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Winnick's Pacific Capital Buys 70% Stake in Colony Capital


Los Angeles investor Gary Winnick, who built Global Crossing Ltd. into an international telecommunications player in three years, said Tuesday that he bought a majority stake in a real estate investment firm and will expand the company's investment focus into non-real estate ventures.

Winnick's Pacific Capital Group purchased a 70% interest in Beverly Hills-based Colony Capital Inc. Colony Chairman Thomas Barrack will become one of three managing partners of Pacific Capital.

Barrack is regarded as one of the most astute real estate investors in the country. He formed Colony in 1991 after managing money for Texas billionaire Robert Bass.

Colony has about $6 billion in real estate investments in four funds. Some of its investments include a controlling stake in Lake Tahoe, Nev.-based Harvey's Casino Resorts and Britain's Savoy hotel chain.

Winnick, who began talking with Barrack about a partnership late last year, said the marriage will provide Pacific Capital with a seasoned and respected research staff and will give Winnick a way to spread his personal wealth among more diverse investments.

After Pacific Capital created Global Crossing in 1997, much of the investment firm's staff was redirected to focus on building the telecommunications firm.

In an interview, Winnick said that he plans to "merge the people" of the two investment companies, but that the public funds will continue to be managed unchanged by the Colony staff, with private investments primarily made through Pacific Capital.

"Having good investments is also a function of having a lot of choices, and they have deal people all over the world," Winnick said. He said he plans to become a primary investor in future funds from the combined firms.

However, Winnick stressed that any telecommunications investments will steer clear of the markets that involve Global Crossing.

Bermuda-based Global Crossing, which has executive offices in Beverly Hills, is building a worldwide fiber-optic communications network and is the fifth-largest long-distance phone company in the United States.

Barrack said the partnership will be looking to make investments in businesses that are changing the real estate field, from switching facilities for telecommunications companies to temporary office providers.

"We're forming a business that will take advantage of dislocations and inefficiencies in the real estate market today," Barrack said. "In office buildings, for example, everybody wants less space, and they want the space they have to be more flexible."

Switching facilities are one particular business that has become hot on rising demand from telecommunications companies for properties to house their technical operations as they expand worldwide.


Bloomberg News was used in compiling this report.


* MUSEUM PROJECT: Gary Winnick donates $40 million for museum in Israel. A1

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