Cohen Financial Version 3.0

Article excerpt

Jack Cohen has a new business model, and his company is growing again after a timely recapitalization.

Most people who meet Jack Cohen, CMB, chief executive officer of Chicago-based Cohen Financial, come away thinking, "Now, there's a really smart guy." * The trouble is, in today's tumultuous financial world, smart guys are not only a dime a dozen, but many of them are out of business - having succeeded in buckling Wall Street and sinking such illustrious New York institutions as Lehman Brothers and Bear Stearns & Co., not to mention all the talented people who created commercial mortgage banking companies, some of which no longer exist. * Jack Cohen would probably be happier to be known as a businessman who is nimbie, flexible and not afraid of big, company-altering plays - in short, a survivor. * After holding Cohen Financial together, sometimes self-funding the company with other management these past four years, he recapitalized his firm in 2010 and is in the process of rebuilding it as a multi-platform, real estate capital services firm that not only can weather bad times but also take advantage of the recent market dislocations. * As a real estate service company, Cohen Financial has been one of the largest originators of commercial real estate loans in the United States, supplying, before the economic downturn, about $50 billion in financing, says Cohen. The company, in a mortgage banking capacity, works with life companies, conduits, real estate investment trusts (REITs) and opportunity funds. * "Our sources are capable of [doing everything from] delivering fully amortizing, long-term debt to structuring non-recourse construction transactions to highly leveraged mezzanine, bridge or preferred equity deals," Cohen says.

Pembroke Capital LLC, a Bryn Mawr, Pennsylvania- based real estate investment firm, has been working with Cohen Financial since 2007, when Pembroke Capital was founded by John Vander Zwaag, who earlier in his career had worked at Cohen Financial.

"Our business plan for a specific asset may or may not include debt," says Vander Zwaag. "And Cohen Financial, because of the breadth of its customer base and knowledge of other parts of the real estate capital markets, can find alternative sources of equity or joint-venture capital."

Vander Zwaag adds, "The reason I like working with Cohen Financial is, no matter which of their offices I'm talking to, I'm getting a highly skilled professional that can understand the specific assets and our general business plan. The company gives us a very focused effort in terms of securing the appropriate capital."

In addition to capital market services, Cohen Financial has evolved into a substantial third-party servicer and special servicer.

After some mighty tough years since the financial markets imploded starting around 2007, the company undertook a major recapitalization in 2010 and is now poised to unveil a third leg of its business - a principal/funds management platform. In essence, Cohen Financial doesn't just want to place other companies' capital; it wants to be a principal investor as well.

A transformative investment

In the second quarter of 2010, Mariner Real Estate Management, Leawood, Kansas, swept into Chicago on a determined shopping junket. Mariner executives bypassed the famed Miracle Mile, heading south to Two North LaSaIIe Street, where they eventually struck a deal to buy a majority interest in Cohen Financial. Mariner Real Estate could easily finance the transaction, as it's an operating subsidiary of Mariner Holdings LLC, a $7 billion wealth- and assetmanagement firm based in Kansas City.

The idea behind the deal was to recapitalize Cohen Financial, says Cohen. "We had a concept for this company to survive, but we needed a 'suspension bridge.'"

The deal came about inadvertently because Cohen Financial had already signed a letter of intent to recapitalize with a different company. …

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