Revamped Crosland drops its developer role

This week Crosland, the Charlotte developer that has been among the most active in the Triangle during the past decade, officially got out of the development business.

Completing a plan that was announced last month, the company divested its retail, multifamily and residential development arms to focus exclusively on managing existing assets.

For the Triangle, this splintering is likely to result in a lot of the same people doing a lot of the same work but under different names.

Crosland's multifamily team is now Ravin Partners, which has taken over three of Crosland's stalled apartment projects in the Triangle.

The retail team has spun off to form Crosland Southeast, which will focus on the acquisition and development of new projects.

"There is no template for success in the retail development business right now," said Austin Williams, 35, who will run Crosland Southeast's Raleigh office. "It was important to us as entrepreneurs to keep our team together. We've created a platform that allows us to be flexible and opportunistic."

What the spinoffs don't have is a lot of bad debt.

Crosland, like many real estate developers that were active during the boom years, has struggled during the downturn as credit became scarce and property values fell for all types of real estate.

That made completing existing projects, and pursuing new ones, difficult if not impossible.

The company also suddenly found itself with a large development operation at a time when almost nothing new was getting built.

Such a structure works great when the economy is humming and there's lots of demand for all kinds of real estate.

"It's on the supposition that none of the spokes of the wheel disappear," said Jim McMillan, an investment broker at Grubb & Ellis/Thomas Linderman Graham in Raleigh. "When three of the five disappear or erode, or start to rust, that wheel becomes severely unbalanced, and as we've seen, un-ridable."

Crescent Resources, another Charlotte-based developer, found itself similarly exposed before being forced into bankruptcy. It has since restructured and is now behind new development projects in Raleigh and Durham.

"They've had to change," McMillan said of Crosland. "And frankly, I think it's creative, and I tip my hat to them."

Ravin Partners and Crosland Southeast can move ahead without any baggage.

"The relationship, personally and emotionally (between Crosland and Crosland Southeast), is very close," Williams said. "The financial arrangement is arm's length."

Well-known name

Williams is one of five partners in Crosland Southeast. In addition to financing provided by the partners, the company will also seek out equity partners on deals and develop projects for a fee.

Williams said deals will run the gamut, including single buildings, regional shopping centers and multi family projects with a retail component.

Crosland Southeast has announced an alliance with CNL Financial Group of Orlando. CNL is putting up $100 million, which will be used to develop and acquire retail projects in the Southeast.

Crosland has long been known as one of the top developers in the Triangle, producing high-quality projects such as 712 Tucker, Oberlin Court and the Midtown Commons shopping center in Knightdale.

Williams said recent events haven't changed that.

"The name speaks to the characteristics that we want to maintain," he said. "It draws a lot of water in the retail marketplace from national retailers. We very much wanted to keep the name."