When Anglo Irish Bank Corp. decided to shed its U.S. commercial property loan portfolio, it looked to Kirkland & Ellis LLP partner Stephen Tomlinson to assist in one of the largest sales of troubled commercial real estate assets since the financial crisis, helping him earn a spot on Law360's list of Real Estate MVPs.
Anglo Irish Bank's U.S. portfolio, valued at $9.5 billion, had a host of bidders seeking to buy the loans, related to 250 properties, that the bank had made during the height of the property boom. Tomlinson, who has specialized in real estate law throughout his career, said working to sell the assets has required a lot of effort in a relatively short period of time.
"We needed to bring a lot of transaction skill to the table, because it was a big transaction with a bank that wasn't really used to this type of deal," Tomlinson said.
Tomlinson, who is based in Kirkland & Ellis' New York office, is used to representing clients through both the highs and lows of a real estate market that has changed drastically in the past few decades. Since he joined Kirkland in the early 1990s, the space has seen increasingly complex transactions involving private equity funds, real estate investment trusts and institutional investors.
In 2010, the attorney represented apartment-complex owner Archstone in a transaction in which Lehman Brothers Holdings Inc., operating in bankruptcy; Bank of America Corp.; and Barclays PLC converted about $5.2 billion in senior debt to preferred equity.
In May, he counseled Bain Capital LLC in a joint venture with Oaktree Capital Management to invest $1 billion in a new commercial real estate platform. The lenders created International Market Centers LP to bring together furniture showroom assets in High Point, N.C., and Las Vegas, with plans for future investment in home furniture display properties.
Involvement in such transactions resulted from a risk Tomlinson took in the early 1990s by becoming one of the first real estate-focused attorneys at Kirkland & Ellis.
At the time, private equity and institutional investment in real estate was still a fairly new concept. Tomlinson, then practicing in Chicago, saw an opportunity to couple his real estate experience with the private equity expertise of Kirkland & Ellis attorneys such as partner Jack Levin.
"I had one of those great, serendipitous moments in life where you go, wow, this is either a great opportunity or I'm going to end up miserable," Tomlinson said. "I was sure, however it worked out, I would learn a lot."
The bet paid off. Tomlinson's real estate knowledge and Kirkland & Ellis' investment expertise helped the firm build a practice focusing on groundbreaking real estate transactions.
In the early 1990s, the practice was an early mover in helping a large corporate pension fund acquire real estate assets through joint venture formations.
In 1994, Tomlinson worked with Starwood Hotels and Resorts Worldwide Inc. in its acquisition of the Westin Hotels, which led to working with the group on numerous hotel portfolio acquisitions, dispositions and joint ventures with a total value of more than $8 billion.
As the industry blossomed, Tomlinson assisted in creating real estate funds for investors including LaSalle Investment Management Inc., the Lionstone Group and Morgan Stanley Alternative Investment Partners.
"Our clients were very active, and when they went on to do other things, we would follow them," Tomlinson said.
Part of the practice's success has been working with clients who are in the real estate space for the long term, Tomlinson said.
"We are pretty focused on people who are in real estate and need to stay in real estate," he said. "It's not going to be hot money."
The strategy worked well when the financial crisis hit in late 2000 and many investors turned toward restructuring instead of acquisition. It's part of a cyclical industry Tomlinson said you have to be ready to face.
"You always try to see around the corner," he said. "When the markets are doing well, you have to know it may end."
No matter what happens in the market in the future, Tomlinson is confident Kirkland & Ellis will have a long life in real estate transactions. The firm's real estate practice has grown to more than 45 attorneys, and it recently hired three new partners in New York and six in Chicago, Tomlinson said.
"The firm made a really big commitment to the space this year," he said. "It's an area where we want to be a pre-eminent group, and that has been exciting."
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