Retail JV Partners Seeding $1B Buy, Build Plan

Dallas-based Cypress has fielded the Carlyle Group in Washington, DC, as an equity partner to develop up to $500 million of new retail product plus structured a private REIT, Milestone Realty Trust Inc. with Presidio Merchant Partners LLC of San Francisco to spend up to $400 million on automotive-related properties. Another $200 million will come from the Cypress Acquisition Fund I, which closed in September. Cypress' eye to buy is retail, all the way down the line.

Until now, the eight-year-old Cypress' developments mostly fell in the $5-million range. The Carlyle relationship opens the door to $15-million to $50-million plays. "It's a different playing field. That's why we sought out a large institutional partner," Chris Maguire, CEO of Cypress Equities, tells GlobeSt.com.

The Cypress-Carlyle team is looking to develop $500 million of high-quality shopping centers and freestanding build-to-suits in the next 12 to 18 months, Maguire says. The building plan will be crafted by development partners in Dallas, Atlanta, New York City and San Francisco with a coast-to-coast reach. Leading Dallas is Jeff Coker; Atlanta, Scott Harrington; New York City, Steve Kushner; and San Francisco, Lloyd Goto.

Maguire, admitting to a delay in getting out the word, says projects are under way in Potomac Mills near Washington, DC, Las Vegas and Largo, FL. Another $300 million of projects are in the pipeline, but Maguire's not tipping his hand as to the locations.

Milestone Realty Trust has launched with Michael Burkitt, a 20-year professional at the helm of the Washington, DC-based operation. A buy-and-hold plan of dealership properties will target high-brow names like BMW and Mercedes Benz to the workingman's Ford and Chevy for a portfolio to encompass every automotive facet, including rental car companies. The goal is to spend $250 million to $400 million in 2004, Maguire says, adding the first closing for $100 million of properties now under negotiation will be in February or March.

Maguire is Milestone's chairman of the board; Burkitt, the CEO. It's a separate company with Cypress holding majority interest.

As for the Cypress Acquisition Fund I, the first asset rolled into the portfolio about three months ago: a 130,000-sf shopping center in McMinnville, OR near Portland. Maguire says there are no other properties under contract. It's not that the fund hasn't tried, but the retail acquisitions market, as everyone knows, is highly competitive these days. "We won't overpay," Maguire stresses of a buying strategy that he comfortably feels can spend $200 million of raised capital in a year to 18 months. Then, Cypress could go to market again for a second fund.

"There's no cap to what we can or can't do," Maguire explains. "These are just the steps toward those different initiatives that we may be involved with in the future.