NEW YORK—RobertDouglas’ journey began five years ago after a group of partners left a well-known real estate services company to form their own company. Today, RobertDouglas’ partners are preparing for the next five years by examining past performance and moving forward with new goals.
“We started with a blank slate at RobertDouglas, which is both a luxury and a challenge,” said Douglas P. Hercher, principal and managing director at RobertDouglas, a private hospitality-focused advisory firm specializing in raising equity and debt capital. “Our vision for the firm was that our clients would grow to think of us as finance experts who were an extension of their own companies with fewer clients but deeper and broader relationships.”
To follow through with this mission, RobertDouglas’ founders acknowledged their colleagues would have to be more than just capital market gurus to their clients. There should be an intimate understanding of the following: brands, domestic and international markets, technology, operations and marketing.
“Most importantly, they need to be as passionate about the industry as our clients,” he said. “From the beginning, we were committed to building a firm with a strong team culture and bringing together hospitality-focused professionals with diverse backgrounds. We felt that these were the critical ingredients to serving our clients.”
Not surprisingly, then, RobertDouglas’ biggest challenge is hiring. “The industry is full of talented young professionals, but putting together a team that can work on a remarkably wide range of projects throughout North America and across the capital stack/structure is as much art as craft,” Hercher said. For the firm, its team members are considered the brand’s top ambassadors.
Prior to forming RobertDouglas, the partners were together at Sonnenblick-Goldman. The group then became partners at Cushman & Wakefield before making the decision to form their own company.
“We enjoy the focus, intensity and collegial environment of a smaller, private company, and firmly believe the team-based, gang-tackle approach possible with such a platform delivers the best possible outcomes for clients,” said Robert B. Stiles, principal and managing director at RobertDouglas. “At the same time, we were watching the incredible consolidation taking place in the capital markets industry in both the brokerage and investment banking businesses, and it was our belief there was a growing niche in the market to offer sophisticated capital markets advice to clients who value senior-level attention. In some sense, we’re turning back the clock to when investment banks were relatively small, privately owned businesses with senior professionals who were intimately involved in every project.”
RobertDouglas’ approach isn’t a traditional one. For instance, it’s not a firm where the partners pitch deals and associates execute. “We are committed to the idea that our senior professionals will be involved in every transaction from beginning to end,” said Stephen O’Connor, principal and managing director at the firm. “Our team members bring together diverse but complementary skills. We are careful about which assignments we accept, but when we take something on, we will commit whatever resources are necessary to achieving a great outcome.”
RobertDouglas structures and arranges senior and subordinate financing, joint venture equity, hospitality and leisure property sales, and capital advisory. “We are building a business that is genuinely multidimensional in the services we offer because most of our clients have multidimensional capital needs,” Stiles said. “Because we have colleagues with diverse backgrounds—banking, acquisitions, consulting, asset management, etc.—and an organization structure that encourages cooperation, we can put together deal teams with robust experience in different areas.”
The firm has seen growth in various areas of business. “For example, last year, we were number six on the league tables for investment sales nationally,” Stiles said. “In the same year, we were one of the dominant firms arranging senior and subordinate financing for hospitality investors. We also have developed an almost unique specialty raising joint venture, programmatic and entity-level equity for hospitality clients. We also saw a growing opportunity to advise clients on small- and medium-sized M&A transactions because the larger investment banks only want to handle billion-dollar assignments.” Additionally, the firm is working to expand its merchant banking capability.
Even though the partners have worked together for years, they don’t always agree on the best strategy for solving a given problem; however, no matter the issue at hand, the partners share a deep respect for one another.
“It probably helps we have worked together for years and that we understand and value our relative strengths,” Stiles said.
What’s more difficult for the firm is building the same respect and trust in colleagues who are new to RobertDouglas. “We don’t have a code of ethics or a set of guidelines we can post on the wall,” he said.
Historically, the firm’s deal sweet spot is any transaction able to attract institutional capital. “That implies both a certain size of deal and certain kind of assets,” Hercher said. “However, we have been aggressively developing relationships in the family office investment world, which means that we can now execute confidently on deals that don’t fall neatly into an institutional capital bucket.” The average deal at the firm is in the range of $75 million.
“We have handled equity raises as small as $5 million and as large as a billion dollars,” he said. “Our financing business in a given year might range from a $15-million construction financing in St. Louis to a $700-million portfolio financing of select-service hotels. We’re currently raising $3 million of equity—venture capital, really—for a small company with a great idea, and $150 million of equity for a business that is looking to grow from $200 million of assets under management to $1 billion or more.”
The firm pays attention to league tables, but it’s mainly because everybody on the team is “pretty darn competitive,” Hercher said. The goal for RobertDouglas is to provide an unfamiliar level of service to clients.
“That can mean more committed as a platform, more creative, more sophisticated, or more responsive,” he said. “We are also willing to take on more complex assignments, what people call ‘story’ deals, than some of our peers, partly because we like the challenge, but also because our team has the depth of experience to deliver on those deals.” HB