Leonard A. Silverstein, senior counsel with Dentons/courtesy photo

Lenny Silverstein has returned to law practice by joining Dentons, after more than a decade running Preferred Apartment Communities, the publicly traded REIT which he co-founded with Atlanta apartment guru John Williams. 

Silverstein joined Dentons as senior counsel, the firm announced late last month, practicing securities and corporate finance law, just as he did at Denton's predecessor firm, McKenna Long & Aldridge, before becoming Williams' business partner in 2005. 

"I've come full circle. I have the law background and experience applying it to the practical business issues and the environment in which people work," Silverstein said, noting that his arrangement with Dentons allows him to pursue other business opportunities and investments.

Silverstein stepped down as president and COO of Preferred Apartment Communities in early March, after overseeing its Jan. 31 merger with an external management company. In May, he also stepped off the board, where he was vice chairman. "We put together a management team, and it was time for them to take it to the next level," he said.

The publicly traded REIT reported $4.8 billion in assets and $470 million in annual revenue last year, with 500 employees. Silverstein said its assets are about 60% multifamily properties, with the rest split between Class A office buildings and grocery-anchored shopping centers. 

"I think I would go crazy being retired," Silverstein said of his decision to join Dentons. "I have a lot of knowledge that I can share with the law firm and clients."

After leaving Preferred Apartment Communities, Silverstein said, he started talking with Dentons' Atlanta managing partner, Sharon Gay, who'd been a colleague at McKenna, about his next move. 

"I thoroughly enjoyed my time at [McKenna and Dentons predecessor] Long Aldridge & Norman," Silverstein said, adding that he views Dentons as an outgrowth of the earlier firm. 

"I know a lot of the partners at Dentons today, because I'd practiced with them—and I knew the reputation of the firm. Dentons is not only an amazing law firm in the United States but internationally," he said. "It opens up a whole other set of horizons."

Silverstein will work with public companies, REITs and other real estate and health care companies, advising on securities, corporate finance and M&A. He also plans to draw on his experience at Preferred Apartment Communities to advise clients on building a company and deciding whether to take it public or stay privately owned.

Innovative financing

Williams, who died in 2018, was one of Atlanta's best-known real estate developers. He founded iconic Atlanta company Post Properties in 1970 that pioneered the garden apartment concept, featuring lush landscaping and amenities. Post grew to more than 30,000 apartments, and Williams took it public as a REIT in 1993 before retiring from the company in 2003.

Silverstein became Williams' personal lawyer in 2002, when he was a partner at McKenna, and then became Williams' business partner in 2005. They started three private real estate funds, raising about $500 million in capital, Silverstein said, used to invest in, own and manage $1.5 billion in real estate. 

But when Silverstein and Williams started talking about getting back into the apartment investment business in the fall of 2009, he said, "real estate pretty well had died during the recession," which made raising capital a challenge. Traditional investment sources—the public markets, high net-worth investors and overseas money—had dried up, he said.

To start Preferred Apartment Communities, Silverstein conceived of a new capital source—selling preferred stock through broker-dealers and investment advisers, which he said had continued raising billions of dollars during the recession selling securities in nonpublicly traded REITS. 

But Silverstein and Williams wanted to make their REIT, investing in multifamily properties, publicly traded—at a time when stock exchanges were in a slump. So they used a hybrid mechanism, Silverstein said, raising the first $50 million through an initial public offering on the American Stock Exchange (moving later to the New York Stock Exchange), and then selling preferred stock through broker-dealers and investment advisers to raise additional capital. 

"It was a brand-new asset class of securities that we were the first to use," Silverstein said.

The IPO succeeded, despite the recession, he said, because of "John's reputation and background as a real estate icon," while, as the securities and finance lawyer, he "brought the structure and organizational part."

"The fun part was convincing the SEC, FINRA and the stock exchange that we could do an IPO to launch—and that the novel concept of creating preferred stock to sell through independent broker-dealers and investment advisers would work," he added.

Silverstein noted that Preferred Apartment Communities has sold close to $2.3 billion in preferred stock through those channels and said multiple other REITS have adopted the investment mechanism.