it in the industry together after each had successful careers in corporate America. Carter had experience originating construction loans for Continental Bank before heading the Western commercial real estate division of Westinghouse Credit Corp. in California, and Primo rose through the ranks at Citicorp to head up its Midwest real estate investment banking operations.
At the start of the 1990s, the pair intended to start a real estate asset management firm. But breaking into the real estate investment advisory business was particularly challenging. The country was mired in a recession, the real estate market was hard hit, and no established white-owned firm in the U.S. was willing to take a chance on two relatively unknown black men in such poor market conditions.
After many failed attempts to obtain startup capital from U.S. firms, Primo and Carter decided to look overseas. They reasoned that they knew the U.S. market better than any European firm — so race would be less of a factor — and that it was a good time for a foreign firm to buy into the American market since real estate prices were depressed. So they approached Chesterton International, a 200-year-old, London-based real estate company.
Chesterton initially wanted to purchase a pension fund advisory business to provide it access to the U.S. market, but was persuaded to consider another option. “We presented Chesterton with our business plan, which said we needed $2 million to $3 million in capital to start the business,” says Carter, an MIT graduate. “They told us they would give us $100,000 of the first million and see what we did with it.”
Primo and Carter used Chesterton’s initial investment to cover operating expenses until they got their first big break in 1993, when the state of Connecticut gave them $100 million of the state’s pension fund to manage, which they placed mostly in real estate investment properties.
By 1997, Primo and Carter were already managing pension fund assets of a number of institutions. They adopted a strategy of acquiring financial services firms that could create several revenue streams and provide a solid base of capital and contacts they could use to defeat competitors. To diversify into the multifamily mortgage lending business, they acquired the delegated underwriter and servicing (DUS) lending division of First Tennessee Bank, which was trying to get out of the business. This allowed Capri to easily meet the stringent approval and $7.5 million net worth capitalization requirements to become a designated Fannie Mae lender. Approvals for Federal Housing Administration and Freddie Mac lending were also easier to obtain because Capri owned an entity that already had a track record in the government lending business.
Vince Toye, vice president of multifamily sales and marketing at Fannie Mae, says, “In 1997, Quintin and Daryl came to Fannie Mae with a business plan, and they had a service and niche they wanted to provide to us. They also had backers and supporters, and we felt they could bring us business we weren’t getting.”
STEPPING OUT ON THEIR OWN
Confident in their ability to