Medzigian In Charge Of $2.5B In Real Estate Investment Funds At Lazard Freres

NEW YORK? Shaking off the dust from Dallas, Michael Medzigian is settling into his new role in the Big Apple as managing director of Lazard Freres & Co. LLC, and president and CEO of its Real Estate Investors (LFREI). Having departed last summer from Texas-based Olympus Real Estate Corp., a private equity placement group of which he was a founding partner and managing director, the veteran real estate executive is taking his time surveying his domain from his offices at 30 Rockefeller Plaza in the heart of Manhattan. Together with Robert Larson, also newly installed as chairman, Medzigian is charged with managing more than $2.5 billion in real estate investment funds. LFREI serves as general partner in four Lazard-sponsored private real estate funds that have invested that amount since 1994, the bulk of which has flowed via two discretionary equity funds, Lazard Freres Strategic Realty Investors and its successor, LFSRI II. Investors are drawn largely from domestic and international public and private pension funds, financial institutions and Lazard partners. Altogether, sitting in Medzigian?s purview are 14 real estate operating companies? from hotels to senior assisted living to multifamily dwellings? with total assets topping $7 billion. ?The immediate focus is on our exiting business,? said Medzigian. ?Bob [Larson] and I will turn attention to those existing investments and maximization of our current holdings. Once we believe we have given those holdings the focus they require and we think they should have, then we will turn our focus a bit more toward future investing programs.? Among those current investments are two hospitality entities: Atlanta-based InTown Suites, an independent developer and operator of budget segment extended-stay product with 28 properties open and Cliveden, a small collection of historic, luxury hotels in Great Britain. While Medzigian is widely credited with driving hotel acquisitions during his career, his strategies for the privately held Lazard Freres will, of necessity, take a different path going forward. ?Lazard?s investment focus with their real estate funds has been on operating entities as opposed to buying single assets. Rather than going out and buying a hotel, what they?ve done here historically is invest in an organization,? said Medzigian. ?As an example, there?s InTown Suites. [Lazard] makes an investment directly in a company like that as opposed to going out and buying a series of single hotel investments.? Last year, LFREI signed a definitive agreement to recapitalize InTown Suites and closed the first portion of a prospective multi-million investment to expand the company nationwide. ?We closed our initial investment of $80 million in cash on November 13 (1998), and took back $80 million of participating preferred,? said Greg Weinberger, vice president of LFREI, who noted the stock performs akin to common stock in that it participates fully. Based on LFREI?s long-term financial commitment, InTown is expected to develop? via a combination of debt and equity to be raised by both partners? $750 million worth of extended-stay properties over the course of several years. ?I think the business plan is about 36 properties per year,? said Medzigian. Added Weinberger: ?The goal is to have about 100 or so facilities some time in the year 2001.? ?We are extremely excited to have Medzigian come on board at Lazard,? said David Vickers, president of 10-year-old InTown Suites. ?I don?t think we could have scripted it any better. He?s knowledgeable in the hospitality industry and he?s well thought of.? Vickers said InTown decided to partner with Lazard Freres because ?the company was at a real crossroads. Financially, it really needed to take on private or public equity and public markets were pretty much closed at that time. ?Lazard offered not only capital, but capital market experience that we really didn?t have. So, the two companies mesh together very well,? he said. Vickers noted th