From the fifth floor of his new corner office, Jonathan Goldstein has a commanding view of the jostling crowds swarming in and out of London’s Victoria Station. The constant bustle is accentuated further by the condition of the office on the other side of Goldstein’s internal glass wall – rows and rows of empty desks.
But they won’t remain unoccupied for long. Far from suggesting a lack of activity, they hint at the as yet unrealised expansion plans at Guggenheim Partners. Filling them is high on Goldstein’s to-do list following his own move to the financial services group one month ago from his role as deputy chief executive of Heron International.
“It’s all new here you see,” he says amid a bit of initial flustering over logistics and – crucially – where to find water glasses. But while this is the first full interview Goldstein has given as Guggenheim’s first head of real estate and direct investment for Europe, he is quick to point out that not everything about his move is completely unfamiliar: “You know, bizarrely, this is a Heron building…”
Indeed, Heron completed the Peak, SW1, in 2009, and let the fifth floor to Guggenheim three years later. So while the 47-year old may have flown the Heron coop, in some ways he hasn’t gone far.
But he has flown. And now the former superstar lawyer is focused firmly on the task ahead. Here he talks about how he plans to fill those empty desks, what the $200bn (£120bn) business wants him to achieve in Europe and what he has learned from Gerald Ronson that will help him deliver.
Bright young thing
This isn’t the first time Goldstein has faced a daunting career challenge, and the media attention that comes with it. At 28 he became the youngest partner of law firm Olswang. Three years later he became its youngest chief executive.
In the course of the following decade he multiplied its £14m pa revenue almost seven times, turning it from a niche media and property practice into a major multi-disciplinary law firm. The success inevitably pushed him into the spotlight and for a period, Goldstein’s name was rarely out of the press.
High-profile instructions also helped. Aged 28 he got a phone call from M&C Saatchi chairman Jeremy Sinclair which led to a role advising on the break-up of one of advertising’s best-known businesses, later earning a seat on its board.
Olswang had also long advised Heron on legal matters and Goldstein had come to know the company’s herculean figurehead Gerald Ronson well.
During a trip to the US negotiating a deal in 2006, Goldstein recalls a particular conversation with Ronson: “We were talking about him and me and the future, and Gerald made some sort of leading comment, in Gerald’s way, which clearly was left for me to come back and ask if he would give me a job. He made sure that it was the other person doing the asking – he’s a genius like that.”
He did ask. And in 2007 Goldstein left Olswang to join Heron as managing director, becoming deputy chief executive two years later.
Towering ambition
Goldstein’s career at Heron was bookended by two key events at its landmark development, the Heron Tower. He joined just as construction began – at the same time as the financial crisis hit – and left following a painful and-well publicised refinancing.
Working for Ronson inevitably meant a step back from the public-facing work he had become used to, and for six years he was the highly respected but largely silent number two in the company. “Anybody who works with Gerald works in his shadow,” he says. “He is a very large presence in any business and Heron was his business. I learnt a huge amount from that, so I was more than happy to play second fiddle because I don’t think I could have said anything externally that would have interested people.”
His tenure with Ronson was marked by the worst recession for more than 100 years, which produced mixed results for the company. The tower’s £270m refinancing, which finally closed in October last year after months of speculation about whether Ronson would lose control, was a major achievement. Albeit one that was secured only after the building’s three main shareholders agreed to inject £100m of fresh equity.
Did Goldstein ever think they would lose control of the tower? “There was a time when the shareholders were squabbling over how it should be controlled and how it should be run,” he says. “In reality, the terms that we agreed at the end were very similar to the terms that we talked about for four or five months. I think it needed a bit of a slap around the face for all of us, to bring us back to the table and say, guys sort this out, don’t be silly, you’re dealing with one of the best assets in London.”
For Goldstein it was one of many opportunities to learn from Ronson to prepare for one day running his own business. They are still close, speaking daily: “Gerald does certain things. One is his ability to do the repeat mechanisms many times over and make sure that things go through processes in the same ordered way – it’s very impressive.”
Working with Ronson also opened up a new web of contacts. Goldstein got to know Guggenheim during his tenure with Heron, as he gradually transformed from lawyer to business leader. “I never thought I would be able to transform myself from Olswang straight into the position I’m in with Guggenheim – I always thought it needed a bridge,” he says.
Expansion plan
So now he has crossed that bridge, what’s next? And why was a US finance house created by the great-grandson of philanthropist and art collector Solomon Guggenheim – the founder of the Guggenheim dynasty – interested in hiring a head of European real estate?
The majority of Guggenheim’s $200bn of assets under management are in North America. The company is reluctant to provide exact details of its current real estate investments but Goldstein is happy to say it “put $3bn to work” in property last year. Its opportunistic investments include both debt and equity, spanning offices, residential, leisure and retail.
Although it has yet to seal a headline deal in Europe, it has come close on several occasions.
The company was in exclusive negotiations to buy Deutsche Bank’s property division RREEF but failed to agree a deal. It was under bidder to buy MGPA, losing out to BlackRock and was in the mix to acquire Lloyds’ asset management division Scottish Widows Investment Partnership late last year, a deal eventually secured by Aberdeen Asset Management.
Until a few years ago Guggenheim was predominantly a bond investor, with a presence in equities. The partnership’s drive into real estate assets really began with the recruitment of former Apollo vice chairman Henry Silverman in March 2012.
Goldstein will report directly to Silverman, who has charged him with building a European real estate platform “similar to that which we’ve done in the US”.
“It has a multiplicity of debt and equity positions,” says Goldstein. “There is development, there is investment and there is debt there.”
The firm’s latest deal is the acquisition of 50% of the Beverley Hilton Hotel in Hollywood, a hotel and residential scheme.
“It has also got a very big debt book and has been developing resorts for one of the hotel operators, so it has got a very interesting eclectic mix of situations.”
In terms of lending Goldstein says it won’t look to take on the main clearing banks but will “look to do things a bit more cleverly”.
And while he won’t predict how and when Guggenheim will enter the market, he doesn’t rule out further attempts at major corporate acquisitions: “I think we’ve been through a very tough period and one would hope that we’ve come through the worst of that. You certainly feel that London is well set for the next period, subject of course to that big bogey out there – the politicians.
“That will lead to a much more fertile acquisition environment because people will feel more comfortable and confident in realising equity returns. People who have struggled through will end up wanting to now use that opportunity to realise, having got back on the right side of the trade.”
Guggenheim already has a team of four working on real estate opportunities in Europe and Goldstein has hired another two: former Heron colleague Arrif Ali and former LBBW and Santander banker John Cole.
He plans to build a team of 12-15 people in total, including two colleagues currently working in Spain.
On the equity side Goldstein highlights fringe London offices and residential as likely targets.
He says the company has already looked closely at office opportunities in “peripheral London” locations like Stratford, Paddington and the South Bank and residential outside the super-prime market.
Despite being close to the top of major businesses for almost 20 years, it is hard not to watch Goldstein talking about the plethora of investment options for Guggenheim and not think of a child in a sweet shop.
It is surely just a matter of time before the desks outside his door are filled.
What is perhaps harder to predict is where he will be in another 20 years.
The industry: “It is too middle-class, public school, male, white dominated”
Goldstein has a problem with the property industry. And having worked in three or four distinct industries, he is well placed to comment.
“The property world is extremely interesting. I think that there’s an extraordinary number of interesting characters in it but there are certain aspects to it that need shaking up,” he says.
Essex born and grammar school educated, Goldstein says he is amazed by the lack of diversity in the industry, particularly in the agency world and even more particularly in the City.
“It is too middle-class, public school, male, white dominated,” he says.
“There’s a comfort zone that these boys operate in that I think is wholly unhealthy for clients and for the firms and it surprises me that some of the large firms don’t see that.
“I find the closeted nature of the City letting market world quite worrying actually. I think it is surprising that for a business that has so many international facets to it, it has got such a narrow approach.”
jack.sidders@estatesgazette.com
