Crow Holdings Ramps Up 'Anti-E-Commerce' Retail Strategy With $2.6B Joint Venture
Crow Holdings is doubling down on its commitment to retail with the creation of a $2.6B joint venture and investment platform aimed at acquiring shopping centers.
The investment vehicle was formed through the recapitalization of a $1.8B, 173-property portfolio owned by two real estate funds managed by Crow Holdings Capital, according to a news release. The partnership with an undisclosed global institutional investor will allow Crow to pick up small-format centers in more than 50 primary and secondary markets across 30 states.
“We have an incredible opportunity to continue to aggregate high-quality but non-institutional-scale assets and unlock their growth potential by applying an institutional asset management framework,” CHC Managing Director Sam Peck said in a statement.
“By investing in properties that are well-located with strong tenant demand, we benefit from a reliable income stream and potential capital appreciation by reinvesting into these dynamic retail centers serving local communities across the country.”
Dallas-based Crow Holdings is one of the largest apartment and industrial developers in the U.S., but over the past 10 years, it has also invested in small-format retail properties that may not be attractive to the capital markets but have strong potential for returns, CEO Michael Levy said during a Weitzman event in January.
The company’s strategy is to pursue “anti-e-commerce” properties, or those that focus on the sale of food and services rather than goods, Levy said during the Weitzman event. Institutional investors have shied away from these assets because they still fall under the retail umbrella, Levy said, even though they are mostly insulated from the ebbs and flows of goods-related consumer purchasing patterns.
“We like that the capital markets paint with a broad brush,” Levy said at the Weitzman event. “It’s called retail, so there’s less interest in it. Cap rates are still relatively high, so the competition for it is relatively low.”
The announcement comes as Harlan Crow, the company’s former CEO, is embroiled in a national scandal that uncovered millions of dollars worth of undisclosed trips and gifts to Supreme Court Justice Clarence Thomas. Crow no longer leads the company but is the chairman of the board.