Quick, What’s DC’s Biggest Private Equity Real Estate Fund?
We believe the answer is: ASB Real Estate Investments’ flagship Allegiance Fund. Haven’t heard of it? You should. $5B under management. Sources say it has the highest cumulative return over the last 7 years out of 22 firms in the NCREIF core fund index—and was the second best performer even during the recession.
CEO Robert Bellinger, here at the Capital Grille in Friendship Heights yesterday, says discipline is the secret sauce—and we believe it, what with that ice tea that keeps him lean. He says ASB’s size, focus and culture lend themselves to moving quickly: you can be proactive, he says, as tenant tastes change. ASB’s open-end core fund grew from $150M when he joined in 2003 to over a billion by early 2006, at which point it went from a regional to national footprint (now with 300 institutional investors, like union, public and corporate pension plans, plus internationals, endowments and foundations). Yet it’s still small enough that Robert can personally visit every property considered (they have 173 in their portfolio, and add about 15 a year).
His occasional smartphone glance during lunch was emblematic: He says they have singular concentration on how to generate NOI growth, and quotes Steve Jobs that it’s sometimes more important what you don’t do than what you do. As he walks the halls of his Bethesda office, he says he wants to hear his colleagues talking not about sexy building acquisitions, but how they can better lease properties, appeal tax assessments, convert non-revenue space into leasable, and rezone to add FARs. Teams are responsible for executing on the deals they source—so if they project $35 a foot in rent and a six month lease up, they’re the ones who will have to do it.
At 72 Greene St in SoHo, they replaced Apple with Patagonia at rents way above pro forma; bought a furniture store out of its lease and replaced it with a much higher paying fashion tenant; and bought out a residential lease that then went to an office tenant for $85 a foot. Value of the building: nearly double in three years, says a New York broker.
At the Watermarke Building in the South Park section of LA, they’ve achieved the highest residential rents downtown.
Co-developing 900 G in DC with MRP, they’ve just placed top NY law firm Simpson & Thatcher and glam furniture dealer Herman Miller.
Sedona Slate apartments in the RB Corridor is another high-profile DC area asset.
And they’re in 13 other urban markets across the country, like here in Boston's Back Bay...
…on the Chicago Gold Coast, in West Hollywood, rehabbing Twitter’s old HQ on Folsom in San Francisco, and making recent acquisitions in Seattle, among other top cities. They're around 34% office, 27% retail, 22% residential and 16% industrial.
Robert not only walks around the neighborhoods they consider, but up the stairs to his 13th floor office at the Chevy Chase Trust Building. Growing up nearby, he went to St. Albans and Haverford College, where he played hockey and tennis. (He is currently attempting to get his 5-year-old son hooked.) Afterwards he went to Riggs (where he learned real estate), got a Wharton MBA, worked a couple of years developing suburban office at Trammel Crow in Philly (alongside now CBRE CEO Bob Sulentic and Carlyle real estate funds chief Rob Stuckey), and in 1990 went to Equitable Real Estate for 12 years. Meanwhile, ASB, started 30 years ago by American Security Bank, was acquired 15 years ago by Maryland’s Saul family, which appears to have done quite well with its investment. Robert’s windsurfing off South Hampton and treadmilling at Equinox has prepared him for all seasons.
We're thrilled ASB Real Estate Investments, as a top national name in real estate, has joined us as a founding partner of our Bisnow Beltway Bash, to be held on May 18 at the Wynn's Tryst Nightclub during ICSC Recon. We hope you'll join us. Register here.