Debt funds are seeking fresh talent to tackle the next wave of distress.

The second half of 2023 was dominated by whispers of distressed debt funds gearing up for the next wave of trouble. As the real estate world begins to accept that the era of cheap debt is well and truly over, attention has turned to building out previously neglected distressed teams. Recruitment has been taking place up and down the corporate hierarchy, according to recruitment consultants. However, over a decade of cheap money and high valuations has meant that, at the junior to mid-level, there’s a real lack of talent. True, more than a few senior players remember the last crisis and the workouts that ensued. However, headhunters point out that in many cases, these senior players rarely get down in the weeds. Plus, all that experience comes at a price.

Discussions are still at an early stage, though they have picked up in the last six months, according to Ulrik Rasmussen, head of Pedersen & Partners’ global real estate practice. Given the speculation about rising distress, people are trying to be prepared, says Rasmussen: '2008 happened so fast, no one was prepared for it. This time, many of the key players are well-prepared for the market change.'

Hollowed out

The larger real estate players are understood to be looking to make specialist hires with corporate and banking skills. Given the workout of most legacy distressed debt, many teams have been hollowed out. Some of the teams at the top distressed investors have shrunk by up to 90%. This means that some firms will be looking to rebuild these teams.

However, very few people at the junior to mid-level have had to work out soured loans, which is posing problems for debt funds trying to build out their teams. One recruiter said: 'There’s a real lack of experience in servicing and workouts at the moment after so many years of cheaper debt. Therefore, funds are having to get more creative about where they hire from and are more open to people coming from different backgrounds, for example the big servicers.'

While some mid-level people did cut their teeth in the Southern European non-performing loan wave of the mid-2010s, debt funds are reportedly looking for people with German and Scandinavian language skills, rather than the Italian, Spanish, and Greek of the previous wave. Given that these markets were spared the biggest bloodbaths of the past 15 years, this has made workout experts with language skills a hot commodity. The German residential construction sector, as well as offices, will be one to watch given some developers are running on squeezed margins.

However, hiring is difficult in a time of layoffs and hiring freezes. This means that recruiters are getting increasingly creative about reallocating people within firms. In many cases, recruiters have told React News that a lot of firms are looking to hire people who are more versatile and can be reallocated when markets change again.

High-profile moves in 2023

React News has been keeping an eye on some of the high-profile moves to distressed debt funds. For example, Alvarez and Marsal hired Florian Nowotny and William Clark ahead of the expected uptick in distressed activity. In the US, former Blackstone grandee Chad Pike launched Mankora, a vehicle that aims to target capital dislocation through credit deals, special situations, and private equity real estate outlays. Back in the UK, Homes England is advertising a role for a senior manager to handle its distressed investments.

The buyside isn’t the only place hiring; advisory firms are also keen to bolster their teams so they can better serve their clients, say recruiters. However, the dearth of real estate restructuring on offer over the past few years, particularly outside of the Southern European and retail markets, has made it difficult to hire at the junior to mid-level. As on the buyside, senior hires with experience working out tricky situations are hard to come by and command a premium. Over in Germany, brokerage firm NAI Apollo hired NPL veteran Klaus Schumacher as an adviser for its corporate services. He was hired to set up a 'special situation platform for NPL and distressed real estate services.'

July 4, 2022 – Zurich, Switzerland – Pedersen & Partners, a leading international Executive Search and Leadership Consulting firm with 54 wholly owned offices in 50 countries, is pleased to welcome Stan Kalinin as a Client Partner in the Life Sciences & Healthcare Practice.

Stan Kalinin draws on an extensive track record of more than 14 years of search and executive team-building expertise, with particular focus on Medical Devices and Technologies (cardiology, heart failure, robotics surgery, robotics imaging, diagnostics, and pathology, IVD, laparoscopy, spine surgery, drug delivery devices) covering Western and Central Europe, MENA, and APAC (Singapore, Japan, South Korea). He has built teams for start-ups and supported growth hiring for large multinational MedTech companies across multiple regions and divisions, providing bespoke candidate search and selection services, specifically designed for the MedTech industry. Prior to joining the firm, Mr. Kalinin placed senior level executives for search mandates across the Medical Technology, Real Estate, Energy, and Pharma sectors across Europe, MENA, and CIS.

“Drawing from his in-depth understanding of the critical issues faced by the Life Sciences sector, particularly the Medical Devices and Technologies and Pharma sectors, Stan will help our clients reshape their leadership talent strategies. We are excited to welcome him to our global Life Sciences & Healthcare team,” said Guido Bormann, Partner and Regional Manager at Pedersen & Partners.

“I’m delighted to join Pedersen & Partners and help our clients transform their organisations. MedTech companies are under continuous pressure to navigate the shifting dynamics of a fast-expanding industry, in which job profiles are transforming and the demand for skilled senior-level professionals is constantly increasing. I look forward to partnering with my Life Sciences & Healthcare colleagues in this challenging environment, and to growing our clients’ senior executive teams,” added Stan Kalinin, Client Partner, Life Sciences & Healthcare Practice at Pedersen & Partners.

Pedersen & Partners is a leading international Executive Search and Leadership Consulting firm. We operate 54 wholly owned offices in 50 countries across Europe, the Middle East, Africa, Asia & the Americas. Our values Trust, Relationship and Professionalism apply to our interaction with clients as well as executives. More information about Pedersen & Partners is available at www.pedersenandpartners.com

If you would like to conduct an interview with a representative of Pedersen & Partners, or have other media-related requests, please contact: Diana Danu, Marketing and Communications Manager at: diana.danu@pedersenandpartners.com

Real Estate Practice Group

Pedersen & Partners’ Real Estate Practice goes far beyond the stage of appointing leadership teams. This component is secondary to our distinct holistic approach to adding value throughout the entire partnership, starting from deep understanding of the client’s business model, its differentiators, its competitive environment and its mission-critical challenges.