By E. Scott Reckard | LA Times
A prominent Los Angeles developer has joined with the co-founder of Guggenheim Partners — the owner of the L.A. Dodgers — to launch a massive real estate investing venture.
Nelson C. Rising, with a long list of commercial office towers to his credit, and Todd Morley, who left Guggenheim to start his own private equity firm, G2 Investment Group, said they aim to build a conglomerate in the mold of investing wizard Warren Buffett.
"Like Berkshire Hathaway," Morley said, with managers appointed to oversee the completion of marquee developments.
The private venture plans to raise $3 billion initially, with expectations of growing far beyond that amount, Rising said in a conference call with his associates and The Times. It could eventually become a public company.
"It will be dictated by opportunity," he said. "If you look just at California, you're talking about [property] asset values of at least a trillion dollars. So you'd think you could pretty easily invest tens of billions of dollars over the next 20 years."
Called Rising Realty Merchant Bank, the company plans to focus first on the many and diverse opportunities in California, Rising said.
That could include building offices and renovating apartments in booming San Francisco; developing housing in San Diego; and renovating older L.A. properties, such as PacMutual Plaza, the 1908 office building given new life recently by Rising Realty, the company that Nelson Rising runs with his son Christopher.
The company would have broad powers to invest in all types of property deals, unlike many private funds and investment trusts that focus on narrower slices of the market, such as industrial buildings, housing developments or apartments.
Investors would be allowed to choose between investing in the parent company or taking positions in the individual businesses beneath its umbrella, Morley said.
The diversification strategy is at times unpopular on Wall Street, where analysts often prefer real estate companies with a single, easy-to-understand focus. But some private investors see better returns if a talented team is given the money and free rein to seize a broad array of opportunities.
"Diversity can lower risk," said veteran real estate investor Michael L. Meyer, chairman of TwinRock Partners in Newport Beach. TwinRock is a real estate investment firm that started buying distressed homes to rent in 2009 and has since pivoted to invest in apartments.
Rising and Morley said they would discuss the venture with investors at the annual Global Conference sponsored by the Milken Institute, to be held next week at the Beverly Hilton Hotel. Then in mid-May their team will begin a global fundraising effort with a trip to the Middle East.
Rising, 72, began his career at L.A. legal powerhouse O'Melveny & Myers, where he became a close friend of Warren Christopher, who later served as U.S. secretary of State under President Clinton.
That association helped launch his sideline career as a Democratic Party political operative. Rising left O'Melveny to work as a campaign manager for John Tunney's U.S. Senate bid in 1970 and was chairman of a series of mayoral and gubernatorial campaigns by former L.A. Mayor Tom Bradley in the 1970s and 1980s.
Rising is "a very low-key, solid, entrepreneurial guy. But he's also very astute politically, and that's helped him move hugely complex projects through to completion," said Stan Ross, chairman of the Lusk Center for Real Estate at USC. "In addition to leadership skills, he's been through the wars."
John Cushman III, chairman of the real estate brokerage Cushman Wakefield, said he negotiated "billions of dollars in leases" with Rising in the 1980s and early 1990s, "and it was because of his skill."
At the time, Rising was a senior partner at Maguire Thomas partners, where he oversaw development of the enormous downtown L.A. project that includes the 73-story U.S. Bank Tower, the tallest building in the Western United States. Rising's son Christopher — named after Warren Christopher — worked "as my right-hand man," Cushman said.
He praised Rising for guiding the Playa Vista complex in West Los Angeles through a minefield of political and environmental issues to completion.
During a successful stint as chief executive of Catellus Development Corp., Rising oversaw a host of projects on former railroad land, including the development of Mission Bay, the biggest mixed-use project in San Francisco, before the company was sold in 2005.
The ending was less happy when, in 2008, he was hired for a rescue mission at MPG Office Trust Inc. The former Maguire Partners — the biggest landlord in downtown L.A. — had hit the skids under a heavy debt load as the financial crisis struck.
Rising wound up resigning from the company in 2010 after clashing with MPG's board of directors.