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Feature Article, September 2006
Private Equity Firm Looks For Retailers
NRDC Equity Partners, which has already purchased Linens ‘n Things —and is in the process of acquiring Lord & Taylor — is looking for more retailers.
Randall Shearin
In recent months, a flurry of activity has taken place with retailers being acquired by private equity firms. One such firm is NRDC Equity Partners, a coalition of the principals of Purchase, New York-based National Realty & Development Corp., Robert Baker and Richard Baker, and Apollo Real Estate Advisors’ principals Bill Mack and Lee Neibert. Earlier this year, the firm purchased Linens ‘n Things. Then, on June 22nd, the company announced that it is acquiring the Lord & Taylor chain of stores from Federated Department Stores.
Shopping Center Business recently spoke to Richard Baker, principal of NRDC Equity Partners, to discuss the trend behind private equity firms, as well as his company’s two recent acquisitions and future plans.
SCB: How did you become involved in acquiring retail chains?
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Richard Baker, principal, NRDC Equity Partners
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Baker: National Realty & Development Corp. created two new companies about 18 months ago. One was called NRDC Real Estate Advisors and the other was NRDC Equity Partners. These two companies are partnerships between my father, Robert Baker, myself, Bill Mack and Lee Neibart, principals of Apollo Real Estate Advisors, L.P.. These two new entities were created in order to focus on acquiring operating companies with a real estate perspective. Since our inception, we began working on the acquisition of a variety of companies. In February, NRDC Equity Partners acquired Linens ‘n Things. Now, we are acquiring Lord & Taylor. NRDC Real Estate Advisors is being headed up by Brian Pall. The company’s main function is to provide real estate services, to retailers and companies in the U.S. and Canada. NRDC Equity Partners is headed up by Francis Cassell. The focus of that
company is the acquisition of operating companies.
SCB: Why did you decide to get into the business of acquiring retail chains?
Baker: For 45 years, National Realty & Development has been involved in developing shopping centers in the Eastern U.S. This has allowed our team a street-level view of real estate, development, and operations not only on the real estate side of the business, but on the retail operations side as well. What we’ve done with the two new companies is positioned ourselves as an acquirer or a partner of another acquirer of retail companies. We have a special focus and expertise on retail companies that are heavy with real estate assets.
SCB: What attracted you to the Lord & Taylor chain?
Baker: There were three prime features that attracted us to Lord & Taylor. The first is that Lord & Taylor is a very high quality brand. The company also has a strong existing management team. Thirdly, it has a lot of high quality real estate that it owns and leases.
SCB: What opportunities do you see for Lord & Taylor in the future?
Baker: We are in the process of evaluating every store and coming up with the right mix in each of the company’s major markets.
SCB: Will you be selling off some of the stores as Federated has?
Baker: We’re not far enough along in our progress yet to understand which are the more successful stores. Certainly, some stores might be shrunk in size or relocated. We acquired 49 stores in the transaction and we are expecting to close on the acquisition during the third quarter.
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Linens ‘n Things has more than 500 stores in 47 states and Canada. The chain was acquired by NRDC Equity Partners earlier this year.
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SCB: Lord & Taylor was your second acquisition this year, the first being Linens ‘n Things. What have you done with Linens ‘n Things so far?
Baker: The biggest change at Linens ‘n Things is that it has brought on Bob DiNicola as CEO. He was formerly the CEO of Zale. He is very talented and he’s doing a heck of a job.
SCB: Do any synergies exist or need to exist between Lord & Taylor and Linens ‘n Things?
Baker: They are two separate ventures.
SCB: Private equity has been purchasing retail chains over the past few years more and more. Why is it a good time for private equity players to acquire retail?
Baker: We evaluate each opportunity as it comes along. If the opportunity makes sense for our type of investment, we acquire it. We are a real estate-focused private equity firm and we still have lots of opportunity.
SCB: What led to this idea of National Realty & Development creating NRDC Equity Partners and becoming involved in purchasing retail chains?
Baker: It became obvious to us that there were a lot of opportunities for us in numerous operating companies that had a real estate dimension. That is our expertise and there was an opportunity in that area.
SCB: What other chains are on your radar? Are you looking at other big box chains and department stores?
Baker: We are looking at a whole variety of different types of companies.
SCB: Do you havea goal for how many retail chains you want to acquire over the next 4 to 5 years?
Baker: We just purchase things if there is an opportunistic reason to do it.
©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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