his old roommates. To save money, he worked in a call center before taking a leap of faith and moving to New York without any job prospects.
After a few months, he landed a job as an originator at Eurohypo, before he eventually took an opportunity to move to UBS on the cusp of the financial crisis where he saw a tremendous amount of deal flow. “It was the perfect credit training,” Stolly said. “I saw tons of deals throughout the country, all the time. I learned how to establish and execute deals.” The ride didn’t last long. He spent a total of five years across both investment banks before he was laid off in the summer of 2008, becoming a casualty of the crisis.
Only a few months passed before he landed a gig at JLL.
Witkoff has known Stolly since his early days in the city at Eurohypo. “[Stolly] is a little like me in that he under promises and overperforms,” Witkoff said. “My children are both in the business and they both like him. He’s formidable. This guy is obsessive [about his work] and he works hard. It’s hard to outwork a guy who’s prepared to outwork everybody.”
There’s balance in every successful partnership and while Stolly is the laid back smoothy, Roeschlaub’s energy is contagious. He speaks fast and operates even faster.
Roeschlaub grew up in Scotts Mills, Ore., a small town of 412 people. His dad ran a construction company and his mother was an attorney in Portland, just about an hour north of the town.
Roeschlaub enrolled in the College of Wooster, a liberal arts college four hours northeast of Cincinnati. There, he studied economic history and was a member of the university’s golf team. His talent on the links is still alive, although, “golf clubs tend to not like people who are on their phones,” he said.
While in college, he got his hands dirty in real estate. He would routinely return home to Portland during the summers to do maintenance and demolition work for American Property Management, a subsidiary of Weston Investments. He worked maintenance jobs on multifamily, office and retail properties for the company, refurbishing units and painting walls and jackhammering. One such job was on Portland’s 220,000-square-foot Commonwealth Building.
The calluses eventually paid off as he would end up financing the iconic 14-story Portland office tower several years later, he said.
And that seems a pretty good way to sum up Roeschlaub and Stolly: Gritty, determined, hardworking, with a reach that can last years.
With NKF’s size and scope and the advantages presented by its large network, their presence has been felt among the likes of Wells Fargo subsidiary Eastdil Secured, Meridian Capital, CBRE, JLL and Cushman & Wakefield.
“We will not stop until we’re the top capital placement group in New York City,” said Stolly, sitting next to Roeschlaub in NKF’s New York City headquarters. “In a very short period of time, we’ve become the top producing team within Newmark nationally. We’re not going to stop until we’re the top choice for clients when they think about their debt and equity placement needs.”
Spoken like a regular king of finance—prom king, or otherwise.