RiverOak Launches $300M Retail Fund

September 15, 2011
By Barbra Murray, Contributing Editor

RiverOak Investment Corp. L.L.C. is setting its sights on urban retail primed for repositioning with the initiation of a new investment vehicle, RiverOak Urban Retail Investors Fund I, with the goal of securing commitments totaling $300 million.

Urban Retail Fund I will target street-level retail predominantly at mixed-use properties with reasonable price tags in live-work-play central business districts. “The fund is really value-add so anything where our money can come to the rescue of the property, we will be interested in,” Stephen DeNardo, CEO of RiverOak, told Commercial Property Executive. “We’re not looking for properties that are already leased up with long-term leases on them where we can’t do much with them.”

While acquisition activity will focus on urban locations, there is one vital caveat: the area has to have a retail market capable of a relatively successful performance even in the midst of a less-than-stellar economy. Not every urban locale fits the bill. RiverOak did its research.

“To choose them, we did sort of a complicated statistical overview of every market of 500,000 people or more and then applied our criteria and weighed the criteria and so on, and it spit out seven markets as the top markets,” DeNardo explained. “They may seem self-evident, but it makes sense for a couple of reasons.”

Those top markets are Boston, Chicago, Los Angeles, New York, Philadelphia, San Francisco and Washington, D.C. “There are a few things they have in common,” he noted. “They’re all 24-hour cities, they have significant pedestrian traffic, they are among the top cities in the country for tourism and transportation systems and they all have a fairly significant university presence.”

Acquisitions will be limited to a very specific in property type as well. “No malls and we’re not looking at strip centers or anything like that,” DeNardo said. “There are plenty of people out there that already cover that. We feel that [the fund’s target] is a niche that there are not a lot of players in. There are not many funds focused on it.

Already, he added, Urban Retail Fund I has attracted a fair amount of interest from institutional investors in the U.S. and abroad.