PHOENIX-Prolific retail developer RED Development has moved away from new construction to focus on building an operating portfolio with its existing assets and future acquisitions. The shift is a response to the continuing lack of demand for new retail product, according to Steve Maun, president of RED Development.
As part of the new strategy, RED Development formed a joint venture with its long-term institutional capital partner, which is advised by CDK Realty Advisors. The new company, RED Consolidated Holdings LLC, owns 22 properties totaling more than 9 million square feet in 12 states. The properties were contributed by both RED Development and CDK’s client, Maun notes. RED Development is now a subsidiary of RED Consolidated Holdings and will manage the portfolio.
Since the relationship with RED began in 1999, CDK on behalf of its client has invested $280 million in select RED development projects including: CityScape in Phoenix; Village Point in Omaha, NE; and Summit Fair in Lee’s Summit, MO. CDK and RED continue to develop certain projects under the original 50/50 development joint venture.
Maun tells GlobeSt.com that a group of RED Development executives and CDK’s client each own 50% of RED Consolidated Holdings. The new company has access to a $75 million line of credit and plans to acquire underperforming retail assets primarily across the Midwest and Southwest regions.
“The goal of the new company is to grow an operating portfolio by investing in assets that need repositioning,” Maun further explains, adding that the company will focus its investment efforts on open-air lifestyle centers and power centers. He expects RED Consolidated will bring on equity partners to make various acquisitions.
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