(For the record, the assets are being brokered by Eastdil Realty and CB Richard Ellis.)

GlobeSt.com: What exactly is the connection between UIA and Starwood?

Wennett: We've been working with Starwood since 1998. Our venture, Urban Investments Advisors, is the exclusive advisor to Starwood Urban LLC, which is a venture between Starwood Opportunity Fund V. That, in turn, is part of Starwood Capital and Wennett Urban Retail LLC, which is a partnership that I control.

GlobeSt.com: What other areas is UIA involved in?

Wennett: We do asset management, leasing, finance, construction management, acquisitions and accounting.

GlobeSt.com: How does your portfolio shape up beyond the Starwood thing?

Wennett: It's mostly one-off purchases with institutional investors, high-worth individuals or by ourselves. Our most recent acquisition was through an entity that's an affiliate of UIA called G-town LLC 1. We purchased 1611 Wisconsin Ave. in the Georgetown section of Washington, DC. We've leased it to Commerce Bank, their first branch in the District.

GlobeSt.com: So give us a break down of the new deal's parameters.

Wennett: The minimum asking price is $100 million on the mixed-use asset and $400 million on the portfolio. We expect to close in the third quarter.

GlobeSt.com: Who are your target buyers?

Wennett: These properties are fully leased and stabilized. It's a portfolio of some of the finest urban retail and mixed-use properties in some of the best markets--Boston, New York, Washington and Miami. So we expect the buyers to be other institutions, foreign investors and high net-worth individuals who want diversity of cash flow in extremely stable markets.

GlobeSt.com: What's their upside?

Wennett: We believe there's a lot of upside both in terms of contract rents and future percentage rents--because a majority of the income comes from the retail portion of the portfolio--and the majority of our leases have contractual step-up rents on an annual basis. So there'll be a continual upside there.

GlobeSt.com: Can you quantify it?

Wennett: For example, in properties we've bought since 1998, through our renovations and our re-tenanting program, rents have doubled and in some cases more than doubled. We have some properties now where rents are approaching 150 to 200 per sf. Many of our retail tenants were already reaching their break points, so the growth will come as more tenants reach those break points and they pay their percentage rent. We also have some undeveloped parcels in the portfolio, which provides the opportunity for additional upside.

GlobeSt.com: Where are you now in the process?

Wennett: We're in the market now, and we'll be calling for offers at the end of June, early July. We expect to select a purchaser by mid-July and have due-diligence completed by September.

GlobeSt.com: Do you have any fear that the properties won't move before the election and you-know-what starts to happen with interest rates?

Wennett: There's no pressure to sell whatsoever, and unless we achieve the price we're asking, we'll continue to hold. But these assets will achieve the price. Given these locations, we don't think these properties are particularly influenced by interest rates. These are not commodity properties.

Instant Insights /

Robert Wennett Of Urban Investments

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