PHOENIX-Growing competition for core-plus and value-add assets, combined with mutual respect has led to a joint venture between local companies Cole Real Estate Investments and RED Development. The partnership is focused on retail asset and note acquisitions and recapitalizations west of the Mississippi River ranging between $15 million and $100 million.

Cole Real Estate Investments acquires and manages core real estate assets throughout the United States. RED Development, in the meantime, develops, leases, manages and markets assets to build their value. The partnership between these two companies was years in the making; RED Development’s managing partner Mike Ebert says there has been discussion, over time, about joining forces for various products. With the market shifting during the past two years, and with more value-add opportunities coming to market, “we’ve had more discussions about a programmatic joint venture during the past couple of months,” Ebert says.

Ebert and Cole’s executive vice president and head of real estate investments Thomas W. Roberts tell GlobeSt.com that the JV’s sweet spot is core-plus and value-add properties that are 75% or 80% leased, in good locations, with solid, credit-worthy tenants. “Some of these developments might have maturity defaults, have lost a tenant or be over-capitalized,” Roberts adds. “This is a good opportunity for us to expand our universe of products.”

The JV could also become involved in development, when feasible. Roberts says that, in a couple of years, when developments make sense, there could be build-to-suits involved for retailers unable to get into fully leased power centers. Developments could either be stand alone structures or small power centers with additional shop spaces. The latter, Roberts notes, would need to be substantially pre-leased.

Ebert says combining forces means Cole and RED will be better positioned against growing competition for core-plus and value-add assets. Both companies’ reputations, combined with performance track records, will help provide a good competitive advantage to sellers, he notes. “Ultimately, there are a lot of people looking at properties out there, and many will bid,” Ebert explains. “When it comes down to that final two or three, the ability to close and a strong track record makes more attractive buyers.”  

As does all-cash purchases. Roberts says Cole has paid all cash for acquisitions made during the past 18 months, and has refinanced after the deals closed. Buying all cash “allows us to be one of the front runners in that we have the ability to close quickly,” Roberts comments.