Toronto real estate tycoon is behind $450m DryShips deals
Hedge fund manager also revealed as investor in Top Ships and Diana
April 6th, 2017 18:05 GMT
by Joe Brady
Published in Finance
A real estate heir has emerged as the man behind the mysterious Kalani Investments, which is pumping nearly $450m into George Economou-led DryShips.
A TradeWinds investigation reveals that Toronto-based hedge-fund manager Marc Bistricer and his firm Murchinson Ltd are behind Kalani, which has also invested a further $160m in fresh equity into two other Greek companies, Top Ships and Diana Containerships.
This will surprise many observers, who had assumed Kalani to be yet another private business of Greek shipowner Economou.
Those assumptions are understandable, given that Kalani first appeared in November with a $20m investment deal in DryShips. The stake grew by $200m in December and quickly became a keystone of the owner’s revival in the sale-and-purchase (S&P) market.
The connection deepened this week when Kalani agreed to purchase an additional $226m worth of DryShips shares, furthering what to date has been a $662m spending spree on 14 vessels.
DryShips’ filings have described Kalani as an unaffiliated third party, but Economou’s history of dealings between his public and private entities caused many to harbour suspicions.
So did the shadowy nature of Kalani, which is registered in the secretive British Virgin Islands and whose only agents described in documents filed so far with US securities regulators are members of a Gibraltar international law firm.
However, three sources have told TradeWinds that the entity is controlled not by Economou but by the little-known Bistricer, who is the son of prominent New York property mogul David Bistricer.
The elder Bistricer's real estate exploits have featured regularly in New York newspapers and even caught him up in a federal investigation of the city's mayor, Bill de Blasio.
David Bistricer heads a US-listed real estate investment trust called Clipper Equity. His family-run firm is said to own more than 60 buildings and thousands of residential units in New York. Most prominently, it bought the Sony Building at 550 Madison Ave in 2013 for $1.1bn and sold it last year for $1.3bn.
But it is son Marc and Murchinson that have appeared on documents circulated among Greek shipowners as the man behind Kalani.
“No, Kalani is not George, it is this man who represents a hedge fund or family-office type of operation in Toronto,” one executive told TradeWinds.
“They have made a lot of investments in other industries like technology under different names and Kalani is just the vehicle they have created to enter shipping.”
A man who answered the phone this week at Murchinson’s Toronto number said Bistricer was not immediately available. The call was not returned by TradeWinds’ deadline.
Besides the DryShips commitments, Kalani has agreed to spend up to $10m on shares in Top Ships — whose principal, Evangelos Pistiolis, has close ties with Economou — and $150m on Diana Containerships.
TradeWinds understands that Diana officials approached Kalani after learning of the potential funding source from the earlier transactions.
Just how Economou first came together with Bistricer remains something of a mystery. However, one source tells TradeWinds this week that the two were introduced by an investment banker.
All of the equity-purchase agreements are set up in the style of at-the-market shares issues, or ATMs, a structure Economou has used in the past through investment banks.
Relatively little is known about the activities of Marc Bistricer. His name appeared in 2015 on a Bloomberg calendar as representing Murchinson at a conference, Next Generation of Emerging Hedge Fund Leaders.
In 2007, he made a bid to acquire a Massachusetts bank, Westborough Financial Services, in which he was a 9.9% stakeholder. The bank’s board ultimately rejected the bid in favour of merging with another bank.
Doubts expressed
Bistricer offered $23.9m, or $40 per share, to buy 36% of the bank’s shares, but insisted on controlling a majority of the board. Although his bid was higher than the bank’s previous $35-per-share offer, the board, through its lawyers, expressed doubts about his ability to raise acquisition funds from private equity sources in time.
Marc Bistricer was also mentioned in a 2015 Canadian Broadcasting Corp report as an officer of a Toronto real estate firm that owned a deteriorating apartment building in Hamilton, Ontario, that was infested with insects.
The firm was said to share an address with Talisker Corp, a multi-million-dollar operator of ski resorts and retail space owned by Bistricer’s brother Jack.
Much better known is father David Bistricer, 67, an Orthodox Jew whose Clipper Equity was profiled by the Wall Street Journal (WSJ) in 2015 as a company active in New York’s recent real estate boom.
The family business has its origins with David’s father, Moric, who was 95 at the time of the WSJ story. As part of generational change, David was said to be transferring increased responsibility to another son, Jacob.
The Bistricers had been placed on New York’s “worst landlords” list in 2010 by de Blasio, then the city’s public advocate, as a result of problems in a Brooklyn apartment complex.
By 2016, the Bistricers had been removed from the shame list, and David Bistricer reportedly hosted a fundraising event for de Blasio’s mayoral re-election campaign.
David Bistricer last year denied media reports that he had personally received a subpoena in a federal corruption probe of de Blasio by then-US Attorney Preet Bharara. De Blasio was cleared of any criminal wrongdoing by investigators last month.
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