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Red carpet treatment that keeps investors in the black.

Carlton Group Chairman and CEO Howard Michaels has been involved in a business environment since he was 12.

"My dad used to take me to work with him," Michael said. "He was in the retail carpet business."

While other kids were playing varsity football, Michaels worked his way up from sweeping and mopping to selling carpet himself.

Michaels went on to American University in Washington, D.C., graduating in 1977 with a bachelor of science degree in business and marketing.

He went to work for 3M in 1978, selling copy machines for about a year, and then to Connecticut General, where he worked for about two-and-a-half years selling insurance.

"That was a great experience," Michaels said, adding that the company's training program was very well organized.

In 1980, Michaels broke into the real estate field with Island Planning, a real estate syndication business.

"That's where my real estate career started," he said. "Since 1980, I've really been in the business of getting people money."

Michaels raised almost $1 billion in equity for investors to acquire through limited partnerships. But when the Tax Reform Act was passed in 1986, he left Island Planning to form H.O. Michaels, his own firm, without the tax benefits.

They purchased more than 3,000 rental apartments to convert to coops. But in the major real estate recession, the idea "didn't work," Michaels said. But, he added, the idea was a profound learning experience. "It was there I really learned the bricks and sticks of real estate," Michaels said. "I believe that experience prepared me for the brokerage business. I kind of have an owners mentality for the brokerage business."

Which served him well when, in 1990, he bought a partnership of Carlton Property Auctions, a predecessor of Carlton Group. The firm handled distressed notes and real estate through auctions and field bids for institutional investors until 1995, when Carlton bought out the other investors and the firm became Carlton Group.

"That's when we made the transition to provide debt and equity services with the same types of clients," Michaels said.

"We had an early step on most of our competition for getting into the debt and equity business as Wall Street became the dominant capital for real estate."

The company has grown since 1995 into a "mini-investment bank," Michaels said, gaining money for clients through mortgages, selling equity, helping companies sell loans to buildings.

The company mostly deals with large, highly-leveraged transactions and has amassed over $12 billion in completed deals.

Carlton Group is divided into several groups: large loans and debt, equity, loan sales and investment sales. The company recently also added Carlton Strategic Ventures, a venture that will, according to Michaels, be able to provide 100 percent of the debt and equity capital required for acquisitions, "which is unheard of," Michaels said.

CSV is led by Abe Wallach, who, for 10 years, served as head of acquisitions for Donald Trump.

"When you need money, you come to Carlton," Michaels said.
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Title Annotation:Profile of the week: Howard Michaels, Group Chairman, CEO, Carlton Group
Author:Moore, Peter
Publication:Real Estate Weekly
Article Type:Interview
Geographic Code:1USA
Date:Dec 3, 2003
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