PhillyDeals: Miller joins Hayden in $100M property fund
2/4/2010
Miller Investment Management, a Conshohocken firm that manages over $1 billion for wealthy clients, has joined Philadelphia real estate investor J. Anthony Hayden in a partnership designed to help finance and manage the $100 million real estate fund Hayden is raising to exploit the collapse in commercial property prices.
The partnership, started by Hayden and backed by former Philadelphia Insurance Co. ceo James Maguire, already owns two buildings at Whitelands Business Park, Exton, and is making what Hayden calls "lowball" offers on a variety of local properties..
Time to buy? "Everyone is predicting rents will go down through this year. As long as rents are going down, prices are going down," Hayden told me. "We are going to buy some real estate this year. We don't know when the bottom is, but we're pretty sure it's in the net two to three years. So if we buy a little before the bottom, a little on the bottom, and a little after, we should be okay."
How much have property values fallen? In December I reported the resale of 2000 Market Street, which had last sold in 2004 for $77 million, or $128 a square foot, to CB Richard Ellis, for less than $56 million, or under $85 a square foot, a drop of one-third in five years. But owners are still "in denial," Hayden told me. "Our biggest friends are the banks and their (loan) schedules. The seller wants $10 million. We offer $6 million. He's insulted. So we call the banker. He says, 'Bring it in, you're the highest and best price today.'"
Hayden met Miller founder H. Scott Miller through the Jesu elementary school board, in North Philadelphia. "We're supplying our share of the investment analytics, as well as some core clients" who wanted real estate exposure, Miller told me. The firm's advisory board includes former Miller Anderson & Sherrerd chief Paul Miller Jr. (no relation), and Lawrence Chimerine of the former Chase Econometrics, among others. They've met biweekly "without fail" since August 1998, and they'll be looking over Hayden's shoulder at every offer he makes, he told me: "A lot of good people will be looking at each deal."