Finance upstart making himself heard among industry bigs

By Konrad Putzier

Competitive debaters need to be able to make a convincing argument for pretty much anything. At a given tournament, they may be asked to argue that euthanasia is desirable, that heroin should be legalized or that the world is flat.

Adi Chugh is a former debating champion, and you can tell from the way he talks about his business success.

Adi Chugh

Adi Chugh

Chugh, the founder of real estate debt brokerage Maverick Capital Partners, is arguably in a difficult position.

A relative newcomer both to New York and to real estate, he is trying to succeed with a small firm in a field where connections and scale are significant advantages.

While rivals like CBRE’s and Cushman & Wakefield’s capital markets groups can field years of experience and armies of well-connected agents, Maverick has six employees and a track record of three years.

But the way Chugh explains it, you get the sense that he couldn’t be in a better position and that his larger rivals wish they were more like Maverick.

His reasoning displays a classic hallmark of competitive debating: turning someone else’s argument for something around into an argument against it.

Large brokerages may argue that their size and connections allow them to approach as many borrowers and lenders as possible, thus maximizing the chances of a good deal. But according to Chugh, this approach is actually a disadvantage.

“We don’t shoot out deals to 70, 80 or 90 lenders. Lenders like our approach because they have a fair shot of making a deal,” he argued. “In bigger shops, the right hand doesn’t talk to the left hand.”

In other words: a more personal pitch to fewer lenders makes it more likely that each one of them will make an offer, which he calls “certainty of execution”.

So what to make of his argument? There is no doubt Chugh has had considerable success — although exactly how much is hard to quantify. Chugh won’t say how much capital he has raised so far, claiming that he “breaks the billion” every year.

In 2014, he arranged a $141 million senior loan (a dizzyingly high 85-percent loan-to-value ratio) for Yitzhak Tessler’s condo project at 130 Madison Avenue.

He also arranged equity financing and an acquisition loan for Megalith Capital and Urban Realty Partners’ residential project at the former Jehova’s Witnesses building in Dumbo.

He arranged financing for Stillman Development’s condo project at 36 Bleecker Street in 2012, and recently got tapped by the firm to raise money for another planned residential development at 151 East 86th Street. More recently, he arranged the acquisition loan for CB Developers, Waterbridge Capital and Ironstate Development’s Pod Hotel at 626 Driggs Avenue in Williamsburg.

Maverick brokers debt and equity financing. Still, Chugh prefers to see his firm not as a brokerage, but as the “extension of the developer’s financing arm”. Part of that means always being accessible. Chugh says he gives all his clients his cellphone number, and answers calls pretty much regardless of where he is.

His track record is impressive considering how new he is to the industry.
He grew up in India, where he debated competitively and represented India and Australia in tournaments. At the age of 17, he moved to the United States for college, getting a BA in finance from Dickinson College in three years. After graduating in 2003, he worked as an analyst at Wachovia Bank before spending a couple of years raising cross-border capital for Indian banks.

In 2010, he began meeting with New York real estate executives to lay the groundwork for Maverick, which he founded in 2011. Those were difficult times in New York’s real estate finance field, a market that has since recovered amid a major influx of capital.

But Chugh believes the current boom cycle has its own pitfalls. “It’s like when you go from starvation to overeating,” he said. “The quality of deals has been compromised. A lot of new players are in the market right now, and they want to make a splash. Some of these guys are overpaying for assets.”

The overabundance of capital and growing appetite for risk creates problems for firms like Maverick.
On the one hand, Chugh needs to make sure he delivers quality deals in order to build a reputation. At the same time, he needs to maintain and grow market share at the precise time when such quality deals are harder and harder to come by.

Chugh dismisses the dilemma, saying his connections to successful developers give him an edge in finding deals. “If you align yourself with good sponsors and work with them, you will be automatically protected,” he said.

Although Chugh hasn’t debated competitively since college, he says his public speaking experience helps him when it comes to pitching to clients and negotiating deals.
“I debate every day,” he said. “I don’t know anybody else who talks on the phone as much as I do.”

Leave a Reply

Your email address will not be published. Required fields are marked *

COPYRIGHT 2015 REAL ESTATE WEEKLY. ALL RIGHTS RESERVED.