Western Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in the Western United States.
Issue link: https://westernrealestatebusiness.epubxp.com/i/818922
60 • May 2017 • Western Real Estate Business www.REBusinessOnline.com BUYING OPPORTUNITY RCG Ventures seeks centers — and markets — with opportunities for growth and expansion. Now, the company is headed west in its search. By Randall Shearin R CG Ventures has been on a buying spree the past several years. The company, which acquires value-add centers through a series of opportunity funds, has also expanded its geographic footprint, opening a Los Angeles office to begin acquisitions in the western half of the United States. WREB's sister publication, Shop- ping Center Business, recently met with Brad Garner, chief financial officer and chief investment officer, and Mark Worley, president and chief operating officer, at the company's headquarters in Atlanta, to discuss RCG's growth plans, and its advancing position as a national shopping center owner. Opportunity Driven RCG has been active in the acquisi- tion of community and power centers since it was launched at the end of 2003. The company acquires through a series of funds, raised through pri- vate investors, and invests solely in retail properties. With its shopping center acquisitions, RCG tends to be more focused on the opportunity rath- er than a particular market. The com- pany likes properties that drive value for its investors. As it searches for those properties, it gets comfortable with the economies and demograph- ics of the markets after they fully un- derstand the potential opportunity of the asset. As a result, it tends to acquire a lot of properties in second- ary and tertiary markets, but has been known to buy in major MSAs as well. In all, RCG has purchased centers in 25 different states and currently owns properties in 22 states. "What sets us apart from most buy- ers is the ability to buy in a number of markets as well as a wide range of deal sizes," says Garner. "Our sweet spot ranges from properties valued at $7 million to $20 million but we have acquired individual deals as small as $2.5 million and as large as $50 mil- lion. We also acquired a $150 million portfolio from a public REIT in 2015. In addition, RCG has become more ac- tive on larger size projects, typically in a joint venture partnership." In 2016, industry veteran Mark Worley joined RCG as president and chief operating officer. Worley was previously president of the South- east region for Brixmor, and worked for New Plan Excel and predecessor companies for many years. He first came across RCG's principals when they all worked for separate firms in the Southeast. In 2002, NewPlan Excel acquired the assets of Equity Invest- ment Group, where Worley worked closely with EIG's founder, Michael Klump, who is now the Chairman of RCG Ventures. Mike McMillen, RCG's CEO, spent years at Regency Centers before founding his own firm prior to cofounding RCG in 2003. RCG has been most active in the Southeast, Midwest and Northeast. However, in January, it opened an of- fice in Los Angeles to focus on west- ern markets. RCG has been investigat- ing opportunities in the Western U.S. for the past several years and deter- mined its model of buying value add would translate. RCG's strong capital backing and infrastructure should al- low them continued success in these new markets. The West Coast office is headed by Scott Tarbet, senior vice president, who has worked on many of RCG's acquisitions. Thus far, the com- pany has acquired Sawmill Square, a Safeway-anchored 134,499-square- foot center in Cottonwood, Arizona, about 20 minutes from Sedona. RCG is also currently under contract on a 335,000-square-foot center in the Reno, Nevada, MSA. With Worley's experience at the na- tion's largest community shopping center owner, RCG now has the abil- ity to run multiple regional offices, which may enhance the company's growth as it moves forward. Today, RCG has 80 employees and has leas- ing, property management, construc- tion management, accounting, due diligence, legal and finance in-house. The company has nearly 100 proper- ties under ownership, comprising 11 million square feet with a market val- ue of over $1.25 billion. Fund Focused RCG looks for underserved oppor- tunities in strong secondary and ter- tiary markets with solid employment bases, universities or state govern- ment offices. The company's series of investment funds hold similar assets, but have all been launched at differ- ent times since the mid-2000s. The company is currently acquiring for its Fund IV, which expects to acquire ap- proximately $200 million to $250 mil- lion of assets. The company has de- ployed about 55 percent of the fund's equity and expects the remainder will be spent by the end of 2017. Among recent acquisitions for Fund IV are Valley Park Center, anchored by TJ Maxx, Belk, JC Penney, Ross Dress For Less and Petsmart in Russellville, Arkansas; Turner Hill Marketplace, a Toys "R" Us and Bed Bath & Beyond- anchored center in Lithonia, Georgia; Oak Brook Square, a TJ Maxx, Hobby Lobby and Dollar Tree-anchored cen- ter in Flint, Michigan; and 240 Penn Park, anchored by Michaels, Old Navy, Ross Dress for Less, Marshall's, Petsmart and Best Buy in Oklahoma City. At the end of 2016, RCG Ventures acquired Riverside Plaza, a center in Terre Haute, Indiana, which Garner says is typical of the centers the com- pany likes to purchase. Anchored by Burlington Coat Factory, the center is located in the area's top retail corridor, with rents well below market. Terre Haute is also home to four colleges and universities which create a stable economy for the region. "The retail market there has strong occupancy and barriers to entry are high," says Garner. "We were pleased to find this opportunity with below market rents and ability to redevelop the site over the next few years." Sawmill Square in Cottonwood, Arizona, is RCG Ventures' first purchase in the West. The 134,499-square-foot center is anchored by Safeway, OfficeMax and Family Dollar. PRIME SPACES NOW AVAILABLE KRISTIN AMBROSE @ 714.460.1564 NOW OPEN! Over 35K+ 1 Mile Population SHOP SPACE AVAILABLE OPEN SOON BRENDA BENTER @ 714.460-1500 LOS ANGELES La Cienega Blvd, Centinela Ave & La Tijera Blvd Up to 30,000 SF of Anchor, Jr. Anchor, Shop Space & Multiple Drive-Thrus OXNARD 135K+ CARS PER DAY!