Hartford Business Journal

www.HartfordBusiness.com March30,2015•Hartford Business Journal 3 Realty investors flock afresh to apt., retail pools By Gregory Seay gseay@HartfordBusiness.com C hastened by the most recent real estate collapse but hungry for better returns, investors across Connecticut and the U.S. are pumping money into new investment pools that are buying up commercial proper- ties mostly outside this state. Since January, Hutensky Capital Partners and Talcott Realty Partners, both in Hartford, and Hamilton Point Investments in Old Lyme have joined the raft of U.S. investment sponsors launching multi-million-dollar funds to buy everything from apartment buildings and shop- ping centers to office and industrial buildings. The Hutensky Group unit has launched another $100 million fund — its fourth in the last 15 years — to invest strictly in building or buying and renovating/repositioning retail shopping centers in U.S. markets with popula- tion and job growth, Managing Partner Brad Hutensky said. It recently closed a third fund after raising $117 million — $17 million more than its goal. Hamilton Point, at the end of last year, closed on its third investment fund, raising $81 million. In February, it began soliciting accredited, high net-worth investors for its fourth fund, this one aiming to raise $100 mil- lion to buy and operate older, existing apart- ments in the southeastern U.S. Many inves- tors in both funds subscribed to Hamilton's earlier investment portfolios, said Hamilton Point Principal Matthew Sharp. "Investors are worried the stock market feels too expensive," Sharp said. "And a lot of them can't get good [investment] yields elsewhere.'' Talcott Realty Partners, co-owner of downtown Hartford's iconic Gold Building, which is about to go on the sales block, also has just opened a fund, said President Michael Mihalek. Talcott's goal is to raise $250 million by summer's end to invest primarily in "high- growth'' suburban office space markets such as in Denver; Phoenix; Nashville, Tenn.; Aus- tin and San Antonio, Texas, among others. "We feel the time is right in the cycle to invest in a value-add strategy,'' Mihalek said. Although each Connecticut investment fund is chasing after different property types they do share one thing in common: They don't have Nutmeg State properties on their investment radar, instead preferring to place bets in cities and communities that have higher growth potential. According to British data-tracker Preqin, commercial real estate investing worldwide peaked in 2008, the same year the global finan- cial crisis emerged, with 204 funds raising $108.2 billion. Since then, fundings have steadily crept back up, from a low of 111 funds that drew $35.7 billion in 2009, to 168 totaling $78.8 billion in 2013, Preqin data shows. So far this year, Preqin counts 16 funds that have raised $12.4 billion. Timing for investing in retail and multi- family real estate also couldn't be better, says Michael Riccio, a CBRE-New England senior managing partner with deep experience with investors to raise or borrow capital to build or buy properties. Driving the steady climb in realty invest- ments are the opportunities generated during and after the Great Recession, a period in which many landlords were left with empty office space and storefronts. Faced with insufficient cash flows and properties whose mortgages exceeded their underlying values, landlords and their realty investors either lost properties to foreclosure or were stuck with them. "In the case of retail, that's the last prop- erty type to come out of recession,'' Riccio said. "The upside on retail is great in this time of the cycle." By contrast, apartments recovered very early into the recession cycle as over-mortgaged homeowners either chose, or were forced, to rent. Investing to build new or refurbish exist- ing multi-family properties remains strong and "we still see that has some legs,'' Riccio said. Greg MacKinnon, research director at the Pension Real Estate Association, whose members include pensions, real estate invest- ment trusts, insurers, developers, landlords and investment advisors, among others, said capital flows into real estate "dried up in large part" during the recession. But in the last few years they have come back plenty. Investors now realize, MacKinnon said, that while investment in real estate suffered the last recession, "… portfolios that were properly set didn't do too badly relative to stock and bond markets and other kinds of investments. It is the best-performing office, retail and multi-family properties, or at least ones with the potential to yield strong returns, that Hutensky, Hamilton Point and Talcott offi- cials say they and their investors covet. With proceeds from its third retail-realty investment fund, The Hutensky Group invest- ed in eight properties: half in new retail con- struction; the rest used to buy and reposition Global Real Estate Fundraising (2005-2015) Amount of No. of funds capital raised Year closed ($B) 2005 141 49.5 2006 176 66.7 2007 207 83.0 2008 204 108.2 2009 111 35.7 2010 116 36.8 2011 137 52.5 2012 169 54.4 2013 168 78.8 2014 149 72.2 2015 16 12.4 S o u r c e : p r e q i n Continued Above, Hamilton Point's David Kelsey, left, and Matthew Sharp. Below, Brad Hutensky with before/after views of his fund's Richmond, Va., retail site. p H o T o | c o n T r i b u T e d Officially Produced by: Now available are official PDF REPRINTS of your Article for your MARKETING usage All copyright fees included Share the excitement of being published! Best Places To Work In CT 2015 By Kathryn M. Roy Special to the Hartford Business Journal H ard work is rewarded at law firm Hinckley Allen. And for its 60 Hartford- based employees, the firm's focus on professional development provides a boost not only to staff, but clients as well. "We put a lot of time and effort into the development and training of our people," said Thomas S. Marrion, a partner at the law firm. "Within the last few years, we hired a director of professional development who was a partner at another law firm in Boston. He is devoted entire- ly to the professional development of our people here. It was a major commitment on our part to hire a full-time person in a firm of our size." Marrion said the role reflects the firm's dedication to having all staff properly trained so they can do the best work for their clients. The Hartford office, which has been open since 2008, is also known for its positive, team-based culture. "Everyone in every position at the firm is part of a team that is devoted to providing the best possible service to our clients," Marrion said. Rewarding good work is a priority at Hinckley Allen, which operates six offices and employs more than 300 people compa- nywide. The firm looks for opportunities for people to take on greater responsibilities, and they get greater rewards, Marrion said. "We always try to promote from within," Marrion said. "It doesn't matter what your job is here; if you work hard and work well with others and you're productive, you will be rec- ognized for that and you will succeed here." 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