Finance Monthly connected with Dan Flanigan - the Managing Partner at Polsinelli’s New York office, who’s also the Founder of the firm’s financial services practice. Established 20 years ago, the department offers a wide range of debt-related legal services in one tightly integrated practice group – from origination through servicing, through to enforcement, bankruptcy and more. Started with only seven lawyers working in the department, Polsinelli’s financial services practice has grown to 100 people today.
According to Chambers USA, Dan Flanigan’s clients refer to him as a ‘master strategist’ and consummate problem solver. Dan has been selected for inclusion in Best Lawyers In America
2018 in each of the following areas: Banking and Finance Law, Real Estate Law, Bankruptcy and Creditor-Debtor Rights/ Insolvency and Reorganization Law, Litigation--Banking and Finance, and Litigation--Bankruptcy.
Dan is a trusted adviser to lenders, helping them navigate the ups and downs of the business cycle. He also makes his financing expertise, and deep knowledge of the lending environment and culture, available to Polsinelli’s borrower clients, especially in difficult restructuring and workout situations. In recent years Dan has been intensely involved in the commercial mortgage backed securities industry (CMBS).
Here, Dan tells us about his career and the CMBS industry in the United States.
Your practice is so diverse - how do you overcome the technical challenges of working within so many different areas?
When I was a young lawyer, specialisation was not as embedded as it is today – especially in the finance world. In a market like Kansas City, where my career path began, it wasn’t unusual for a skilled professional to be helping bank clients with an extensive range of services. I was lucky that I grew up and trained in a time when you didn’t need to specialise in one thing only, as this allowed me to get an insight into a number of areas of focus and develop a wide range of skills.
My real estate practice was a logical step from finance because when you work within finance in the US, it’s hard not to get into real estate, too.
My piece of advice for overcoming technical challenges is to stay up-to-date and read as much as you can about new trends and developments and you have to “burn the midnight oil” but it is worth the effort.
What are any interesting cases that you are currently working on?
At Polsinelli, we are very involved in the so-called ‘retail apocalypse’ in the US. Our country is incredibly over-retailed and shops are closing every day, due to factors such as over-expansion of malls, rising rents, bankruptcies, low profits outside of holiday binge spending, etc.
Big malls across America have been a significant part of Commercial Mortgage-Backed Securities (CMBS) pools. CMBS is a type of mortgage-backed security, secured by mortgages on commercial properties, instead of residential real estate that can provide liquidity to real estate investors and commercial lenders. We have been very involved in the general movement of debt from a public regulated banker type of product into the so-called ‘private debt market’.
More generally, we represent loan originators, issuers, loan sellers and servicers on a national basis in all aspects of the CMBS market and other real estate finance.
What drew you to the CMBS field?
The CMBS industry came about in the mid and late 1990s as a response to the debt crisis for commercial real estate in the US that was a consequence of the SNL crisis. In the early to mid-1990s, it was nearly impossible to get any financing. Thus, the securitisation market was invented with the objective of helping to alleviate this situation.
What we were able to see in Kansas City for example was that all funds were moving to central locations, especially New York. Securitisation was a Wall Street invention.
CMBS fits perfectly because I had experience in all of the components required for CMBS, such as lending and bankruptcy for example. Banks were failing at that time and some of my bankrupt clients ended up developing a CMBS origination platform and I followed them religiously, ultimately ending up in New York.
ABOUT POLSINELLI
Polsinelli is an Am Law 100 firm with more than 825 attorneys in 21 offices. Ranked #24 for Client Service Excellence and #10 for best client relationships among 650 US law firms, Polsinelli is also named among the top 30 best-known firms in the nation for the second consecutive year. The firm’s attorneys provide value through practical legal counsel infused with business insight and a focus on health care, financial services, real estate, intellectual property, mid-market corporate, labor and employment, and business litigation.
Cambridge Companies SPG (Special Projects Group) is a leading private equity firm based in Newport Beach, California with a focus on commercial real estate and venture capital transactions. The company’s estimated $300M real estate portfolio is primarily in California and Nevada, owned in part by investors and is unleveraged. Cambridge Companies has zero debt, a strong cash position and has achieved a 40.6% Overall IRR with a 47.25% average project IRR across 27 principal real estate transactions. The firm also has a Venture Capital platform and buys minority controlling and non-controlling interest in companies poised for growth. Cambridge has a growing advisory board that is comprised of some of the world’s most successful entrepreneurs, investors, financiers, scientists and operators. This month Finance Monthly had the privilege of speaking to Filipp Chebotarev. As Chief Operating Officer of Cambridge Companies, he oversees all daily operations, develops and maintains strategic partnerships and drives initiative for organizational growth. Filipp graduated from University of California Irvine with honours. Prior to establishing one of the leading Private Equity Firms in California, Filipp obtained a wide array of experience in politics, business, revenue operations and organizational development. Here Filipp tells us in more detail about Cambridge Companies’ structure and aspirations. He also introduces us to his role and its impact on the private equity firm's performance.
Cambridge Companies as a game changer investor
“We are led by a set of core values that define our character and culture; they have been at the core of Cambridge Companies SPG since its inception.”
Today most real estate investment companies only understand real estate. As long as the real estate market is hot – they find themselves performing well too. They leverage and buy more real estate until a market correction brings them to the brink of despair and as we saw in 2008 - flat out wipes them out. What differentiates Cambridge Companies from other real estate investment companies is that it has a unique non-leveraged strategy which keeps the company investments in a low-risk profile structure. The firm is also well-diversified within its VC platform and has exposure in Food, Beverage, Fintech, Healthcare and a number of other markets. Cambridge prides itself in its world-class team and advisory board, which provides the company with a unique ability to have an industry agnostic investment strategy and an ability to execute when opportunities in the market present themselves.
Above all, Cambridge has made it their top priority to serve the needs of their investors and clients. This commitment is reflected in a culture that values integrity, accountability and strong passion for excellence. The company operates with forethought, financial discipline, a long-term perspective, and an unblemished understanding that trust is the cornerstone of their success.
Filipp Chebotarev - one of the top subject matter experts on real estate and venture capital transactions in the US
Fillip’s role as Chief Operating Officer and Partner at the company is defined by character. He has been able to elevate the presence of the firm and make it a relevant player in the private equity world by implementing everything he learned during his tenure in Politics and Corporate America. Filipp’s stint as a Constituency Representative for U.S. Congressman Ed Royce allowed him to see the importance of great leadership, since his role involved gathering information from constituency groups and reporting their needs or concerns directly to the administration – allowing the leadership to understand the issues people faced within their district and react.
Filipp later transitioned to Revenue Operations at DaVita, the only Fortune 500 Healthcare provider with over $12 billion in annual revenue at the time. His daily role was to account for over 70% of total revenue, reconcile and balance the Gl, identify and correct complex payor discrepancies before the reports went off to auditors for Sorbanes-Oxley compliance. In addition, the team that he was part of handled M&A and integration, as DaVita was aggressively acquiring and consolidating smaller providers. DaVita later merged with Healthcare Partners, creating one of the most efficient integrated healthcare systems in the world. “DaVita taught me the importance of Core Values, Organizational Structure and teamwork - today I bring those important lessons to Cambridge Companies”, says Filipp. He continues: “My sister Polina and I came from humble beginnings and worked for a prominent business mogul/real estate developer for over 4 years - this is how we learned the business. Eventually, as our mentor got older, our importance in the organization elevated and the three of us became partners. In late 2015 our mentor retired and David Patton joined our firm after a successful career at Citigroup (NYSE: C). Today, our team drives investment strategy, corporate core values and organizational development. The success of our clients and teammates are our number one priority - our job is to maximize shareholder value and this is what drives us”.
Today, Filipp is considered as one of the top subject matter experts on real estate and venture capital transactions in the US. Real Estate is a wide area of expertise and his expansive experience covers assisting with vacant land, land entitlement strategy, ground up development, NNN stabilized commercial real estate, value add commercial real estate, as well as luxury single family. He has vast experience across all property types including single family, multi-family, retail, office, industrial and high-rise residential. Mr. Chebotarev is also a highly regarded Venture Capitalist. At DaVita he and a team engaged in acquiring and integrating over 1000 new clinics, as well as international healthcare joint ventures. DaVita grew revenue from $6.45 Billion in 2010 to over $12 Billion in 2013. When working for the company, he and his team were able to consolidate smaller providers that were not providing the same level of care, improve level of care and access to affordable treatment. Today, DaVita’s clinical outcomes continue to be the highest of any clinical provider, according to Government reports.
Cambridge Companies was honoured when Food and Beverage legend Greg Fleishman, who has created and grown some of the world’s largest and most successful brands during his 18-year career, joined the company’s advisory board. Together with Greg, Cambridge has been able to make a handful of incredible investments that contributed to the elevation of organic and non-GMO brands in the bake mix, food-crafting, baby food and a number of other sectors. Most recently, Filipp and his group led the multi-million dollar Series A round of investment in Foodstirs, Inc. Foodstirs is the world’s first organic, non-GMO, biodynamic bake mix quickly capturing market share in the $5 Billion U.S. Food craft and Baking market. The widely popular company was founded by Galit Liabow, internationally-known actress Sarah Michelle Gellar, and has been promoted by superstar Jessica Alba. Filipp believes that these investments have a discernible impact on the health of customers and children in the US. “The best kind of investment is one that not only performs financially (which these have done in a major way), but also makes the world a better place. By investing in organic and non-GMO food brands, we are helping to reduce the cost and offer wider access to customers, thus allowing them to live healthier lives”.
Having had experience in healthcare, real-estate, food & beverage, financial services and technology, Filipp is able to understand complicated transactions across multiple economic verticals. “My experience allows me to efficiently understand the structure of the business in which we are looking to make a potential investment. This is a very valuable asset and one of the key elements I bring to the table at Cambridge.”
When asked about his role in Cambridge Companies, Filipp continues: “From the moment I wake up to the moment my eyes close I am thinking, planning, and growing the business. I see it as my responsibility and commitment to our clients and teammates. We are led by a set of core values that define our character and culture. Our team knows that our clients come first, their success is our success. We take commitment very seriously at Cambridge and are accountable to our teammates, partners and clients. Integrity must be at the core of everything we do and trust is the cornerstone of our success. We are a group of passionate professionals focused on performing at the highest level. Our success is built on innovation and hard work. We are continuously improving, building and growing for our clients. I don’t stop until the job at hand is done and there is a favourable outcome, I inspire my team by example”.
Mr. Chebotarev also has an experience in politics, revenue operations, and organizational development. He believes that the most valuable lesson that his varied experience has taught him is the importance of having the right team. “Even a rock star needs a group of musicians, producers, lighting and sound engineers, a strong manager and a host of other teammates to deliver a memorable performance. Otherwise, he is just a guy in tight pants, singing acapella in his bedroom. My advice is - if you meet someone smarter than you, bring them on your team and build a base of intellectual capital that you can draw on for support and knowledge”.
