Daily market intelligence on mortgages, equity raising, investment sales, and CMBS.

Monday, 11 February 2019

Venture Pursues Grocery-Anchored, Service-Oriented Shopping Centers in Smaller Markets

Written by 
Rate this item
(0 votes)

Commercial Real Estate Direct Staff Report

Carnegie-Weinberg, a venture of family office Weinberg Capital Group and real estate investor Carnegie Cos., is pursuing small- to mid-sized grocery-anchored and service-oriented shopping centers in secondary and tertiary markets.

Weinberg Capital, of Cleveland, primarily invests in middle-market companies in various industries, but it is looking to expand its focus on real estate investments. Carnegie, meanwhile, is Solon, Ohio, owner of retail and industrial properties and undeveloped land in 13 states.

The venture is pursuing shopping centers with 50,000 to 150,000 square feet primarily in the Midwest United States, but it also is open to investing in other parts of the country. It is looking at areas without much retail competition and with favorable economic and job growth prospects. The venture may target other real estate sectors, such as multifamily, office and industrial, in the future, but it has found grocery-anchored properties provide the best opportunities now.

"We feel there is tremendous value as the retail landscape is going through its changes," said Weinberg Capital principal John Herman, who manages the firm's real estate investments. "We are taking the position that many basic needs and services will continue to be in demand."

Carnegie-Weinberg is targeting shopping centers that are anchored by grocery stores and have service-oriented tenants such as medical centers, dry cleaners, barber shops, salons and day-care centers. Those businesses are not as prone to e-commerce competition as typical brick-and-mortar retailers.

"We see a significant opportunity in this subsector of retail real estate," Herman said. "We're looking to scale the portfolio together."

Weinberg Capital and Carnegie provide most of the equity for the Carnegie-Weinberg deals, but they also raise additional capital from other family offices. The venture obtains financing for 65 to 75 percent of a property's value.

Last month, the venture bought the 139,757-square-foot Sangamon Center North shopping center in Springfield, Ill. That property, at 1861-1945 East Sangamon Ave., is anchored by a 63,257-sf Schnucks grocery store. Other tenants include the United States Postal Service, CVS, Pet Supplies Plus, Hair Cuttery and Subway.

That was the second deal completed by Carnegie-Weinberg. Three years ago, it bought a portfolio of three shopping centers with 174,000 sf in Greenville, Mich. The properties in the portfolio are The Marketplace, at 701-703 South Greenville West Drive; Greenville West, at 300 South Greenville West Drive; and Hathaway Circle, at 1925 West Washington St.

The venture has another deal under contract and expects to acquire more properties as well.

Weinberg Capital was formed in 2010 as the family office for Ronald E. Weinberg, who sold Hawk Corp. that year to Carlisle Companies Inc. of Charlotte, N.C., in a deal valued at $413 million. Weinberg was the co-founder and chief executive of Hawk, which manufactures brake materials used in the aerospace, industrial and specialty consumer industries.

Weinberg Capital typically invests in companies with annual revenues from $15 million to $100 million and earnings before interest, taxes, depreciation and amortization, or EBITDA, of $2 million to $10 million. It pursues firms operating in numerous industries, including manufacturing, business services, medical and healthcare, aviation services, consumer products and distribution.

Weinberg Capital has made a few small investments in real estate deals, but it did not act as a principal until joining forces with Carnegie, which was formed in 1991. Carnegie is led by principals Paul D. Pesses and Peter C. Meisel, who had known Weinberg Capital's executives for several years before forming the venture.

Comments? E-mail Tim Casey or call him at (267) 397-3347.



weekly-call-to-action

“The Weekly”

“The Weekly” is Commercial Real Estate Direct’s PDF newsletter, sent to subscribers every Friday morning. With over 100 news stories published on Commercial Real Estate Direct each week, “The Weekly” features the top stories in commercial real estate that industry participants need to know first. “The Weekly” also contains:

  • Breaking mortgage, CMBS, and REIT news

  • Quarterly league tables with rankings of B-piece buyers, book runners, and lenders

  • Industry moves and changes in “The Insider“

Additional Info

  • Syndicate to Realpoint: No
  • Sector: Retail
  • Subject: Institutional Investment (INS), Property Acquisitions (ACQ)
  • Private: No
Read 125 times

Data Digest

 

CMBS DELINQUENCY VOLUME

dqdataFP1

 

CMBS SPECIAL SERVICING VOLUME

sschartfp

Top Bookrunners Domestic, Private-Label CMBS - 2017
Investment Bank #Deals Vol$mln MktShr%
Goldman Sachs 17.59 11,819.34 13.68
JPMorgan Securities 14.52 10,968.11 12.70
Citigroup 12.04 10,012.71 11.59
Wells Fargo Securities 14.02 9,936.06 11.50
Deutsche Bank 12.55 9,879.74 11.44

 

RCA CPPI

 

cppichart FP

 

 

CMBS 2.0 Spreads

AAAspreads

Top CMBS Loan Contributors - 2017
Lender #Loans Vol$mln MktShr%
Goldman Sachs 146.89 11,719.34 13.63
JPMorgan Chase Bank 117.68 10,114.14 11.76
Deutsche Bank 198.48 9,689.97 11.27
Morgan Stanley 166.18 8,539.78 9.93
Citigroup 199.05 8,088.24 9.41

 

 

 

REITCafe

  • Challenging Retail Environment Weights on REITs
    Mixed economic news is weighing on retail markets, pushing REIT performance down in 2015. This week, the National Retail Federation announced that back-to-school spending is expected to be down 9.3% in 2015. This news came on the heels of a report from the Commerce Department stating that retail sales declined 0.3%...
     
  • US REITs Feeling Effects from Turmoil in Greece and China
    International economic forces have taken center stage this week, affecting both US stock markets and REITs. The crash in the Chinese stock market and ongoing concerns about the future of Greece in the eurozone drove markets down during the first half of the week. REITs fared better than the overall market...

  • What Does Increased Construction Mean for Apartment REITs?
    REITs so far this year have raised $17.1 billion of capital through the sale of unsecured notes, bringing the total raised over the past two and a half years to just more than $75 billion. That’s more than they raised during the previous five years. The massive volume shouldn’t be a surprise as it comes while the yield from 10-year Treasury bonds, the benchmark...
shouldn’t be a surprise as it comes while the yield from 10-year Treasury bonds, the benchmark against which most REIT’s price their bonds
warehouse-backstage