'I wouldn't invite him to my birthday party'

The tough men running Soros's property empire
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The Independent Online

Tucked inside the notebook belonging to Richard Georgi, managing partner of Soros Real Estate Partners, is a quote by the Irish playwright George Bernard Shaw. It reads: "Reasonable people adapt themselves to the world. Unreasonable people attempt to adapt the world to themselves. All progress, therefore, depends on unreasonable people."

Tucked inside the notebook belonging to Richard Georgi, managing partner of Soros Real Estate Partners, is a quote by the Irish playwright George Bernard Shaw. It reads: "Reasonable people adapt themselves to the world. Unreasonable people attempt to adapt the world to themselves. All progress, therefore, depends on unreasonable people."

Mr Georgi is a brash, aggressive, American financier who's in charge of billionaire speculator George Soros's worldwide property investments. With a boss like Mr Soros it pays to be unreasonable. Earlier this month Mr Georgi secured a £2bn contract to own and manage the Inland Revenue and Customs and Excise's property estate - through Mapeley, a consortium of investors in which Soros Real Estate is one of the largest shareholders.

The deal raised eyebrows not only because Mr Soros - the man who in 1992 forced the Britsh Government to exit the European Exchange Rate Mechanism - will become the Government's landlord, but also because Mapeley beat off such tough competition. This included Nomura's principle finance unit, headed by Guy Hands, and Trillium, an outsourcing specialist, backed by Goldman Sachs.

Mr Georgi is now close to pulling off another large deal in Britain. On Friday Soros Real Estate, again via Mapeley, submitted its best and final offer to buy Abbey National's UK property portfolio, estimated at £460m. The bank will decide in September whether to award the contract to Mapeley or to a rival consortium headed by Morgan Stanley Dean Witter.

For Soros Real Estate, the two deals represent the beginning of a huge push into UK and continental European property investment.

The campaign was triggered in May 1999 when Mr Soros poached Mr Georgi from Goldman Sachs, where he ran the acquisitive Whitehall Real Estate Fund in Europe. As Mr Georgi is one of the most highly rated property investment bankers, this was a major coup.

However, five months later Mr Soros did it again, poaching another high-flying banker, Richard Mully, former head of merchant banking at Pricoa, the European arm of the Prudential Insurance Company of America. It is understood Mr Mully, who reports to Mr Georgi and runs Soros Real Estate's European operations, was lured with a $1.5m salary-plus-bonus package.

Based in a modest office in London's traffic-choked St James's Street, Mr Georgi and Mr Mully are an unlikely pair. Both are highly driven - the money and prestige that go with working for Mr Soros give a big buzz. But their approach to colleagues in the banking and property world is very different.

Mr Georgi, a 37-year-old who rides a Harley Davidson, has made some enemies. Says one former colleague, who asked not to be named: "He's a very bright guy with an incredibly high opinion of himself. He likes to think of himself as the all-powerful investment banker - working all day and night, and when he's got a couple of minutes to spare, learning five languages. He's the type of chap who would swing back on his chair and put his feet up on someone else's boardroom table."

A former adviser to Mr Georgi is a little kinder: "[He] is straining at the leash. He loves it when he's got 15 advisers running around for him. He's a nice guy but I wouldn't invite him to my birthday party. And if I did I would warn everyone first." Mr Georgi's working day would shame even the most committed workaholic. When he is engrossed in a project, ex-colleagues report that it isn't uncommon for him to leave messages on their answer machines at two in the morning.

Just as driven, but slightly easier going, is 38-year-old Mr Mully. "He's devastatingly bright, but quite personable and fun to be with. When he's doing a deal he always likes to be at the leading edge," says a close associate. "You would think that the two would end up killing each other, but their personalities actually seem to work rather well together." This is a good thing, too, as Mr Soros has entrusted $600m of his clients' and his own money to the two men. It's also understood Mr Soros has hired investment bank Donaldson, Lufkin & Jenrette to raise a further $800m to inject into Soros Real Estate.

Investments through Soros Real Estate are opportunistic - although Mr Georgi hates the word, as he believes it implies that he is reacting to situations. The pair are particularly interested in structuring deals with occupiers, taking stakes in property companies and buying distressed loan portfolios.

In Italy, for example, Soros Real Estate is understood to be in discussions to buy a £1.25bn portfolio owned by the country's largest oil and gas company, Eni. In the UK it completed its first corporate deal in April by paying £14m for a 25.75 per cent stake in AIM-listed self-storage company Safestore.

But doing deals with occupiers that own their own property is where Soros Real Estate is currently focused. The Inland Revenue and Customs and Excise deal, code named "Steps", will see Mapeley own the property estate - a mixture of freeholds (assets) and leaseholds (liabilities) - and manage the facilities for 20 years.

Having won Steps, the backers of Mapeley now believe that they can persuade blue-chip companies to strike up similar deals based on this model. Sources in rival consortia believe that Mapeley bid on an extremely low margin to win so it can use Steps as a springboard to garner more business.

Ian Ellis, managing director of Trillium's estates group, says: "We know what it costs to deliver a quality service and we simply could not have bid any lower. To do that we would have compromised our service delivery. Mapeley may have secured a platform, but will corporates end up subsidising its government contract?"

The two other equity partners in Mapeley are Fortress Investment Corporation, a US real estate investment company that last month was hit by the resignation if its two UK managing directors, and Delancey, a property company run by James Ritblat.

Mr Soros, through his flagship investment fund Quantum, holds a majority stake in Delancey and there is now speculation that, with the help of Mr Georgi and Mr Mully, he will help Delancey go private. Mr Ritblat will only comment: "We continue to look at all our options." So, back to Mr Georgi's notebook.

If he is the archetypal sharp, aggressive, sometimes unreasonable, financier, then has he changed the world around him? In the property world the answer is "yes", and he looks set to continue doing so.

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