Greenhill partner builds reputation as expert in investment banking : Krause combines relationship building with extensive real-estate knowledge to engineer deals in multiple areas

Hotel & Motel Management, August 14, 2000 by Robert A. Nozar

Relationships, religion and real-estate are foremost in the mind of Peter Krause, who has ridden a 26-year career on Wall Street to become one of the leading investment bankers not only in lodging real-estate but real-estate of many varieties.

For Krause, the 1996 decision to leave his position with Morgan Stanley & Co. and become a founding member and managing director of Greenhill & Co. was a logical step in a career that has run the gamut.

With Morgan Stanley, he spent time as chairman of the board of Red Roof Inns, guiding the economy chain through the period of transition that followed its sale by the Trueman family after the death of James Trueman. As an investment banker at Greenhill, he has arranged the sale of properties such as the Ritz-Carlton Laguna Niguel (Calif.) on behalf of the Prudential Insurance Co. He currently represents The Carlson Cos., creating its new fund for Radisson and Regent hotels with Olympus Real Estate Corp. Krause also is representing Causarina Holdings in its bid to acquire Lodgian.

Outside lodging, Krause and his colleagues also recently closed transactions in the multifamily housing (Berkshire) and office/industrial (TriNet Leasing and Starwood Financial) sectors.

"I had done all sorts of hotel deals, and with Red Roof, I saw an opportunity to buy a company that was undercapitalized," Krause said. "It was one of my most successful hotel deals."

Krause hired the management team that included Francis "Butch" Cash as c.e.o., which took a lodging product that was strong in certain regions of the country and made it a national force in its niche.

"I had known Butch and was thrilled to get him to run Red Roof," Krause said. "He was very successful in that role. He did a great job."

Before the Red Roof deal, Krause was a managing director in the real-estate department of the investment banking division of Morgan Stanley. He founded and managed the Lodging & Leisure Group at the company and was a member of the investment committee of The Morgan Stanley Real Estate Fund.

When Robert F. Greenhill, the former president of Morgan Stanley Group and founder of Morgan Stanley's mergers-and-acquisitions department, founded Greenhill & Co. in 1996, Krause saw a career move taking shape.

"I was the second partner in the door after Bob," Krause said. "We've since done mergers and acquisitions all over the world."

That's satisfying for Krause, but he never strays far from the other two "Rs" in his life. For Krause, the relationships he has established in the business world are important, but the relationships he has with his own family are even more integral in guiding his life. Mention family, and he recounts stories of his three children, specifically their academic successes and the careers to which they are advancing--14-year-old Peter Jr. at Manhattan's Regis High School, and daughters Christina and Molly, who both attend Harvard College. His wife, Alice, a former v.p. at Chase Manhattan Bank, and he form a team as national co-chairs of the Harvard College Parents Fund. Previously, they were trustees of The Convent of the Sacred Heart School.

"We love being together, going on vacations, [and] just being a family," Krause said.

Cash, now the president and c.e.o. of La Quinta Inns, counts Krause as one of his most important contacts in the hotel industry.

"Peter is one of the most effective investment bankers that I've known in the hotel industry," Cash said. "Peter's greatest strengths are his people skills. He knows all of the key decision makers. He's always trying to figure out ways to create value for his clients.

"Peter not only works hard as an investment banker but is a very family-oriented person who makes sure he spends quality time with his wife and family."

Making time for the private side encompasses devotion to his creator. When Cardinal John O'Connor, archbishop of New York, died in May, Krause bid farewell to a friend for whom he served as honorary usher at St. Patrick's Cathedral.

"I was honored to serve a man who cared about everybody--workers, the sick, those needing an education, a home, a meal," Krause said. "He was a wonderful priest."

O'Connor was the third New York archbishop Krause served, and he occasionally continues to fill a role as an altar server for the rector of St. Patrick's.

"My office is around the corner (West 52nd and Fifth Avenue) from the cathedral," Krause said. "Monsignor Anthony Dalla Villa celebrates the noon Mass, so it's easy to be there to help."

Sometimes Peter Sr. and Peter Jr. handle the altar server tasks together.

"What I do in business and family is always influenced by my faith," Krause said.

What Krause, Greenhill, the other seven partners and the 70-plus other employees of Greenhill & Co. do in business, Krause said, is use its more than 200 years of combined worldwide investment banking experience to provide expert advice on mergers, acquisitions and related transactions in a wide variety of industries.

Krause is chairman and founder of Greenhill's real-estate principal investment vehicle, The Barrow Street Real Estate Fund.