The Real Deal New York

The Closing: Dean Dakolias

The Fortress executive on growing up Greek, freelancing for “60 Minutes,” and meeting with SoftBank’s Masa Son
By Mark Maurer | June 01, 2018 10:00AM

Dean Dakolias (Photo by Studio Scrivo)

Constantine (“Dean”) Dakolias is co-chief investment officer of the credit funds group at Fortress Investment Group, the Midtown-based investment manager that SoftBank acquired for $3.3 billion last December. That all-cash deal took the 20-year-old firm private after a volatile decade on the stock market. Fortress has $43.6 billion of assets under management, and Dakolias and his team have done more than $100 billion in transactions across various industries since the credit business launched in 2002. The 500-person group includes about 100 employees dedicated to real estate deals. Fortress — a major property owner and lender in New York — provided the $1.2 billion loan to Harry Macklowe that led to his sale of the General Motors Building, and owns CWCapital, the special servicer that sold Stuyvesant Town-Peter Cooper Village to Blackstone and Ivanhoe Cambridge for $5.3 billion in 2015. The global asset manager also has equity stakes in Maefield Development and L&L Holding’s TSX Broadway project in Times Square as well as Ian Bruce Eichner’s troubled Madison Square Park Tower. Eichner recently filed a lawsuit against Fortress and equity investor Dune Real Estate Partners, accusing them of pushing him closer to defaulting on the project. Before joining Fortress, Dakolias simultaneously ran two companies: the finance firm American Commercial Capital and the SEC-registered broker-dealer Coronado Advisors. Wells Fargo bought both firms for an undisclosed sum in 2001.

DOB: June 20, 1966
Hometown: McLean, Virginia
Currently lives in: Bronxville, New York
Family: Married with two children (ages 16 and 13)

What were you like as a kid? I was an outgoing kid, into academics and sports. I was very in touch with my family roots in terms of us being immigrants from Greece, and very close to the Orthodox church and the community. I have one sister, but lots of first cousins.

What do your parents do? My dad was an economist at the International Monetary Fund. My mom has a PhD and MBA from NYU and was a professor at the University of Maryland. Foreign economists from all over the world were constantly coming through my house and talking about economics and policy. Dinner conversations with my parents and their guests were always very interesting.

Who calls you Constantine? Only my grandfather, who was a priest. The Greek naming convention is that the first-born son takes his maternal grandfather’s name, and his father’s name becomes his middle name. I’m Constantine Michael Dakolias. My mother calls me “Deano.” Or she’d call me the dog’s name when she got mad at me.

What led you to major in physics at Columbia University? I was always strong in math and sciences. It was natural for me to keep pushing that way. Is there anything I’ve learned in physics that’s applicable today? No.

What did you do after college? I actually started doing documentaries, researching indigenous rights with a few Indian groups. I worked as a sound man and did freelance work for several news operations, like CBS. We did an interview with Tom Wolfe in 1990 for “60 Minutes.” I was in his apartment, listening to him do the interview in his white suit. I was focused on doing my work and not fucking it up by talking to him too much. That work was not the traditional path, but after four years of hard studies and being on the crew team at Columbia, I took a break to see what else was out there.

How did you get into real estate? After a few years in New York, I moved to D.C. and spent five years as the right-hand man for Chris Kallivokas, chief operating officer of the private equity firm JER Partners. He was really one of the old guard in terms of restructuring real estate. He taught me about distress. Then I left D.C. in 1998 to go to San Diego with some colleagues to start a business.

How did you join Fortress? When we sold the business to Wells Fargo in 2001, one of my partners, Marc Furstein, and I did not want to stay with Wells. We wanted to create our own path without any bureaucracy or regulatory uncertainties and limitations. We met with Pete Briger, now a co-chairman of Fortress, in San Francisco in May 2001, and we walked him through what we wanted to do. Pete, who had just left Goldman, said, “Very interesting, but you’re thinking too small. Why don’t you guys join Fortress?” Marc and I joined that August, and the two of us did things for the old Fortress — the private equity business. I’ve been here ever since.

How has your role changed? When I started out, I was just a managing director within the group, really focused on helping originate, find and analyze transactions. In 2008, Pete and I became co-chief investment officers on the credit business, which invests in commercial real estate, loans and distressed assets. Just a natural evolution as Pete became more comfortable with me over time. He thought of me as a partner with him.

When Fortress went public 2007, did that change things for you? Not in terms of the business we did or how we run our individual funds. But it obviously changed our profile as the first alternative manager to go public. Stock investors came in, and I said, “I’m happy to help you, but my first priority are my limited partners.” People got mad at me a few times for saying these things. Our approach as a public company was always to focus first and foremost on investments and generating strong returns for our LPs. Public shareholders would benefit directly from our success in doing that. But public markets always seemed overly focused on pure growth — asset-gathering over performance, and that’s really the direct opposite of what we do. If we don’t see investment opportunities, we won’t raise capital. So going back to making investments in a private company structure under SoftBank is really something that we’re very excited about.

You’ve said in the past that one your most active stretches at Fortress was during the financial crisis. Why? I remember in summer of 2008 getting money out of the ATM because I wasn’t sure the ATM was going to work the next day. My wife thought I was crazy. Maybe that’s a little bit of my immigrant upbringing. But that time was exciting, and we were fortunate in that we were generally on our front foot and not playing too much defense. Many funds got in trouble because they had to sell assets for redemptions or because they were levered. That really cost a lot of funds their livelihood.

Has SoftBank’s acquisition of Fortress had any effect on your job? I’ve met with Masa Son, and I think he’s a true visionary focused on huge disruptive forces in all the major sectors, including real estate. What will the world look like in 10, 30 or 100 years, and how can we position for that today? Being part of a company thinking like that, and with really vast resources, can only benefit us. It was critical to us to find a partner really committed to having Fortress run as an independent business.

What’s your relationship with Ian Bruce Eichner, whom Fortress is now battling in court? We just don’t comment on anything related to litigation in motion.

What was the hardest deal you’ve done? Harry Macklowe’s deal to buy Equity Office Properties’ Manhattan portfolio was obviously challenging. We were putting together a $7 billion capital structure in 10 days, and I got four hours of sleep a night. That evolved into a long workout with Deutsche Bank, the senior lender on the deal, and Harry. He’s an intense individual and one of the great New York visionaries. Some investments that have not gone well for us have been non-income-producing. We did some precrisis investments — debt stuff — with counterparties on development land out west. Those did not go well. I keep a tombstone paperweight to remind me of one of the bad deals we did: CalPERS’ land deal in Arizona in 2007. We ended up losing a fair amount of money on it, so I keep this here to remind me of it.

Fortress often puts up the majority of the equity when partnering on a real estate deal. Is it more stressful that way? We’re going to make good and bad investments. We’ve lost money in many different ways, but hopefully not the same way twice. Getting stressed about an investment doesn’t really accomplish much. The Sheffield loan deal [in which Fortress took over Kent Swig’s property in 2009] wasn’t that big of a position. But it was obviously very complicated and took a lot of time to navigate through the foreclosure process and then taking over the condo and finishing off the work on the units.

Fortress provided Michael Jackson with a mortgage on his Neverland Ranch. Did you meet him? That is a story I wish I could tell you, but Pete and Mike Novogratz flew to London to meet with Michael Jackson. There was no need for a third person to go. Jackson’s one of the greatest musicians and was well ahead of anyone else. We also made the loan against the Beatles catalogue, which he bought in 1985. We had a $300 million loan against the catalogue, which got taken out by a refinancing from Deutsche.

You’re dressed casually. Do you wear suits? I’ll never be — or aspire to be — Sam Zell, but I do embrace his view of how to dress. I also fully acknowledge I have a face for radio.

What’s the most extravagant purchase you’ve made lately? I just bought a 1961 Ural Russian-made motorcycle and a sidecar for $15,000. It was refurbished in the U.K. and is being delivered to my house in Rhode Island. I haven’t told my wife yet. I’m going to have to keep The Real Deal out of the house that month.

How many homes do you have? I have four — in Bronxville, New York; Rhode Island; Park City, Utah; and Greece. My friends use the house in Greece more than I do.

How much time did you spend in Greece growing up? I was there for three months every summer, to go to overnight camp and spend time with my family. Both my parents grew up in Greece as teenagers during World War II, but they never talked about it. The one story my mom finally told me a few years ago was that the Germans took her older brother and sister in 1943 because they thought they were fighting with the Resistance. They took them to hang them in the square. I’m sorry, I’m getting emotional [tears up]. Her father offered the Germans everything they had and traded it to have the kids again. On Christmas Eve, her brother and sister walked home. For her, there could never be a better Christmas than that.

Wow, that’s powerful. Do you observe Christmas? I celebrate it. My kids, who are 16 and 13, are not as embracing of Christmas, but I haven’t pushed them into that.

Do you travel a lot for work? I don’t think any of the trips are exciting. What is exciting to me is taking my 16-year-old daughter to Iceland for spring break. Spending quality time with her and just talking about what drives her. A deal is a deal. You hopefully make money on it, and you move on.

—Edited and condensed for clarity