Making a Mark With 'Off Market' Deals

A DECADE ago, Georgia Malone decided that she needed a change.She was a 43-year-old real estate lawyer and senior partner at one of the most prestigious landlord-tenant law firms in New York City. She had also just overcome a bout with cancer.

Until she took a year off to convalesce, Ms. Malone had been working since the age of 15. She decided during that period of recuperation to sell back her interest in the law firm, rent a small office in Midtown Manhattan and just read real estate journals for a while.

"I had no idea what I was going to do," said Ms. Malone, a blonde who lost her hair after 10 months of chemotherapy. In keeping with the radical change in her life, after her hair grew back she dyed it red for three years. "I figured I'd hire a secretary and look out the window and try to figure out what I wanted to do when I grew up," she said.

What Ms. Malone did was use her ample connections in real
estate to build Georgia Malone & Company — seventh in the
first half of 2005 among the city's brokerage firms ranked by
dollar volume of commercial property sales, according to the CoStar Group, a commercial real estate information company. Georgia Malone & Company is also one of only a few commercial brokerage firms in New York City to be owned by a woman.

According to Ms. Malone, the company had $1.1 billion in real estate
sales in 2005, including the $500 million sale of a portfolio with 104 apartment buildings in Harlem and the Upper West Side.

That may seem striking for a seven-member firm with one dealmaker — Ms. Malone — competing against other companies with dozens or even hundreds of brokers. But in an industry where many small firms are being absorbed by corporate behemoths, Ms. Malone, 52, says that she believes her company will survive, and thrive, on a national level. Already, her company represents exclusively in New York one of the country's largest owners and operators of apartment communities, the Apartment Investment and Management Company of Denver.

Ms. Malone has plans to expand nationally. "Right now, we're working on a deal in south Los Angeles," she said.

Ms. Malone credits the company's success to her decision to focus on "off market" deals, meaning that she brings together buyers and sellers without ever listing the property on the open market. Her unusual approach, she said, grew out of some early deals involving contacts from her days in the law profession and an observation that buyers were becoming frustrated with the bidding process.

"Buyers were spending a lot of time and energy and money on analyzing the property," she said. "Then they would start a long bidding process where there are 20 other bidders, so their chances of getting the property were 5 percent."

While Ms. Malone said she has negotiated a few deals in which sellers listed on the open market, she doesn't encourage it. Her most challenging deal in 2005 — the sale of 239 West 72nd Street, a mixed-use building — involved listing it. "I tried to talk the sellers out of it," she said.

Potential buyers kept bidding, she said, then backing out of the deal when it came time for them to pay up.

"I was losing my mind selling this $4 million deal," Ms. Malone said. "Eventually, I sold to the same buyer who'd been ready to buy it four months earlier."

Ms. Malone says she is often approached by potential buyers seeking a specific type of real estate. She is also contacted by a surprising number of sellers looking to move a property quickly and quietly.

"On the sales side, we get four or five huge deals a year," Ms. Malone said.

In 2005, Georgia Malone & Company negotiated the $270 million sale of Herald Towers and the $240 million sale of the Pennmark Towers, both on West 34th Street.

Brokers at other commercial real estate firms in the city, meanwhile, have been noticing Ms. Malone's success.

"I don't know her personally, but I've heard she's done some great sales," said Paul J. Massey Jr., founding partner of Massey Knakal Realty Services. "She's got a great reputation."

Massey Knakal prohibits its brokers from doing off-market deals, but other firms are handling large numbers of such transactions.

"We do 70 to 75 percent exclusive business, meaning we're retained by the owner to market a property; the rest are off-market deals," said Eric Michael Anton, a senior managing director at Eastern Consolidated. "New York is such a big market that there's room for all different types of brokerage and expertise."

While some potential sellers question how a true valuation of the real estate can be achieved in an off-market transaction, others believe that the analyses from Ms. Malone, who works with a team of financial experts, are on the mark.

"If somebody brings you a deal that makes sense, you don't procrastinate and let it hang around gaining competition — you act," said Kamran Hakim, a property developer and investor who owns about 150 residential buildings in Manhattan. He has hired Ms. Malone to handle deals for him.

Acting quickly also makes sense in a market where interest rates have been edging higher, Ms. Malone said, noting that rising rates could affect how a property is priced. "It takes three, four, five months to go through a bidding process," she said.

Ms. Malone spends much of her energy promoting the advantages of the off-market deal. But as someone who lived through non-Hodgkin's lymphoma, not to mention a gas explosion in 1963 in her childhood home in Baldwin, N.Y., Ms. Malone is scrappy and resourceful.

Her first deal, worth $380 million, came about after she had just resigned from, but had not yet left, her law firm, Borah Goldstein Altschuler Schwartz & Nahins. Misdirected by a receptionist into a conference room where she expected to be handling a lawsuit settlement, Ms. Malone found herself among strangers.

"I'm looking around, and I'm thinking, 'Why doesn't anyone look remotely familiar to me?' " Ms. Malone said, laughing.

So she began talking with the only other woman in the room, who was in charge of acquisitions for a major hotel company and who was visiting New York in search of developers interested in doing hotel deals.

"I said I was a real estate lawyer, and she gave me her card," Ms. Malone said.

She subsequently contacted a friend and developer, Bruce C. Ratner of Forest City Ratner Companies. The match led to development of the Embassy Suites Hotel New York in Battery Park City and the Hilton Times Square.

MS. MALONE also likes to channel her energies into several pet causes. She has served on the board of the Center for Complementary and Integrative Medicine at the NewYork-Presbyterian Hospital/Weill Cornell Medical Center. And with a close friend, she developed a 350-acre alternative healing center in Phoenicia, N.Y., which was eventually donated to the Dalai Lama.

Ms. Malone said she defeated cancer not only with chemotherapy, but also through changes in her diet and lifestyle.

"The doctor who treated me introduced me to the concept of healing your own body," she said.

About the time she was dealing with her cancer, Ms. Malone also developed a passion for painting. She attends classes regularly at the Art Students League of New York and serves on the Contemporary Arts Council of the Museum of Modern Art.

"I must tell you, I'm not very good" as an artist, said Ms. Malone, who has some of her artwork on display at her firm's office, "but I don't care."

Not everyone, though, agrees with her assessment of her work. One client particularly liked a painting of a female nude, she said.

"He said, 'I'll give you all my buildings to sell, but I want that.' So I gave it to him," she said.

Copyright The New York Times, March 26, 2006