Investec Raises $130M for West Coast Retail Acquisition

The retail specialist is looking to add to its 2 million-square-foot, $650 million portfolio.

October 7, 2010
By Barbra Murray, Contributing Editor

Investec has just raised $130 million to do some shopping along the California Coast from San Francisco to San Diego. The real estate investment firm’s new acquisition fund will target premier grocery- and drug-anchored neighborhood shopping centers to enhance the company’s current $650 million portfolio of high-quality owned and managed retail properties in the Golden State.

Contributors to the new investment vehicle consist of a group of family offices and high net worth individuals who clearly have faith in Investec, despite the still-challenged retail market. While the light at the end of the tunnel for national retail is not exactly blinding just yet, some sub-sectors have continued to fare relatively well during the economic crisis. “Not all retail is the same,” Ken Slaught, Investec’s founder and president, told CPE. “The average occupancy in our portfolio is 97 percent; at the peak, it was 98.5 percent. We think that is what helped us raise the money, because in the worst of times, we’re still at 97 percent occupancy.”

In its search for acquisitions, Investec will not be competing with investment entities that are eagerly snapping up, say, poorly leased assets with low price tags in anticipation of reaping financial rewards when the market stabilizes. “We’re not looking for distressed assets,” Slaught said. “The properties we buy are not distressed at all, they are typically the crown jewel of a seller’s portfolio.” In a $21 million deal in February, the company bought The Plaza at Sunbow (pictured), a 100,000-square-foot shopping center anchored by Ralph’s and CVS in San Diego.

The number of well-anchored and well-leased premier shopping centers along the California coastline is substantial enough to present Investec with a variety of options for the fund. “There are a fair amount of opportunities,” he added. “Most of those properties are off-market. Typically, sellers do not want people to know they are selling their crown jewels because it has a negative connotation that might be true or might not be true. They could just have cash flow needs somewhere else. Today, we see people selling key assets to reduce debt; a lot of companies are having to sell the good stuff. The economy has improved but it has not gotten dramatically better, it’s not on fire, so some owners are still gong this route to reduce debt.

Investec is already actively perusing the market for new purchases. “We do have a couple of deals we’re negotiating hard on. There are a couple in Northern California and a couple in Southern California, and they’re all within 15 miles of the ocean.”

Investec was founded in 1983 and has since handled more than a billion dollars in transactions. It is headquartered in Santa Barbara.