Real estate investment firm takes road less traveled, gets results | Crain's Washington D.C.

Real estate investment firm takes road less traveled, gets results

Asana Partners’ three principals are (from left) Terry Brown, chairman and CEO; Sam Judd, chief investment officer; and Jason Tompkins, president and chief operating officer. | Photo courtesy of Asana Partners

As trailblazers in real estate investment, Asana Partners have had little trouble finding folks willing to bet on their success.

The Charlotte-based company recently closed on a $500 million fund that’s among a handful of investment vehicles in its niche. Despite a novel approach to investing, Asana was able to win backing in a nine-month period, largely from institutional investors.

Asana Partners Fund I is targeting retail property, a sector that’s under siege by online shopping. But Asana isn’t interested in strip centers with big-box stores or suburban malls. Instead, the company is targeting the niche of properties in strong urban markets offer “an engaging and differentiated consumer experience,” says Sam Judd, chief investment officer.

Think of a property with tenants such as a gym, a boutique and a restaurant that’s flanked by neighborhoods that generate pedestrian traffic. The properties may have office tenants and residential as well. Retailers in these properties are less likely to be affected by the Amazons of the world, unlike suburban malls.

Many of these properties also lack institutional management, which provides an opportunity for Asana to tweak the tenant mix and raise lease rates. One local example is Park Road Shopping Center. Its revamping under the ownership of Edens shows how a change in management can boost operating results. Some new tenants, higher rates and the development of the center’s rear portion are paying dividends for Edens, which bought the center in 2011.

Prior collaboration

The three principals at Asana spent many years together at Edens, where they handled the acquisition of Park Road Shopping Center and pushed the company to new heights, developing and renovating shopping centers. Judd spent nine years there, while Jason Tompkins served as its CFO for 11 years and Terry Brown was CEO or chairman for 13 years.

Geoff Millerd, head of retail investment sales at Newmark Grubb Knight Frank in Boston, has known Asana’s principals for many years and says their track record at Edens eased the capital raise for the new fund. “Investors want to know, 'Who am I investing with?,'” Millerd says. “They are incredibly talented people.”

Millerd was involved in deals worth roughly $700 million with them at Edens.

"I love their business plan,” he says. “They will unlock a lot of value” by buying properties from owners who aren’t efficiency-minded. “They can be mom-and-pop owners who inherited the property and have no pressure to maximize rents, or they’re not aware of the best tenant mix,” Millerd says. Asana, he said, is “ahead of the curve in finding opportunities in the urban edge.”

Tompkins says the firm’s “value-added activities are very similar to what we executed on at Edens,” but “the nuance is the asset class. We’re focused on more granular assets that are below the radar screen of the typical institutional buyer.”

Retail conversion

One example is the Design Center of the Carolinas, a three-building complex totaling 167,000 square feet that Asana bought in late 2016 for $42.7 million. Most of the property is leased for office use; Pike’s restaurant was the lone retail tenant at the time of the acquisition. Asana plans to convert at least half the space to retail. Judd expects the main building to become filled with restaurants and entertainment venues that open to its large interior courtyard.

The South End setting also puts the Design Center in Asana’s sweet spot. Some 6,000 apartments are built or under construction nearby, and the neighborhood is seeing an influx of office development. That will drive pedestrian traffic to the property’s specialty food and retail offerings, Judd notes. And while the Design Center will open a 520-space parking deck in March, the light-rail train that runs by the property will deliver customers, he adds.

Asana has a three- to seven-year timetable for each investment, Tompkins says.

“It has to be an asset we can put our fingerprints on. If a property has long-term leases that can’t be changed in that time, then it’s not an opportunity for us,” he says.

Asana is looking for opportunities for its fund in Charlotte and 10 other markets, including Raleigh-Durham, Atlanta, Nashville, Washington, D.C. and Austin. It will be able to leverage the fund to buy $1.2 billion in real estate. By early February, it had committed roughly 30 percent of the total. The company expects to target other markets, including the West Coast, in future funds.

Judd says Asana’s strategy could change over time, but he expects the three principals to continue pairing capital with opportunities in retail properties. “This is our last stop career-wise,” he says. “We have created a generational, sustainable company.”

February 13, 2017 - 1:37pm