Rumors of Legg Mason, Clarion Deal Heat Up

By Gail Kalinoski, Contributing Editor

Stephen Furnary, Chairman & CEO, Clarion Partners

Legg Mason, the Baltimore-based global asset manager, could soon be the new majority owner of real estate investment manager Clarion Partners if a deal reportedly in the works for the past several months comes to fruition.

Bloomberg reported Legg Mason is in exclusive discussions to take an 80 percent stake in the New York-based global institutional real estate firm in a deal that values the company at $850 million. Clarion management, including Chairman & CEO Stephen Furnary, would retain 20 percent ownership, according to Bloomberg. Private equity firm Lightyear Capital and Clarion Management acquired the company from ING Groep NV in 2011 for $100 million.

A Nov. 19 report from Reuters noted Lightyear Capital was considering selling its majority stake and identified Legg Mason as a possible suitor for Clarion. The Reuters story noted that real estate asset managers are rarely for sale. Legg Mason, which has about $691 billion in assets under management, would likely be attracted to Clarion’s specialized real estate investment management platform as it seeks to boost its own alternative investment offerings. Clarion has about $38 billion in assets under management, including office buildings, hotels, residential and retail properties.

No one at the various companies involved is commenting but a deal could be announced this month, according to Bloomberg’s sources who asked not to be identified because the information is private.

Legg Mason has been eying acquisitions in recent months with CEO Joseph Sullivan announcing at the annual stockholders’ meeting in July that its M&A pipeline was robust and he expected industry consolidation to continue, according to The Baltimore Business Journal. In October, Legg Mason closed on the acquisition of a majority interest in RARE Infrastructure Ltd., a global infrastructure manager headquartered in Sydney. The firm was also active in 2014, acquiring Martin Currie, an international equity specialist headquartered in Edinburgh, Scotland, in October and QS Investors, a New York-based customized solutions and global quantitative equities provider, in May.

Clarion is a real estate investment manager offering a broad range of strategies across the risk/return spectrum to its more than 250 domestic and international institutional investors. In addition to New York, the firm has offices in Atlanta, Boston, Dallas, London, Los Angeles, Sao Paulo, Seattle and Washington, D.C., as well as Mexico. Its acquisition team invests in high-quality properties in major markets throughout the United States, Mexico and in Sao Paulo. The firm acquires full ownership interests in properties, forms joint venture partnerships, provides equity capital to developers and invests in various debt instruments.

In July 2012, Clarion bought 600 California St., a San Francisco office building, for $180 million and sold it two years later for $216.5 million. A year ago, Clarion formed a joint venture with MPH Real Estate Services to acquire 180 Maiden Lane, a 41-story office building in Manhattan’s Financial District and began a $28 million renovation of the 1.2 million-square-foot property. Eight months later, the owners announced three new leases totaling 20,000 square feet. Other investments in 2015 included acquisitions of more office buildings, outlet centers in Florida, a warehouse development property in Orange County, Calif., and the closing of a $400 million student housing fund with Campus Apartments. This fall, Clarion sold a seven-building industrial property in Otay Mesa, Calif., to a private investor.