With about $80M, Chapel Hill real estate investor eyes out-of-state opportunities

By Lauren Ohnesorge – Senior Staff Writer, Triangle Business Journal

Jun 28, 2019, 8:41am EDT

For a Chapel Hill firm with a long history of investing in North Carolina, bullish portfolio goals are shifting its interest elsewhere.

This year alone, Prudent Growth Partners plans to acquire about $80 million in property – “and we’re well on our way to do that,” says company president Thomas Hahn.

On Friday, the company announced a $6.22 million purchase of a 55,000-square-foot retail/flex center in Mooresville at a 8.5 percent cap rate.

Next year, Prudent's acquisition goal swells to $100 million. “To do that effectively, we have to go beyond North Carolina,” he says.

On June 27, the company inked a $1.7 million funder by rounding up 20 investors according to a securities disclosure, to complete the Mooresville purchase.

Like most of its other investments, the Crosslake Park Drive center in Mooresville is a commercial property. It’s what Hahn describes as a “stabilized asset,” cash-flowing from day-one. But rising real estate prices have PGP rethinking its strategy.

The company has more than 20 properties in its portfolio, and the vast majority are in North Carolina. In recent weeks it’s been branching out, however, through some purchases in southern Virginia. It has a property under contract in northern Kentucky and another in Savannah, Georgia. And it’s exploring additional regions to target.

“We really love North Carolina – it’s just harder and harder to find these assets,” he says. “It’s incredibly difficult to source deals here that meet our criteria… You don’t want to get in a situation where you’re overpaying for something just to get a deal done.”

Right now, PGP is identifying high-growth areas, from Nashville to Memphis to Cincinnati to Huntsville. It’s utilizing demographic data and broker contacts to find logistics and technology hubs.

And Hahn expects an increasing volume of its deal to be in new regions in the coming years.

As for the overall investment market, Hahn is bullish.

“There’s a lot of equity that’s looking to be placed in commercial real estate, and everything that we buy,” he says, noting the company is usually able to get commitments for its deals within three or four days.

And it can be patient, he says, noting that it doesn’t have a specific fixed hold period for its assets.

“We’re willing to exit early if the number makes sense… but because we’re buying what we believe to be stabilized assets in great locations, we believe they’ll have appeal over the years,” he says.

As the company expands its portfolio, it’s also expanding its team. He says it’s likely PGP will be looking to hire “one or two” new asset managers in the coming months.

PGP was founded in 2015 by Hahn, who had previously cofounded energy derivatives firm Chapel Hill brokers. That company was acquired by ICAP Energy LLC.

Locally, PGP’s current portfolio includes a four-building office complex on Barrett Drive in North Hills, Rolesville Town Center Mall in Rollsville, Airpark Flex Building and Fuquay Retail Center in Fuquay-Varina and Shops at Garner Plaza.

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