From left to right, Craig Shannon, Jeffrey Dean and Wiz Khayat.
Canada has long had energy boutique investment banks, and plenty of small firms specialize in mining. But real estate was another story.
Trimaven Capital Advisors Inc. has stepped into that gap, and in less than two years of operations, is moving up in the rankings of investment banks doing deals in real estate. The Toronto-based firm worked for Huntingdon Capital Corp. on its $210-million sale to Slate Properties Inc., announced earlier this month, as well as advising Royal Host Inc. on its sale to Holloway Lodging Corp. in May. It has also advised New York-based activist Orange Capital LLC on two real estate files.
The founders of Trimaven counted on business from a number of sources. They saw more real estate investment trusts being formed, more activists on the prowl and boards looking increasingly for independent advice – all signs that, they believed, a boutique could make a go of it. Their gamble has paid off. The workload is busy for the three principals – RBC Capital Markets veteran Jeff Dean; Craig Shannon, the former head of real estate investment banking at National Bank Financial, and Wiz Khayat, a lawyer who came from Bennett Jones, and before that, Norton Rose – and the firm is looking to add people.
"For whatever reason, real estate in Canada was missing [a boutique]," Mr. Dean said. "We looked at the success of some of the oil-and-gas-focused boutiques out in Western Canada and thought we could replicate aspects of that model here."
Real estate is an especially lending-heavy business, which means it will always be a slog to compete with banks that can offer up debt financing as well as advice on transactions. The banks are also just plain good in their own right. RBC, in particular, has a very big presence in the real estate advisory market, while the other big banks are also significant players.
Without the ability to lend, a boutique has to offer innovative advice and push hard on the independence angle – the idea that its advice comes without any strings attached, whereas a bank's advice might be coloured by its desire to offer up loans.
At the moment, the company has what Mr. Dean calls a "high-class" problem of being too busy on deals to be "focused inward, on the business," so their plan now is to grow. The firm would like to add a property brokerage team, for example.
Deal activity in REITs and real estate operating companies (REOCs) has picked up a bit in recent months, especially among smaller companies. That will contine as smaller companies that are having trouble financing keep teaming up.
Mr. Dean is expecting that M&A in bigger real estate companies may soon be more active.
"It's been a slow 12 months for a number of the larger REITs and REOCs, so I wouldn't be surprised at all to see one of the larger names [especially where succession is an issue] to either privatize or merge with another REIT or REOC within the next six months," he said.
Deals won't all be friendly, either, he expects. Willingness to go hostile is as high as it has ever been.
"Management teams won't shy away from the right opportunity, even if overtures are met with resistance," Mr. Dean said.