ACH - Shopping Center Business Article

ACH - Shopping Center Business Article

ALBANESE CORMIER

Making Secondary Stars Shine Albanese Cormier mines for potential in secondary markets and applies a proven formula of aggressive tenanting and physical upgrades to achieve success.

Lynn Peisner

Albanese Cormier’s Renaissance Square in Fort Worth, Texas, is a 105,605-square-foot center with Hibbett Sports, Marshall’s, Ross Dress for Less and Dollar Tree.

B eaumont, Texas-based Albanese Cormier Holdings (ACH) is in growth mode, fueled by a tried and true model of acquiring shopping centers with national tenants in secondary and tertiary markets. President Michael Albanese cut his teeth on this asset type. He bought his first center, Mid County Shopping Center in Nederland, Texas, while he was one of the tenants. That was back in 2001. The seller, Weingarten Realty, set the tone for how ACH would run its business. “We created a philosophy early on that we would own, we would manage, and we would lease,” says Albanese. “We’ve always kept everything in-house. On those first shopping centers, my brother Eldon

was the property manager, I was the leas- ing manager. Because our only experience was with a large REIT, we modeled this small company after a REIT and tried to grow the business in that fashion.” Today, with a staff of approximately 20 employees, ACH owns 80 properties in 22 states. ACH isn’t afraid of the risk that typically surrounds non-core shopping centers with some deferred maintenance and a few vacancies. Last year alone was proof of that. ACH completed approxi- mately $80million in acquisitions in about 900,000 square feet of space through multiple centers. “For a little, boutique firm, that keeps us pretty busy,” Albanese says. The goal is to acquire between $70 million to $100 million each year, while

disposing at a much slower rate. ACHsees opportunity inproperty types that don’t always splash up the news pag- es of the retail real estate industry’s larger players. But ACH leverages scale and ex- perience to make this opportunity work. The company does go into smaller mar- kets for regional or neighborhood cen- ters with vacancies. But they are looking carefully at locations and ensuring there is enough real estate for future growth. ACH follows certain tenants that are in- dispensable in most people’s daily lives. Through capital improvements and ag- gressive leasing, ACH has found success sticking with a certain stripe of tenants that remain internet-resistant. You’ll most often see a fitness tenant,

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ALBANESE CORMIER

including Planet Fitness, Crunch and Anytime Fitness, restaurants, dollar stores and cellular carriers. Albanese says that while the company is in full support of mom-and-pops and small-business entre- preneurs, you’ll mostly find only national names at their centers. “We have over 120 restaurants and fast food locations within our portfolio, and the deep-discount re- tailers are our biggest tenants nationally. Dollar Tree is actually our largest tenant on a national basis,” says Albanese. Newport Shopping Center inNewport, Kentucky, is a good gauge for the type of center ACH seeks. In fact, Albanese calls this center “the poster child for what we like to buy.” The 264,196-square-foot cen- ter is located within a 10-minute drive of Cincinnati and is on a parcel with excess land for potential expansion. Tenants include Crunch Fitness, Ace Hardware, DollarGeneral, FamilyDollar,GameStop, GNC, Hallmark, H&R Block, Sally Beau- ty Supply and Taco Bell. “We’re typically looking for a larger center with true upside potential,” says Albanese. “Whether it’s through vacancy and our ability to lease up space. And we don’t mind spending money on tenant improvements.” Typical improvements include new roofs and new facades. “We are certainly reinvesting in the centers. That’s really important.” Albanese says these improvements are especially essential when dealing with national tenants who the company wants to continue to do business with in future deals. “We want them to know when they’re in an Albanese Cormier center that they’re well taken care of.” For ACH, trade areas aren’t evaluated by the immediate radius surrounding the center. “You get into these smaller mar- kets, and you start seeing a phenomenon that we’ve always believed in and we’ve al- ways chased,” says Albanese. “There’s just so much opportunity when your market really spreads out. Many times, it’s not a five-mile demographic when you get into these smaller cities.” ACH also likes to take on a vacancy op- portunity in a big box and lease to some of Albanese Cormier owns Fairview Park Plaza in Centralia, Illinois. The 274,215-square-foot center is anchored by Schnuck’s, Hibbett Sports, Goody’s and AMC Theatres.

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ALBANESE CORMIER

centers and our business model,” says Albanese. ACH made a decision early on that geographical barriers wouldn’t be placed on acquisitions so long as centers met the company’s investment criteria. The ten- ants and categories ACH is attracted to lead to themarkets where they invest. “We love Ross, we love Dollar Tree, T.J. Maxx, Marshalls, Planet Fitness, cellphone users — we believe in the markets they believe in. These are they guys we run with, and we’re very proud of how they run their businesses. When they do well, we do well. I believe we were among the first companies that were looking at whether a shopping center was internet-resistant.” Many ACH acquisitions follow the his- torical arc of some of the larger REITs’ previous footsteps. Sellers have included Weingarten Realty and Phillips Edison. “They purchased a lot of DDR centers back in the day, and we ended up with several of their properties. They built their company on a similar philosophy of going into these smaller markets. Same with Weingarten. They’re who put us in Lake Charles, Louisiana and Nederland, Texas.” Using its own equity and unburdened by multiple outside investors or lenders, the company is nimble and can act quickly. “We are buying, and we’ll look anywhere in the country,” says Albanese. “We’re in California, we’re in Florida, and we’re everywhere in between. We are definitely open for business, and we are looking for opportunity.” SCB

Located in Newport, Kentucky, is Newport Plaza. The 161,734-square-foot center is anchored by Fresh Thyme Farmer’s Market, Dollar Tree and A.C. Moore.

the tenants the company regularly works with. ACH did that at Jefferson Square Shopping Center in Pine Bluff, Arkansas. That property was purchased in Decem- ber 2013. A 60,000-square-foot vacant grocery store was backfilled with Planet Fitness and Ollie’s Bargain Outlet.

“Backfilling the big box space at Jeffer- son Square as quickly as we did was do- able in large part due to the great working relationships we have with several nation- al tenants that seem to really flourish in secondary and tertiary markets. And that really makes them an ideal fit for our

‘We’re typically looking for a larger center with true upside potential,’ says Albanese. ‘Whether it’s through vacancy and our ability to lease up space. And we don’t mind spending money on tenant improvements.’ Typical improvements include new roofs and new facades. ‘We are certainly reinvesting in the centers. That’s really important.’

Newport Shopping Center in Newport, Kentucky, is anchored by Crunch Fitness, Dollar General, Family Dollar and Ace Hardware. The center is 264,196 square feet.

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