REAL ESTATE - Urdang Capital Management has signed a definitive agreement to be acquired by The Bank of New York.
Urdang is a Pennsylvania-based real estate investment management firm.
The transaction is set to close by either the end of February or the end of March but its value has remained secret.
Urdang claimed it did not have any intention of selling. What changed executive’s minds was the fact that the Bank of New York was able to meet some very specific requirements.
Richard Ferst, chief operating officer of Urdang, said: "We didn’t think there was any company out there that would meet these requirements. One of these was to keep the current management in place and let them run the business as it had been done in the past.
“The buyer would have to be a company with no previous institutional real estate investment management business. We also wanted to continue with the same controlled growth strategy that Urdang has employed in the past."
Bank of New York was looking for a way to get into the real estate investment management field. It felt that buying an existing operation was a better way to go.
Steven Pisarkiewicz, head of BNY Asset Management, said: "To start an operation on our own could have taken us three to five years to create any kind of substantial manager. We believe this was the best way for us get started."
Some of the existing clients that BNY Asset Management works with could be investing in real estate through Urdang in the future. The bank has more than $107 billion of assets under management. Its investment products include equity, fixed-income and alternative investments.
All the current Urdang employees will be kept by the new owner and all the current company offices will remain open. The purchase deal calls for 60% of the capital to be paid up front, with the other 40% to be contributed through an earn-out over five years.
Urdang has total assets under management of around $4bn. This includes both direct real estate equity investments and real estate securities. A couple of its pension fund clients are Los Angeles Fire & Police Pension System and Sacramento County Employees Retirement System.
Urdang will be promoting some new investment products later this year. One of these will be the Urdang Value-Added Real Estate Fund II. This is a follow up fund. The real estate manager raised $267 million for its Urdang Value-Added Real Estate Fund in 2004. The second fund should be twice as big. Urdang will also start its first ever hedge fund on the securities side.