Hawaii And Western States A Focus For Robertson Properties Group
Finding tight sites is a specialty for Robertson Properties Group, which started as a developer of old drive-in movie theater sites.
Randall Shearin

Robertson Properties Group partnered with Kamehameha Schools — the largest landowner in Hawaii — to trade parcels of land for the company’s third project in Hawaii.

Robertson Properties Group started in 1992 as an offshoot of Pacific Theatres. The company began by developing community shopping centers on the sites that formerly housed Pacific’s drive-in theaters. Most of its projects during its first 10 years were on the drive-in sites, as well as other land acquired in the west by Robertson. In more recent years, Robertson has actively sought sites for new developments. That has taken the company to Hawaii, where it owns several centers. Over the last 10 years, the company has continually developed its portfolio, which now consists of about 5 million square feet of community and power centers on the West Coast and Hawaii.

Shopping Center Business recently spoke with John Manavian, vice president of development; Mark Weinstock, vice president and senior counsel; and Jeff Koblentz, CFO, of Robertson Properties Group, to see where the company is growing.

Robertson Properties Group’s recent projects include smaller markets like Petaluma, California, and Midway, Washington. In Midway, the company is developing Phase II of its Midway Crossings project. Phase I, which was opened in 2006, consisted of a Lowe’s Home Improvement Center and some inline space. Phase II will add Staples and several pad users. In Auburn, Washington, the company is developing a mixed-use project with office, residential and retail. The project will be up to 700,000 square feet in size. In Loma Linda, California, the company is in pre-development on a former Pacific Theatres drive-in site. The company will develop up to 300,000 square feet of retail on the site. 

“There are only a handful of the Pacific Theatres drive-in sites left,” says Manavian. “We will develop them as the markets grow and retail is needed.”

Adjacent to its project in Auburn, Washington, RPG is in the process of acquiring additional land to integrate with its master plan for a 55- to 65-acre mixed-use development.

“We primarily like to do projects with national retailers,” says Manavian. “Often, we do have local tenants in the small shop space. We have been lucky to attract major local retailers who have several locations. We’ve done everything from neighborhood centers to community centers to power centers.

In December 2006, Robertson Properties Group completed Center of Waikiki, a project in Honolulu’s Waikiki Beach area. Retailers include California Pizza Kitchen, Rip Curl, Foot Locker and several local tenants. The center also includes an outdoor marketplace and a live theater converted from a former IMAX theater.

The company has been incredibly active in Hawaii as well. In December 2006, the company completed Center of Waikiki, a project in Honolulu’s Waikiki Beach area. The project consists of several parcels. The central retail component has California Pizza Kitchen, Rip Curl, Foot Locker and several local tenants. The center also includes an outdoor marketplace which has kiosks popular with tourists. An IMAX theater on the property was converted to a live theater.

The company also recently closed on a 14-acre site in Pearl City, Hawaii. Robertson plans to develop a 160,000-square-foot community center on the site called Pearl City Gateway. It has three new-to-Hawaii tenants lined up for some of the space, which will break ground in spring 2008.

Robertson Properties Group partnered with Kamehameha Schools — the largest landowner in Hawaii — to trade parcels of land for the company’s third project in Hawaii. Kamehameha Schools received a theater property known as The Varsity, while Robertson received a property it leased as a former drive-in known as the KAM Drive-In. Since the values of the properties were disproportionate, RPG also made a cash payment to Kamehameha Schools.

“The trade was a great strategic fit for both companies,” says Weinstock. “They really wanted our site for their overall strategic plan since they own other land near The Varsity building. We had been looking at their site for quite some time for potential development opportunities.”

The area where the KAM site is located has had incredible residential growth in recent years, but retail growth has lagged behind. RPG has worked with different tenants to bring them to Hawaii, many of which it has had success with on the Mainland. In its west coast projects, the company works a lot with Kohl’s, The Home Depot and Lowe’s Home Improvement Centers.

“We are always looking for the best fit for the community and what makes sense in what’s lacking for the marketplace in terms of the types of tenants,” says Manavian.

“From a portfolio standpoint, having a mix of tenants across the portfolio is good,” says Weinstock. “Our concentration with any one tenant is relatively low.”

More recently, RPG has purchased a number of properties where there is opportunity down the road for redevelopment. Often, it has purchased parcels next to properties that it already owns in anticipation that the market is growing and RPG will be able to expand its center to meet the increased demand. Most of the assets that RPG owns are conversions from other uses, so the company is used to the politics and timelines of redevelopment.

RPG’s Redwood Gateway project in Petaluma, California.

For example, the company purchased a swap meet in the San Fernando Valley. One day, it will be an incredible retail site, but it is currently operating the site as a swap meet.

“It has actually turned out to be a great investment,” says Koblentz. “We look at businesses as properties, but we actually buy them based on the merit of the businesses as well. We look at the upside of the real estate, but they are fantastic businesses to operate. We’ve been fortunate in that the properties we’ve been able to acquire have been solid commercial projects that have some potential redevelopment down the road or they’ve been undeveloped land.”

Since Robertson Properties Group’s parent company, Decurion Corporation, has other businesses that operate over a broad spectrum of businesses, it has the comfort of knowing that the business it purchases for the land can be run successfully by another branch of the parent company. Decurion will often operate businesses for years — such as the swap meet — until the time is right for RPG to do an adaptive reuse or conversion to retail.

“Decurion is a portfolio of companies, of which Robertson Properties Group is one of them,” says Koblentz. “We have a theater company, Pacific Theatres/ArcLight, as well as a company that operates a number of smaller businesses like the swap meets, a bowling center, and drive-in theaters. The set up allows us to operate these businesses inside Decurion while holding the real estate assets.”

Robertson Properties Group started in 1992 as an offshoot of Pacific Theatres. The company began by developing community shopping centers on the sites that formerly housed Pacific’s drive-in theaters.

Because Pacific Theaters — the predecessor to Decurion — has been in business for more than 60 years, Robertson Properties Group has accumulated a lot of excess property as well. The company from time to time sells off some of these non-core properties. The company only considers selling non-core assets when it needs to redeploy the capital into a core asset. In 2005, the company sold an office building near Los Angeles International Airport (LAX) and an industrial building in the city’s Pico Rivera neighborhood. With the proceeds from that sale, RPG was able to buy a retail center in Thousand Oaks, California, that was immediately adjacent to a center it had recently developed. The acquisition gave RPG’s center access to the corner at the off-ramp of the 101 Freeway and an assemblage of 50 acres. RPG does a lot of these transactions using the 1031 exchange vehicle.

“Because we are a privately-held company we have the flexibility and internal financial resources to structure 1031 exchanges in a manner that accommodates our timing on both the sale and the acquisition,” says Koblentz.


©2007 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.