At long last, Highland Capital Management of Dallas, Texas, has reached an agreement with RAIT Financial Trust. The alternative asset firm, founded in 1993 by James Dondero and Mark Okada, was entered into a cooperation agreement with the real estate investment trust, or REIT, that ensures that both parties are able to appoint desired trustees to its Board of Trustees. According to the terms of the agreement, two new trustees will be appointed based on recommendations by James Dondero and Highland Capital. One will take their post immediately, and the other will be appointed within 120 days of the finalization of the agreement.Additionally, Highland Capital Management and its affiliates have agreed to vote their shares in favor of the election of a slate of trustees that has been recommended by RAIT’s board during its annual meeting. Currently, 115 investors own RAIT Financial Trust. James Dondero and Highland Capital filed paperwork with the Securities and Exchange Commission, or SEC, reflecting that HCM owns a 5.9-percent stake in the trust, which is equivalent to nearly 5.3 million shares. This disclosure was made in November. With the cooperation agreement, Highland Capital will continue to own around 5.9 percent of RAIT’s outstanding common shares.
RAIT Financial Trust is a real estate investment trust, or REIT, that specializes in providing commercial real estate financing throughout the United States. It operates a widely respected, full-service commercial real estate, or CRE, lending platform that facilitates customized lending solutions to more effectively meet clients’ needs. Meanwhile, Highland Capital Management is a $15 billion alternative asset firm and hedge fund. With James Dondero at the helm, the firm has enjoyed one success after another since being founded in 1993. With the cooperation agreement in place, all parties are optimistic about a profitable future working together.To more properly understand the agreement between Highland Capital Management and RAIT Financial Trust, it helps to know more about Highland Capital’s president and co-founder, James Dondero. At just 54 years of age, Dondero has long been a force to be reckoned with within the industry. Born in Hoboken, NJ, Dondero spent time in Los Angeles, which is where Highland Capital was originally headquartered, before finding his way to Texas. He and co-founder Mark Okada relocated the firm to Dallas early on and have been content there ever since. The firm was a success from the very start. When you consider James Dondero’s background and track record, it comes as no surprise.
James Dondero did well in school as a kid, and he attended the University of Virginia. There, he studied accounting and finance. As a young man, he planned to break into the world of real estate investing. He had a head for numbers, but after completing college, he realized that real estate investing might not be quite right for him. Just five years after earning his college degree, Dondero was managing more than $1 million in fixed-income assets for American Express. That experience put him on the path that led directly to where he is today.Although James Dondero is a talented businessman and investor, he doesn’t just make money for the sake of making it. A philanthropic man, he is actively involved in many causes. For one thing, Dondero is a strong supporter of emerging non-profits. Through Highland Capital, he operates a $300-million donor-advised fund that provides around $3.5 million of funding to such non-profits per year. He also supports Reasoning Mind, a tech-based math curriculum for pre-K through seventh grade that is primarily used by under-funded schools in remote areas of the country.
Until the certification of the vote from RAIT’s 2017 Annual Meeting of Shareholders happens, the board will remain intact. Now that Highland Capital and James Dondero have a cooperation agreement in place with RAIT, however, there is no question about how everything will unfold at the meeting. Both Highland Capital and RAIT believe that the two new trustees will strengthen the board as a whole. This agreement is just the latest in a long history of successful collaborations and agreements that James Dondero has been a part of in his more than 30-year career. It will be fascinating to see where Highland Capital and RAIT go from here.