Canadian company to take over full control of 1890 Ranch

A Canadian retail real estate company is doubling down on Texas, and Cedar Park's 1890 Ranch shopping center is among the assets it will obtain.

RioCan Real Estate Investment Trust will take over full ownership of Cedar Park's power retail center Oct. 1, when it will end its joint partnership with Retail Properties of America Inc. The Toronto-based company previously had an 80 percent stake in the shopping center but ceded control of day-to-day operations to its U.S.-based business partner.

"When we decided back in 2008 to make our foray into the United States, we weren't foolish enough to think we could do it without local expertise," said Oliver Harrison, a RioCan vice president of asset management. "We partnered with a number of different companies with the long-term mindset that we were going to manage the real estate ourselves but in the interim partner up with the right guys and learn from them."

As RioCan gained a greater understanding of the Texas real estate market, Harrison said it became time to set up shop in Texas, opening a regional office in Plano and taking over full ownership and operations of approximately 20 commercial properties throughout the state. In order to dissolve its joint venture with RPAI, RioCan will give up five of 13 commercial properties currently owned by both companies while retaining the other eight, including 1890 Ranch.

Shoppers should not expect an immediate shakeup at the popular shopping center, he said.

"My expectation is that [the ownership transition] is going to be totally seamless," Harrison said, explaining how RioCan intends to first evaluate the retail complex. "We're not planning on changing anything out of the gate."

Long-term outlook

Dean Domingo has been managing 1890 Ranch since Chicago-based RPAI acquired the shopping center in early 2011. His role ends Oct. 1 when RioCan takes over, yet he continues to work with existing and potential new tenants.

In particular, Domingo has focused his efforts on filling the vacancies on the north back end of the approximately 350,000-square-foot retail complex. He currently has a dentist slated to open in an empty space next to MedSpring near Toll 183A, and Breeze Salon also intends to expand its existing footprint within the shopping center, Domingo said.

"It's part of the mix sometimes to lose certain tenants, but we feel we'll get some good replacements," Domingo said. "It's been a good center for us, and it's going to continue to get better."

He also expects aggressive marketing to take place as part of the ownership transition. RioCan's initial marketing efforts will involve possible partnerships with local businesses to help attract more people to the shopping center, Harrison said.

First, however, RioCan must take a step back to see where specific improvements should be made, he said. Harrison already has some suggestions on how to improve the area's back end, where tenants have complained about feeling overshadowed by the tenants facing FM 1431.

"It's not so much from my perspective the visibility that's the issue. It's more so the parking," Harrison said. "It's something we certainly need to try to alleviate, although there's not a simple answer to doing that."

Harrison also suggested an improved mix of retail tenants once RioCan becomes more comfortable in overseeing day-to-day operations of 1890 Ranch.

"We'll look and see where we can add value and make improvements and ultimately how we can drive shopping sales up," he said, "because driving up sales drives rent."

The business of retail ownership

1890 Ranch will undergo its third ownership change since debuting in 2007. Such ownership changes are not uncommon depending on the stage of a shopping center's development, said Phil Brewer, Cedar Park's economic development director. Prior to RioCan's joint ownership with RPAI, Austin-based Endeavor Group helped launch 1890 Ranch before selling off the majority of the property in 2011.

It's all part of the process, Brewer said.

"A company will build a project to get it to a certain occupancy level where cash is flowing," he said, explaining how such a process typically takes three to five years. "Then it gets to a point that they start marketing to other types of entities looking for a long-term investment."

RioCan is one such entity, as it will take over full ownership of retail properties in Austin, Dallas, Houston, San Antonio and Temple as a result of ending its joint venture with RPAI. And at some point, that footprint may expand, Harrison said.

"We're looking at a few different opportunities," he said. "Nothing that involves ground-up development, but we're actively looking at some additional properties in Austin."