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Vornado Courts Kaempfer
By Suzanne White, Staff Reporter
February 28, 2003
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New York-based Vornado Realty Trust is close to finalizing the acquisition of The Kaempfer Co., a pre-eminent D.C. developer and property manager with 3.5 million square feet of office space, mostly within the District.
Sources close to the deal say Kaempfer's president, Mitchell Schear, will head Vornado's subsidiary, Arlington-based Charles E. Smith Commercial Realty.
A Kaempfer acquisition instantly gives Vornado two prizes: a local real estate professional to head its Smith operations; and an ownership and management portfolio of Class A offices in downtown D.C.
Schear could not be reached for comment.
A spokeswoman for Vornado, which acquired Smith Commercial's then - 12.9 million-square -foot portfolio in December 2001, would not comment. "The company hasn't made any announcements and we don't comment on rumors or speculation," says Wendy Kopsick, Vornado spokeswoman.
Vornado has spent more than six months searching, primarily in the local market, for someone to head Charles E. Smith Commercial Realty.
Right now, the division is managed by Vornado from New York, along with local executive vice presidents of leasing and property management. Robert Smith, son of the company's founder, is chairman. The company does not have a chief executive or president.
Until the merger last year, the top executive positions at Smith Commercial were held by Smith and Bob Kogod, the son-in-law of the company's founder. Both Smith and Kogod are on Vornado's board.
Vornado has a reputation for being an aggressive investor and a hands-off owner, letting local management control its own offices. Hiring Schear is considered by market sources as the final management transition: a new generation running a locally focused company.
Marsha Pearcy, managing director in the D.C. office of Equinox Partners, an executive recruiting firm based in New York, says she helped place Schear at Kaempfer in 1988. Although Pearcy has no direct knowledge of the acquisition, she understands why Schear would be an attractive choice for Vornado.
"Strategically it's a great move," she says. Schear has "grown up in this market. He's an aggressive and well liked real estate executive."
Vornado has completed $6.8 billion in real estate acquisitions or investments since 1997, according to its Web site, and shows a strong propensity for downtown offices. The real estate investment trust (NYSE: VNO) owns or manages 14.2 million square feet in the New York market.
In Charles E. Smith Commercial, Vornado got the largest commercial property management company and the largest developer in the D.C. area. Smith also is among the largest government landlords in the area, with the majority of its supply in the Virginia submarkets.
Kaempfer's assets would align well with Vornado's well-heeled portfolio.
"Depending on economic cycles, these assets perform differently," Pearcy says. "I think it makes for a very smart, diversified portfolio."
Kaempfer was founded in 1977 by Joey Kaempfer, who is chairman and chief executive. He also is co-chair and chief executive of BAA McArthurGlen, which focuses on retail development in Europe.
Sources in the market say it's unclear what implications an acquisition would have for Kaempfer, whether the company would lose personnel and what would become of the Kaempfer name.
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