Crow Holdings Launches $2.6B Retail Platform

CityWest Retail Center, Houston. Image courtesy of Crow Holdings

Crow Holdings has formed a $2.6 billion joint venture and retail real estate investment platform with its investment management business, Crow Holdings Capital, and a global institutional investor to acquire additional small-format, convenience-oriented, open-air, food and service shopping centers.

The platform is an expansion of the firm’s retail investment strategy and will enable CHC to continue capitalizing on the opportunity to aggregate an institutional-quality portfolio in a highly fragmented market.

The platform was formed through a recapitalization of an existing $1.8 billion, 173-property portfolio owned by two real estate funds managed by CHC and includes a significant equity commitment to pursue new acquisitions. The plan is to continue to scale the business and establish the joint venture as the dominant, small-format food and service platform in the U.S. The seed portfolio has properties across primary and secondary markets in over 50 cities in more than 30 states, including CityWest Retail Center in Houston and Palms Plaza in Boca Raton, Fla. The portfolio focuses on dense and affluent markets located near major suburban population and employment hubs that benefit from positive net in-migration, record-low new supply and positive job growth.

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Sam Peck, CHC managing director, said in a prepared statement this segment of the retail sector presents a compelling opportunity for investors to partner with a manager like CHC with deep experience in the space during both positive and challenging market environments. He said they have a team of retail specialists who can implement a hands-on approach to increase property values. Peck noted the joint venture will provide an opportunity to aggregate high-quality but non-institutional-scale assets and unlock their growth potential by applying an institutional asset management framework.

Small-format retail centers’ resilience

Michael Levy, CEO of Crow Holdings, a Dallas-based national real estate investment and development firm, said in prepared remarks small-format retail centers are resilient and have strong leasing activity. Levy noted these types of food and service centers have succeeded where other, more goods-based retail has been negatively affected. He said they see further opportunity to be the leading institutional player in that part of the retail market.

Palms Plaza, Boca Raton, Fla. Image courtesy of Crow Holdings

While much of Crow Holdings’ recent transactions and developments have involved the industrial sector, last year the firm sold the 60,000-square-foot, multi-building portion of The Shops at Eastlake Terraces, a retail and community center in Chula Vista, Calif., to Gershman Properties for $47.8 million. In early 2016, CHC closed Crow Holdings Realty Partners VII at $1.85 billion in capital commitments. The fund made investments in assets in industrial, retail, office, multifamily, convenience stores and gas stations, hotel and self storage. CHC Real Estate in June 2015 had closed its inaugural Crow Holdings Retail Fund at $295 million. That fund was created to invest in small, well-located retail properties with an initial purchase price of $17.5 million or less.