Catering to the Hugely Wealthy

(The New York Sun)

by Pranay Gupte

March 2, 2005 - Theodore R. Gamble Jr., founder and managing director of The Prescott Group, a real estate merchant bank, certainly has pedigree. In New York's self-conscious investment banking community, pedigree is taken seriously.

His father, Theodore R. Gamble, was chairman, president, and CEO of Pet Incorporated, a large international food company based in St. Louis, which was founded in the 1880s by the older Mr. Gamble's grandfather, Louis Latzer. The company's brands included Pet milk and dairy products, Progresso soups, Old El Paso Mexican foods, Whitman's chocolates, Schrafft's restaurants and hotels, Stuckey's restaurants, Musselman fruit products, Pet-Ritz pies, Downeyflake frozen foods, Laura Scudder's snack foods, Reese gourmet foods, and Hussmann store and food service equipment.

In investment banking, an Ivy League education also carries weight. Mr. Gamble is, of course, an Ivy League man through and through. He got his undergraduate degree in architecture from Princeton, and a graduate degree, also in architecture, from Harvard. Following in his father's footsteps, Mr. Gamble obtained an MBA, from Harvard again.

"Watching my father financially transform and build a large company was tremendously exciting to me and had a major impact on my choice of career," Mr. Gamble said over lunch yesterday.

That choice took him to - where else? Morgan Stanley & Co. after Harvard, where he structured and managed investments for Morstan, Morgan Stanley's vehicle for the investment of the firm's capital in real estate. His job involved working with major institutional investors, and with people with serious money.

What is "serious money"?

The reporter could picture Mr. Gamble with an abacus - no, using a computer would be too facile for such a sketch - calculating the net worth of the clients he likes to do business with. Let's see: the ideal high net worth individual would have at least $20 million in assets to invest in real estate holdings.

But The Prescott Group, whose other partners include Susan Stupin, formerly of Goldman Sachs, also makes allowances for clients with less pocket change. That is to say, for those who have between $250,000 and $500,000 to invest, Mr. Gamble offers "transparent property-asset portfolios that provide attractive risk adjusted returns."

The reporter asked: "So you would get luxury apartments for your clients to live in?"

"No no," Mr. Gamble said. "We consider ourselves a financial boutique. We don't do residential real estate. What we do is to offer guidance for investment for our high net worth clients. This could mean, of course, buying into luxury apartment complexes - which is what we're doing in Mexico right now for an American client. Another example is Atlanta, where we're recommending investment in apartment complexes. The idea is for our clients to look at real estate as an investment, not as property for their own use."

His clients often use high-powered financial advisors, which means that Mr. Gamble must carefully nurture his relationships with those who whisper into the ears of the very wealthy. That requires frequent travel. Not long ago, for instance, he flew to London for a meeting with such an individual that lasted less than an hour. But it was important for Mr. Gamble to be perceived as a man who would make an enormous effort in pursuit of a deal.

Another trip took him to Bermuda recently. Still another trip had him in Australia. If there's such a thing as a typical week in his frenzied line of work, it involves being on the road two or three days on business.

"My work at Prescott essentially involves the intersection of finance and real estate," Mr. Gamble said. "We see tremendous opportunity as the private client world - and particularly its investment in the real estate sector - becomes increasingly more sophisticated. By creating investment vehicles that allow the substantial private investor to access institutional quality investment products, managed by strong and experienced operating partners, we feel we can establish Prescott as a preferred provider in this rapidly expanding and evolving part of the investment landscape."

Even though he's given to using jargon - an occupational hazard for an investment banker - and even though he speaks so fast that the reporter, a veteran of on-the-run interviews, has to request him to slow down a tad, Mr. Gamble leaves little doubt of the tremendous potential of his industry.

Consider this: In 2005, Mr. Gamble will deploy $500 million in real estate. This is made possible, in large part, because he was able to invite the participation of two trusts of the Gordon P. Getty family, Orpheus and Pleiades.

And how did that happen?

It was a dividend of the relationships that the investment banker had assembled over the years. One of his contacts was a lawyer - someone with whom Mr. Gamble had worked closely on an earlier deal - who was friends with an advisor to the Getty family. So one man spoke to another, and then - well, the Gettys came in with money to invest.

What that means is - in investment banking parlance - the Getty Trusts "have a preferred right to invest in all of Prescott's real estate investments," Mr. Gamble said.

If the Gettys could participate in $500 million of investments through The Prescott Group at one go, how much money was out there among high net worth individuals, money available for investment?

Mr. Gamble did a quick mental calculation, that abacus at work again.

"About $40 trillion in assets is available to high net worth individuals worldwide," he said.

So, the reporter asked, was it true what F. Scott Fitzgerald said about the very rich being different from everyone else?

Mr. Gamble's answer: "Like everyone else, they want to put their money to work. But, as my father used to say, like everyone else, the very rich must also put their legs into their pants one leg at a time."

Then he added: "And we're there to help them make their investment decisions in real estate. We're not in this business just for the fees - we're in it for successful transactions."