Brokers will talk your ear off about deals they’ve done. When it comes to commissions, however, they’re far more secretive. A recent personal bankruptcy filing by a top capital markets broker reviewed by The Real Deal offers a rare window into the clandestine world of commercial brokerage commissions.
Michael Campbell, a partner at the prominent real estate investment banking firm Carlton Group [TRData], filed for personal bankruptcy in May. In the court documents, Campbell lists pending and contingent debt and equity deals that he expects to close in the coming six to 12 months, along with an estimate of commissions.
The 10 deals total $1.63 billion, according to the documents, although the Carlton Group told TRD the actual figure is around $1.98 billion. For those deals, Campbell estimates that the Carlton Group is set to make just under $25 million in fees – an average of 1.3 percent (of $1.98 billion). Campbell’s own commissions, he estimates, will total $6.23 million – about a quarter of the Carlton Group’s take, or about 0.3 percent of the money raised.
Source: court records. All numbers are Campbell’s estimates on pending and contingent deals
Campbell’s attorney Ralph Ferro said the Chapter 11 bankruptcy filing is connected to his client’s recent divorce, and that he expects to pay back his creditors in full within a year. According to the filing, Campbell has $3.19 million in liabilities and $2.1 million in assets, including a $1 million condo in Weehawken, N.J.
Howard Michaels, founder of the Carlton Group, said Campbell’s bankruptcy is a personal matter and has “no bearing” on the company.
“I have known Michael Campbell for almost twenty years,” Michaels said. “He is a person of high integrity and character. Unfortunately, he went through an adverse divorce and he had to deal with an unreasonable lender, which facilitated the filing.”
From deal to deal, Campbell’s commissions vary greatly, the filing shows. On a pending $1.3 billion funding deal for an unnamed office portfolio, Campbell estimates the Carlton Group will collect $13 million in fees (1 percent of the total), and his personal haul will be $3.25 million (0.25 percent). On a $50 million hotel deal, meanwhile, he expects Carlton to make $2.5 million, or 5 percent of the total, and his commission to be $625,000. On a $55 million apartment deal, Campbell expects $1.375 million in fees for Carlton, and $343,750 for himself.
Fees and commissions tend to vary depending on a financing deal’s size and complexity. Equity deals tend to generate higher commissions than debt deals.
The Carlton Group, founded by Michaels in 1991, has closed more than $125 billion in real estate transactions, according to its website. The company specializes in complicated equity and debt deals, often with high leverage. Prominent deals include brokering an $830 million loan for HFZ Capital Group’s May 2015 acquisition of a development site at 518 West 18th Street, and a $125 million equity raise for Witkoff at 111 Murray Street.
Campbell joined Carlton in 1999 and has had a hand in $50 billion worth of real estate deals, according to the company’s website. Prior to joining the firm, he worked as an analyst at Prudential.