“Project Atlas” is an innovative financing paradigm, which was originally developed for commercial mortgages; however it can be readily applied to all forms of financing. It represents a viable alternative to traditional lending and capital markets financing through securitization. As designed, it has its own checks and balances organically assimilated within its business model in that it maintains accountability for those involved in:
⇨ Structuring the loans;
This represents a fully-integrated "soup to nuts" financing and investment operation, where compensation is directly correlated with the long-term performance of the loans and related investments made through maturity, and relies on a flat organizational structure and open channels of communication. Collectively, these features create operating and investment efficiencies that translate into competitive advantages against traditional forms of lending.
⇨ Making the credit decisions;
⇨ Funding the loans;
⇨ Pooling the loans;
⇨ Structuring the securities backed by the loan pools;
⇨ Getting those securities rated;
⇨ Selling the securities to third parties;
⇨ Making a secondary market for those securities sold;
⇨ Investing in the subordinate and derivative securities;
⇨ Monitoring investment performance of those securities;
⇨ Servicing the securities and maintaining investor relations;
⇨ Servicing the underlying loans;
⇨ Settling the underlying loans; and
⇨ Liquidating the securities
Importantly, had this business model been followed by Wall Street, commercial banks and insurance companies, the economic meltdown that occurred in 2008 would never have materialized, nor would the unbridled greed been allowed to manifest to such a dangerous level, for those responsible for those mistakes would have been found out early on, and would never have been able to walk off with millions, while leaving taxpayers to foot the bill.
As originally planned, Project Atlas was to be rolled out in two “Phases”. Phase 1 encompasses six core business segments noted below, along with the Principals responsible for each of those segments, and their relevant current and former company affiliations. The Principals of Phase 1 delineated below had extensively collaborated with Spencer C. Young to derive sound "bottoms-up" business plans, underwriting manuals, capital markets pricing and credit models, etc. – all of which were suffused in our consolidated operating plan, after incorporating comments elicited at secretly arranged group meetings at the Cornell Club of New York, where Mr. Young is a member.
Phase 1 – The Core Business Segments
The six core business segments involved teams aggregating 85 professionals, and headed up by the senior executives noted below, each of whom has a strong resume of accomplishment in commercial real estate and related finance and capital markets. The six Principals immediately listed below developed a detailed budget and implementation plan, which can be accessed by clicking on their hyper-linked name below -- the first page will be their bio. Each of these Principals were prepared to leave their senior management positions at some of the most prestigious financial institutions (noted below) to work for Spencer C. Young and play an instrumental role in bringing Project Atlas to fruition.
⇨ Conduit Loan Originations: Steve Beyer – JPMorgan / Morgan Stanley / Aegon
⇨ Deal Management: Jackie Brady – JPMorgan / Nomura / GMAC
⇨ Trading: Rob Cestari – Nomura / Apollo
⇨ Investments & Credit Risk Management: Bob Clark – Aegon
⇨ Small Loan Originations: Steve Cole – Union Central Life / Nationwide
⇨ Large Loan Originations: Nicki Livanos – AXA / Equitable Insurance
While the Phase 1 Principals were aware there was a Phase 2, Mr. Young had protected the names and contemplated roles. And although he held discussions with many of these Principals, (in some instances he had received detailed business plans), Mr. Young had deferred earnest discussions and detailed plan formulation until Phase 1 was successfully launched and operational – their respective roles are only generallyoutlined below, for proprietary reasons.
Phase 2 – Supplemental Business Segments
These supplemental business segments of Project Atlas would employ another 125 people at full throttle, as contemplated, and be headed up by the following executives (again, listed in alphabetical order):
⇨ Distributions, Coverage & Syndications: Sam Davis – John Hancock
⇨ Small Loan Originations & Distribution: Joe Francis – Standard Insurance
⇨ International Business Operations: John Ho – Merrill Lynch / JPMorgan
⇨ Bank Liaison, Coverage & Syndications: Steve Jones – Wachovia Capital Markets
⇨ Mezzanine Lending & Syndications: Richard Katzenstein – MONY Mutual
⇨ Legal Counsel / CDO Structuring: Eric Klingenberg – Thacher, Proffitt & Wood
⇨ Coverage & Transaction Generalist: Joe Mosley – Greystone / GMAC / Goldman
⇨ Investment Hedge Fund: John Nunley – Allmerica Insurance
⇨ Large Loans & Syndications: Steve Palmer – Cigna / Travelers / JPMorgan
⇨ Chief Investment Officer: David Graves – State Farm
⇨ Loan Syndications & Investment Joint Ventures: Blake West – Nationwide
Any person conversant in the industries of Commercial Real Estate, Insurance and Related Finance and Capital Markets knows of the exceptionally high caliber of people in the above listed groups.
Every Principal listed above for Phases 1 and 2 either: (i) previously worked with or for Mr. Young, or; (ii) was a client of Mr. Young's over the roughly 10 years he was within “The House of Morgan” (i.e., JPMorgan and Morgan Stanley).
In addition, the formulation of Project Atlas assimilated the sagacious advisory insights of three friends, who also happen to be highly accomplished senior Wall Street executives – in alphabetical order, they are as follows:
Michael Hanna – Mike was formerly Group Head of Municipal Bonds & Trading at Smith Barney and formerly Group Head of Derivatives at Donaldson, Lufkin & Jenrette. Having amassed a small fortune from his successes on Wall Street, Mike retired before the age of 40. Mike kindly advised on setting up the Project Atlas trading desk and related operations, as well as how to address Morgan Stanley’s tortious interference. Howard Keenan – Howard is the Founder and Managing Partner of Yorktown Energy Partners, one of the most successful energy private equity investment funds in the world – Howard graduated from Harvard, and seems to possess the “Midas touch” with all of his Funds’ investments. Howard advised on money raising and investment strategy for Project Atlas. Charles Trunz – Charlie is the former President of J. P. Morgan Securities, with whom I had launched the CMBS business at J.P. Morgan, and is currently the Chief Operating Officer of The North Shore-Long Island Jewish (LIJ) Health System. Charlie had advised on strategies associated with seeking Bank sponsorship, serving as an effective and invaluable advocate, as well as provided the nuts and bolts guidance in setting up the investment banking side of the Project Atlas operation. As a result of significant market buzz about the launching of Project Atlas, on January 23, 2004, a cover page story on this exciting initiative appeared in Commercial Mortgage Alert, titled “CMBS Pro Planning Securitization Venture". After the story ran, Paul Fiorilla, The Managing Editor of this trade publication called me to say people at Morgan Stanley (most notably John Westerfield) had called him to say the article was “premature” because the initiative “would never happen” and he then proceeded to besmirch my professional abilities, and personal character, by referring to my past achievements as “hyperbole”.
Undaunted, Spencer Young formulated "Project Atlas" and recruited an impressive team of senior executives ("Principals"), many of whom were real estate- and capital markets-related group heads at insurance companies instrumental to the establishment of the IQ® brand. Client representation in Project Atlas included:
⇨AXA / Equitable
⇨John Hancock *
⇨State Farm *
⇨Union Central Life *
* IQ® transaction participant