Being able to effectively tell a company's story to potential investors has made this Chicago-based firm a success.
When you're a real estate group of 12 (soon to be 14) professionals and you're competing with often much larger groups, then you had better be more than just good at what you do; you need to be craftsmen. But how do you make that work?
You keep it simple. And you load up on service in a boutique-like fashion. And that's exactly what Chicago-based EVEREN Securities Inc. has done.
"We're not like Sears Roebuck; you can't buy one of everything here," says Burl East, managing director, senior research analyst and co-head of EVEREN's real estate group. "What we're like is Henri Bendel. You walk in, and we have very high-quality stuff in seven or eight little areas. We are highly specialized, highly focused. I wouldn't describe us as a mile wide and an inch deep; we're the other way around."
Included in those areas of expertise are of course the traditional real estate sectors of office, lodging and multifamily, but EVEREN also specializes in such niche sectors as vacation timeshares, storage and healthcare.
"This is a very entrepreneurial company in my opinion," says Jon Haahr, managing director in charge of investment banking and co-head of the real estate group. "It's a company that has worked very hard to focus on selected industries where we felt that we could be value-added in terms of our ideas and our capital and in industries that we thought were growth industries."
And the way EVEREN determines which industries it will be involved in is through thorough research.
"What makes the real estate group successful is the unique relationship between Jon Haahr and myself," East says. "We look at this truly as an integrated team. There are 12 people in the group, six in banking and six in research, and we work on the same things at the same time. So what you have is a coordinated and organized strategy which brings to bear the talents of both research and banking simultaneously. What results from that is a very careful selection of investment banking clients."
Research has also given EVEREN an edge over some of its competitors by not just finding niche sectors, but finding them before everyone else has.
"We look for growth niches," Haahr says. "For example, a few years ago, we were very early in the storage business; we were either a co-lead or lead underwriter for both Storage USA and Storage Trust. More recently, we have begun to focus on the timeshare industry. It is something that is going to be driven by powerful demographics and so there's a secular trend occurring that we think there's growth potential in."
This partnering of heavy research with investment banking can be traced back to the roots of EVEREN Securities when Haahr and East co-founded the real estate group in 1992 under the former company name of Kemper Securities.
Just to give a bit of history, in 1995, the Kemper Corp. was sold to Zurich Insurance of Zurich, Switzerland, but as part of the transaction, the employees had the opportunity to purchase Kemper Securities, which they did. Once thewas completed, the firm was renamed EVEREN Securities Inc.
In October 1996, EVEREN went public with its own initial public offering of 4.6 million shares of stock priced at $18.50. In just over a year, the markets have rewarded the firm. At presstime, EVEREN's shares closed at $47.00.
Today, EVEREN is the ninth-largestfirm in the Untied States. In 1997, the real estate group was involved in 30 transactions for 25 different clients and participated in raising over $2.5 billion in both public and private capital.
EVEREN also provides financial advisory and M&A services and, on the private side, the company does both debt and equity. Generally speaking though, EVEREN is an equity shop, which has been a part of its strategy since the beginning.
"Debt typically fits into a box -- it's structured, it's rated, it's an A-rated bond trade -- it's an easy decision," says East. "Equity, on the other hand, involves taking a company and helping it to define its goals and then expressing those goals in essentially story form to investors and helping investors understand the beginning, the middle and the end. That is not a science at all; that is an art."
Currently, EVEREN works with about two-thirds public companies and one-third private, but over the next few years it hopes to equal out those numbers to 50/50. There are a couple of reasons for this.
First of all, EVEREN feels that it can be more value-added to a private company, especially when it is brought in early to advise and grow the company through several stages.
"Where we are really value-added is if we're there at birth," East says. "It's the same as a doctor. If you have the same doctor for 20 years, he's going to know everything. He's going to know you had measles when you were 6 and then that may be valuable information when something happens when you're 15. So it's our goal to add the most value by helping private organizations structure themselves for private capital raises in a pre-public fashion and then go public."
Secondly, working with private companies has given EVEREN an edge over its competitors.
"When we put this group together, we put it together with people that have structuring and advising expertise," Haahr says. "Our focus has been to compete head on with Wall Street in terms of our professional expertise. One of the ways that we have competed successfully with Wall Street is on the private capital raising side. In other words, we used our structuring expertise and our knowledge of the public markets to help evaluate private companies that can be incubated and grown into public companies."
And because larger securities firms often have their own funds to finance the "better deals" and EVEREN does not, it can fairly represent these private companies to institutional investors.
"We are not naturally conflicted out of helping private companies raise private equity from all different sources," Haahr says. "We aren't constrained by the fact that we have our own money and, if it were a good deal, then it would just go into our fund."
A recent example of EVEREN's capability of working with these private companies is the $206 million private equity placement for CORE Cap, Inc., a newly formed mortgage finance REIT sponsored by GMAC Mortgage Group, Inc. EVEREN acted as exclusive financial adviser and structuring agent and solely placed the securities with 30 major institutions.
And a classic case of EVEREN's ability to provide high-quality research combined with strong investment banking for a public company is Catellus. According to East, the firm dedicated 300 to 400 hours of research to understand the California-based company. Once EVEREN fully understood how Catellus worked, it began to advise others that it was a great buy because at the time the stock was only $8 per share. Today that stock is going for $20 a share. Later, when CalPERS wanted to lower its ownership of Catellus from 40% to about 20%, EVEREN was once again chosen to sell those stock shares because it understood Catellus and could explain it to potential investors.
"That's the perfect situation for EVEREN," East says. "We combine our research element with our banking element and we have a win-win; investors make money and the company gets good advice."