Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)
Issue link: https://sct.epubxp.com/i/654213
A p r i l 2 0 1 6 / S C T 49 THE DEVELOPER Ron Krausz proudly recalls that his father, Amos, founded the San Francisco–based Krausz Cos. some 40 years ago. The business began as a development company that focused on projects near regional malls. The company has grown to large, institutional projects, such as the redevelopment of the Puente Hills Mall, in City of Industry, Calif.; the ground-up development of downtown Kihei and a 30-acre, mixed-use retail, entertainment and hospitality center on Maui (both in Hawaii); and the 500,000-square-foot Gramercy mixed-use project, in Las Vegas. The company regularly disposes of and acquires assets based on its judgment of market conditions. Last year it purchased a portfolio of 81 small parcels occupied mainly by convenience stores. "We bought the ground leases and fee interests from dif- ferent owners and combined them into one deal," Krausz said. "This is much more of a value-add situation, because of the op- portunities we saw in the properties." Krausz says there is little competition for the convenience stores. "There was a great deal of complexity to the 81 properties, which sort of defines what we end up buying," he said. "We have five key principals who are very good at complex projects. We look for things where the principals are hands-on." When the company makes a purchase, it usually looks at the underlying real estate, Krausz says. "We certainly try to buy real estate that we think is strong on fundamentals regardless of whether it is a reposition opportunity or a stabilized situation," said Krausz. "We usually buy things that have moving parts. For example, a couple of purchases we made a few years ago were good, quality assets but needed backfilling, or some pieces needed to be repositioned. They were good, strong community centers that needed something done." Krausz expects that the firm will stay busy with those 81 properties through this year. "The intention is to improve the quality and tenure of the leases," he said. "If something really good came up, well, we are always looking for opportunities." Recently, Krausz Cos. was more on the seller side than the buyer side — divesting an unnamed but well-anchored, 100-percent- leased shopping center that was distressed with leasing chal- lenges at the time the company acquired it in a foreclosure. Krausz says he expects this year to be fairly even with last year for the firm in terms of new purchases. "We don't do a lot of transactions, because we have existing developments that we put a lot of effort into," he said. "I don't think we will be busier than in 2015, because we will be digesting what we purchased. In ad- dition, our downtown project, which we are doing on the island of Maui, took many years to get entitled, and Las Vegas will take a lot of attention." Still, one can never really say never, Krausz notes. "If buying opportunities are presented to us, or if selling activity is gener- ated by another investor's interest in our portfolio, we will take a look," he said. "There is the combination of things that affect the market, such as cap rates or the availability of appropriate capital. Our decisions start with the question: 'Is there a funda- mental opportunity for us?'" SCT R O N