Over the past year, HSA Commercial has profiled a different broker each month in the News & Views blog. Starting this month, we are reaching beyond our brokerage department to talk with the company’s leadership and various team members to benefit from their specific real estate expertise and insights. In this edition, we talk with Tim Blum, executive vice president and managing director of HSA Commercial’s retail division. In his role at HSA, Tim has overseen many of the company’s retail and mixed-use development projects including Orland Park Place and The Mayfair Collection in Wauwatosa, Wisconsin. Last year, Blum led a partnership between HSA Commercial and Innovative Capital Advisors (ICA) to launch a $50 million real estate equity fund, which he discusses in greater detail below.
HSA: How would you define the basic acquisition criteria for the fund?
Blum: The scope of our search is relatively broad. We are looking for retail, office, industrial, and multi-family properties in high barrier of entry markets in the major metro areas throughout the Midwest. Generally speaking, we are looking for investments between $3 million to $15 million with good in-place income but inherent upside, either through leasing or long-term redevelopment potential. Most of the opportunities right now seem to be in retail and industrial, since the office market remains depressed and the multi-family sector is so competitive.
HSA: What differentiates this fund from a crowded field of active real estate equity funds?
Blum: First of all, through ICA’s partnership with their insurance company clients, we have a unique capital stacking structure that allows us to spread our equity further and yield higher cash-on-cash returns to our principal investors.
Another way that we’re different is that we have a greater degree of flexibility in pursuing acquisition opportunities than most funds. Our scope isn’t narrowly defined to commodity-type assets that receive the attention of a lot of institutional-type investors. In fact, we are particularly attracted to more non-traditional real estate investments with a certain amount of complexity, because the lack of competition for those assets can allow us to buy them at the right value.
HSA: What do you mean by “non-traditional”?
Blum: I think one example that we saw recently was a retail net-lease property with very little term remaining on the lease. The lack of stability would scare most investors away, but we understood that, if the property were acquired correctly, the upside was possible based on the attractive, infill location. Beyond that specific example, it could be the purchase of a note or a joint-venture opportunity. Since we have the real estate expertise and benefit from the full-service platform at HSA, we know that we are uniquely positioned to deal with and compete for unconventional assets.
Tim Blum has directly supervised the execution of over 3 million square feet of commercial development totaling in excess of $500 million in total value. Mr. Blum’s diverse retail development experience includes large format promotional centers, multi-level urban mixed-use projects, adaptive reuse of existing retail facilities, and traditional suburban shopping center formats.