Baltimore firm is opening an office in Naples to manage its existing regional portfolio and to position itself for future growth.
A Baltimore-based real estate investment firm is opening the first satellite office in its nearly 60-year history in Naples both to manage an existing Southwest Florida portfolio and to better eye future acquisitions.
Continental Realty Corp. currently owns six retail properties in and around Naples totaling 350,000 square feet, including the Colonnade on Fifth on Fifth Avenue; the 110,000-square-foot Bed Bath & Beyond Plaza; and the Esplanade Shoppes, on Marco Island.
The company says the new office, on 3838 N. Tamiami Trail, will allow for better property management.
“We’ve owned property in Naples since 1996, and as we have a critical mass there now, it pays for us to be there on the ground,” says David Donato, a company senior vice president.
“Plus, I see us as being net growers of space in the foreseeable future.”
That growth will be fueled by a company-driven real estate investment fund — Continental Realty’s third — that closed in late July with $210 million in equity.
Donato says that with appropriate leverage, the new fund could have buying capabilities of up to $700 million — all aimed at multifamily and value-add retail investments in the Mid-Atlantic and Southeast U.S.
In all, he expects Continental Realty to acquire between 14 and 20 assets through the fund. The company’s previous two funds were capped at equity investments of $100 million and $165 million, respectively.
“That entire swath of the country has been experiencing immense growth,” Donato says. “Plenty of businesses are relocating there and there are several compelling demand drivers. The Southeast is expected to receive one third of the country’s growth over the next few years, and that’s always good for real estate investment.”
JD Brakefield, Continental Realty’s director of property management for its commercial division, will oversee the Naples’ office’s day-to-day operations. The company has to date hired a real estate manager and two support staffers for the office.
In addition to Naples and Marco Island, Continental Realty in Florida 10 owns retail centers and apartment complexes in Fort Myers, Spring Hill, Coral Springs, Davie, Destin, Rockledge and Orlando.
Most recently, Continental Realty in May acquired Seven Hills Plaza, an 87,250-square-foot neighborhood center in Spring Hill, for $9.8 million. The property, anchored by Planet Fitness and Walgreens, was 74% occupied at the time of purchase.
In all, the company owns 72 properties in eight states — Florida, Maryland, North Carolina, South Carolina, Georgia, Virginia, Alabama and Tennessee — valued at more than $2 billion. Its commercial properties total more than four million square feet and it also owns more than 10,000 apartment units.
Although the bulk of its portfolio is in its home state of Maryland, with 41 properties split evenly between retail projects and multifamily communities, its second-largest collection of holdings is in Florida, according to the company’s website.
“We especially have been drawn to Naples,” Donato says. “It took a hard hit from the recession a decade ago, but it’s more than fully recovered and it’s getting better all the time. We think the new office there underlines are continued commitment to that market.”
Donato says the company became familiar with Naples more than two decades ago, when co-chairmen J. Mark Schapiro and John Luetkemeyer vacationed in the area.
And while competition from the likes of the Hoffmann family in Naples, Benderson Development Co. throughout the Gulf Coast and others is stringent, Donato says he believes Continental Realty will be able to fill a niche.
“Though Florida has experienced a lot of new development over the past five years, there’s not been a lot of new retail development, as compared to, say, the early- to mid-2000s,” Donato says. “I don’t think we’ll have too much trouble finding and buying retail properties, based on our examination of the markets we’d like to be in.”