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BLOOMINGTON, MN-United Properties has combined with Lutheran Brotherhood to establish a new venture with some $100 million to $150 million that will specialize in developing or buying neighborhood retail centers anchored by grocery stores. Called Midwest Retail LLC, the investment fund will focus on 15 regional markets in the Upper Midweststates of Minnesota, Iowa, Wisconsin, North Dakota and South Dakota, as well as Nebraska, says John Breitinger, vice president at Bloomington, MN-based United Properties and general manager of the fund.

“The bulk of our portfolio has been in office and industrial properties, and several years ago we started exploring for ways to invest in a sector thatdoesn’t have the same business cycle,” Breitinger says.

Because Breitinger has a background in retail real estate, that was a natural sector to take a look at.

The investment target is very specific: the typical neighborhood center would be 100,000 sf including a 65,000-sf grocery store, he says.

More than a year ago, United Properties ventured into this arena by buying First Center South, a 120,000-sf center based in Fargo, ND. The family of Ronald Offut, a successful Fargo businessman, had owned the center. In that deal, Kansas City-based Kissinger Hunter represented the Offut family, and a Fargo mortgage banker named John Dahlin represented United Properties.

Although initially Breitinger thought the fund would stay away from buying properties in the Twin Cities, as he thinks the prices would be too high, he islooking at several deals in that area.

The Midwest Retail fund also has two deals under agreement, two more under letter of intent, is talking with four other centers, and has a half dozen more centers in the development pipeline. Breitinger says he expects the fund will fill out by the end of next year or early 2003, and he would anticipateestablishing another similar fund at that point.

The fund is not aimed at quickly “flipping” the properties, but is oriented to be a “medium-term” holder of the properties.

“I would expect it to be a perpetual business,” Breitinger says.

Lutheran Brotherhood is a Minneapolis-based life insurance company.

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