This Veteran Development Team Has a New Firm

LOS ANGELES—Development veterans Bill Witte and James Ratkovich launch a multifamily development and investment platform at Salem Partners, a successful private equity firm with a significant presence in the entertainment, life science and aerospace fields. Witte joined the firm four years ago as president of the firm's private wealth management group. The development platform is the firm's fourth vertical platform, and Ratkovich and Witte will lead the group. To find out more about the development platform, including the strategy, focus markets and the firm's projects, we sat down with Witte and Ratkovich for an exclusive interview.

GlobeSt.com: What is your development strategy, and what are the market drivers behind it?

Witte and Ratkovich: Our development strategy presently is to find well-located redevelopment opportunities that provide a reasonable cash flow while we pursue new or additional entitlements.  Ideally, we are involved in infill projects in high barrier to entry markets. In Honolulu for example, we were able to assemble two large parcels of infill properties within the new Ala Moana TOD District.  It is extremely difficult to aggregate large parcels in the Ala Moana/Waikiki area.  These parcels had operating businesses in place at the time of acquisition.  The first property closed on June 13, 2014,  One week later, the Mayor of Honolulu signed the Interim Transit Oriented Development (TOD) legislation (IPD-T) allowing for bonus density on catalytic and transformative projects within the Ala Moana TOD Planning area. We were able to work closely with the Honolulu Department of Planning and Permitting, City Council and the Mayor's office to create a plan for an iconic hotel and condominium project across from the Hawaii Convention Center, at the intersection of Kapiolani Blvd. and Atkinson St., which serves as the gateway to Waikiki from Ala Moana and the gateway to Ala Moana from Waikiki.  When completed, owners and guests will be able to walk to the largest outdoor mall in the United States (Ala Moana), walk to Waikiki, walk to Ala Moana Beach Park, or hop on the new rail at the station to be built down the street and travel to the airport or Kapolei.  This 40-story tower was the first project to apply for and the first to be approved under the new IPD-T ordinance.  We have a second, larger project currently preparing for submittal under the ordinance located approximately 1,000 feet from the first, directly across the street from the main entrance to the mall.

GlobeSt.com: You recently broke ground on a new project in Hawaii. Tell me about the project and your interest in the Hawaii market.

Witte and Ratkovich: Approximately 3 weeks ago we received our entitlements on our 40-story luxury hotel and condo project across from the Convention Center. James Ratkovich has been developing in Hawaii for over 20 years, and has strong ties to the Hawaii development community.  He is also very involved with the Urban Land Institute (ULI) serving in a leadership capacity on its national Urban Development Mixed-use Green Council.  His 20-year affiliation with ULI has created a great interest in Transit Oriented Development, including service on ULI sponsored TOD taskforces.  The opportunity to combine a historic presence in Hawaii with a groundbreaking TOD opportunity was too good to pass up.  Bill Witte also had previous Hawaii experience as part of the ownership team that acquired the Fairmont Orchid at Mauna Lani several years ago.

GlobeSt.com: What other markets are you focusing on any why?

Witte and Ratkovich: We currently have over one million square feet under development in Honolulu, a recently entitled high-rise site in Berkeley, and investments in Pasadena, in two mixed-use projects.  We are currently looking at opportunities in Los Angeles, San Francisco, Las Vegas and San Diego.

GlobeSt.com: What is the capital source behind the these projects?

Witte and Ratkovich: Salem Partners invests our own capital as well as on behalf of our 35 families currently part of our Salem Private Wealth Management division, managed by Mr. Witte.

GlobeSt.com: Some developers are slowing down in anticipation of a downturn or plateauing, especially this late in the cycle. Do you have any concerns about starting a development company now?

Witte and Ratkovich: We don't look at it as starting a development company.  This is something Bill and I have been doing for the past 30 years. The opportunity to work with great people and knowledgeable investment partners is extremely compelling.  As long as we remain disciplined in the projects and properties we pursue, our ability to react swiftly with in-hand capital sources will allow us to be extremely opportunistic in the market.

LOS ANGELES—Development veterans Bill Witte and James Ratkovich launch a multifamily development and investment platform at Salem Partners, a successful private equity firm with a significant presence in the entertainment, life science and aerospace fields. Witte joined the firm four years ago as president of the firm's private wealth management group. The development platform is the firm's fourth vertical platform, and Ratkovich and Witte will lead the group. To find out more about the development platform, including the strategy, focus markets and the firm's projects, we sat down with Witte and Ratkovich for an exclusive interview.

GlobeSt.com: What is your development strategy, and what are the market drivers behind it?

Witte and Ratkovich: Our development strategy presently is to find well-located redevelopment opportunities that provide a reasonable cash flow while we pursue new or additional entitlements.  Ideally, we are involved in infill projects in high barrier to entry markets. In Honolulu for example, we were able to assemble two large parcels of infill properties within the new Ala Moana TOD District.  It is extremely difficult to aggregate large parcels in the Ala Moana/Waikiki area.  These parcels had operating businesses in place at the time of acquisition.  The first property closed on June 13, 2014,  One week later, the Mayor of Honolulu signed the Interim Transit Oriented Development (TOD) legislation (IPD-T) allowing for bonus density on catalytic and transformative projects within the Ala Moana TOD Planning area. We were able to work closely with the Honolulu Department of Planning and Permitting, City Council and the Mayor's office to create a plan for an iconic hotel and condominium project across from the Hawaii Convention Center, at the intersection of Kapiolani Blvd. and Atkinson St., which serves as the gateway to Waikiki from Ala Moana and the gateway to Ala Moana from Waikiki.  When completed, owners and guests will be able to walk to the largest outdoor mall in the United States (Ala Moana), walk to Waikiki, walk to Ala Moana Beach Park, or hop on the new rail at the station to be built down the street and travel to the airport or Kapolei.  This 40-story tower was the first project to apply for and the first to be approved under the new IPD-T ordinance.  We have a second, larger project currently preparing for submittal under the ordinance located approximately 1,000 feet from the first, directly across the street from the main entrance to the mall.

GlobeSt.com: You recently broke ground on a new project in Hawaii. Tell me about the project and your interest in the Hawaii market.

Witte and Ratkovich: Approximately 3 weeks ago we received our entitlements on our 40-story luxury hotel and condo project across from the Convention Center. James Ratkovich has been developing in Hawaii for over 20 years, and has strong ties to the Hawaii development community.  He is also very involved with the Urban Land Institute (ULI) serving in a leadership capacity on its national Urban Development Mixed-use Green Council.  His 20-year affiliation with ULI has created a great interest in Transit Oriented Development, including service on ULI sponsored TOD taskforces.  The opportunity to combine a historic presence in Hawaii with a groundbreaking TOD opportunity was too good to pass up.  Bill Witte also had previous Hawaii experience as part of the ownership team that acquired the Fairmont Orchid at Mauna Lani several years ago.

GlobeSt.com: What other markets are you focusing on any why?

Witte and Ratkovich: We currently have over one million square feet under development in Honolulu, a recently entitled high-rise site in Berkeley, and investments in Pasadena, in two mixed-use projects.  We are currently looking at opportunities in Los Angeles, San Francisco, Las Vegas and San Diego.

GlobeSt.com: What is the capital source behind the these projects?

Witte and Ratkovich: Salem Partners invests our own capital as well as on behalf of our 35 families currently part of our Salem Private Wealth Management division, managed by Mr. Witte.

GlobeSt.com: Some developers are slowing down in anticipation of a downturn or plateauing, especially this late in the cycle. Do you have any concerns about starting a development company now?

Witte and Ratkovich: We don't look at it as starting a development company.  This is something Bill and I have been doing for the past 30 years. The opportunity to work with great people and knowledgeable investment partners is extremely compelling.  As long as we remain disciplined in the projects and properties we pursue, our ability to react swiftly with in-hand capital sources will allow us to be extremely opportunistic in the market.