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On the Money

On the Money

Michael Medzigian was something of an anomaly when he first began raising investment funds in the early 1990s. Having graduated from the School of Hotel Administration at Cornell University in 1982 and matriculating directly into hotel operations for Marriott, his background was dramatically different than most of his peers.

“I can’t think of many people in the early 1990s who had been hotel operators and were running big discretionary equity pools that were buying real estate,” Medzigian says. “We were coming out of the horrible downturn, and there were few investors in the real estate industry and not a lot of capital available. So having an operating background 20 years ago and running a big equity fund was rare. Now it’s more commonplace.”

Today, Medzigian is chairman and managing partner of Watermark Capital Partners, a privately held real estate investment management firm, and the president and CEO of Carey Watermark Investors, a non-traded real estate investment trust (REIT). Over the past two decades, he has carved out a niche for himself as a bold investor with a keen ability to read markets and artfully reposition assets.

Strategy For a Meltdown
After working for Marriott, Medzigian established a hospitality consulting practice at Deloitte and Touche. Despite the economic havoc wreaked by the S&L crisis, Medzigian steered the practice through the early ’90s recession. That experience provided him with a road map to turn to when the 2008 economic downturn hit.

He’d sold most of the firm’s assets prior to the downturn as a response to “expensive” assets, so Watermark was well positioned, he says. “When this downturn hit, it had a number of the same underpinnings as the one in the early 1990s,” Medzigian recalls. “We decided we were going to respond to it similarly—we were going to put a significant equity pool in place to take advantage of it, and that’s what we did.” Without the burden of being laden with overpriced assets as transaction activity began to percolate in 2010, Watermark was able to capitalize, investing in under-valued or troubled assets.

The two parts of Medzigian’s company, Watermark Capital Partners and Carey Watermark Investors, are private and public operations, respectively.

As a privately held REIT, Watermark has flexibility in what markets to target and how it can structure its deals, Medzigian says. “We are a REIT, but we don’t have a narrow strategy where we only want to be in the top five or six markets,” he says. “We also do joint ventures, and that’s one of the key differentiators between us and other REITs.”

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