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Feature Article, July 2006
Entering Development
Jon Wheeler of acquisition firm Perrine Wheeler creates new company to develop shopping centers and other properties along the Eastern Seaboard.
Randall Shearin
Jon Wheeler, president and chief operating officer of Norfolk, Virginia-based Perrine Wheeler Investment Real Estate, a company that’s traditionally been known for its purchasing of shopping centers through its equity funds, is doing something a little differently. He has started a new company that is entering the development business.
Wheeler launched Wheeler Development to focus on development, something that he loved, but wasn’t doing a lot of with Perrine Wheeler. Under his direction, Perrine Wheeler has already developed three shopping centers: one in Tampa, one in Smithfield, Virginia, and one in Norfolk, Virginia.
“With the success of those three projects coupled with my background in development, it has shown me that I want to expand upon our development expertise,” says Wheeler.
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Wheeler Development is building a 117,000-square-foot center in Edenton, North Carolina. Edenton Commons will be anchored by a 56,000-square-foot Farm Fresh supermarket.
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To develop new projects, Wheeler Development has been launched. This new company plans to develop shopping centers in the Northeast and Southeast by raising private equity, similar to the way that Perrine Wheeler does for its acquisitions. Wheeler Development closed its first fund, Development Fund I, in April. The $10.7 million fund will provide enough leverage to develop $50 million worth of shopping centers. Wheeler Development has a construction guidance facility with Monarch Bank that will provide the leverage. Over the course of the next 4 years, the fund will invest in many projects. Already, there are six projects under contract or in the development process. Three of the projects have been announced: a 10,290-square-foot office building in Virginia Beach, Virginia, called Riversedge; a 6,920-square-foot strip shopping center in Moyock, North Carolina; and a 117,000-square-foot grocery-anchored community center in Edenton, North Carolina, called Edenton Commons. Other projects include a build-to-suit for Bojangles Restaurants, and two other shopping centers.
“Because of our success in these first three properties, we want to expand on that with our relationships that we have with a large amount of retailers up and down the East Coast,” says Wheeler. “Because Perrine Wheeler has properties located from Syracuse, New York to Tampa, Florida, and over to Houston, Texas, we’re comfortable in a lot of markets. We want to continue working in those markets, as well as take advantage of the development opportunities that may exist there.”
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Wheeler Development has built Riversedge, a 10,290-square-foot office building in Virginia Beach, Virginia.
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Over the next 2 years, Wheeler sees a shift at Perrine Wheeler. Wheeler will become more involved in the development arm, while Harrison Perrine, who serves as Perrine Wheeler’s CEO, will be more active on the acquisitions side. Currently, Perrine Wheeler has 34 shopping centers. Over the next few years, the company will begin selling and refinancing a lot of its properties.
Some of the centers that Wheeler Development creates may be syndicated in a similar fashion as Perrine Wheeler has done in the past. Wheeler may also sell the centers to other entities. Similar to Perrine Wheeler’s portfolio, Wheeler Development is looking for centers in primary, secondary and tertiary markets. Anchors of Perrine Wheeler’s centers are also diverse, and the same will be true of Wheeler Development’s centers. All of Wheeler Development’s projects will be tenant-driven.
“The tenant is going to control where they want to go and the market they want to be in,” says Wheeler. “We are building on our relationships with retailers by letting them find the location and then building a center or facility for them. These won’t be spec opportunities.”
Most of the centers that Wheeler Development builds will be grocery-anchored. Some will be shadow-anchored by grocery stores, while others will have the grocery store as part of the asset. For instance, at Edenton Commons, the 117,000-square-foot center Wheeler Development is building in Edenton, North Carolina, the anchor, a 56,000-square-foot Farm Fresh, will not be owned as part of the center. The retailer will own the store as a shadow anchor, while Wheeler Development will own everything else affiliated with the center.
©2006 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.
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