As reported in The Real Reporter by Joe Clements
BOSTON — Any denizen of Deerfield Academy will identify Albany Road as the main thorough- fare coursing through that prestigious boy’s boarding school in western Massachusetts, and those there in the early 1980’s might recognize two key principals of Albany Road Real Estate Partners among four business professionals launching a new real estate investment firm based in Boston. Joining alum Christopher J. Knisley and Mark McInerney are Steve Strandberg, the father of Deerfield attendees, and Clark N. Callander, whom Knisley advises “has no affiliation with Deerfield, but wishes he did.”
As to starting Albany Road, Real Estate Partners, “We think this is the perfect time,” relays Knisley, a Rhode Island native who has crafted an impressive career in New England real estate circles since departing Deerfield for Vanderbilt University in 1981. After earning undergrad and an MBA at that Nashville institution, most of Knisley’s time in the new millennium was spent at The Koffler Group, a savvy Ocean State group that quietly emerged as a significant CRE owner during his tenure. The entity led by Anthony DeLuca is about to score big in divesting the Woburn Mall for a reported $65 million, or approximately five times what the firm paid for a then-struggling asset in 2001.
Callandar explains in an e-mail that conditions are favorable “to be aggressively buying in New England.” The partner of an investment banking firm with McInerney says “the opportunity in real estate, particularly in good quality buildings located in strong secondary markets in major cities, can be a great hedge against the current uncertainty in the domestic and global equi- ty market.” A bubble in the government bond market is result- ing in “very attractive mortgage rates for moderately leveraged buildings,” adds Callandar.
As to the investment platform, it would appear in line with Knisley’s view on how to accrete returns, an approach shying away from pricey trophy wars or risky value-added gambits in favor of properties quietly outperforming the competition. Says McInerney:”Chris’ experience and relationships in the New England real estate market make him the ideal partner, and we look forward to working together to build a high-quality firm that becomes a meaningful player in the marketplace.”
Albany Road will pursue prospects in the $10 million to $50 million range, ultimately aiming to assemble $500 million in gross assets under management by conclusion of its fifth year, a/k/a 2017. Investments will be funded employing the group’s own equity and/or blended capital from other high net-worth investors and even institutional monies. A 60 percent debt com- ponent is anticipated in order to take advantage of what Knisley terms “today’s mispriced bond market.”
Among the product types being pursued will be industrial, office, medical office and retail. Knisley says the general strate- gy will be buying real estate bearing “a continual cash flow com- ponent, ideally coupled with some degree of a repositioning story.” Albany Road will consider select value-add opportunities “if the story makes sense and the project- ed returns are commensurate with the risk,” says Knisley.
The lone downside to Albany Road’s creation, accedes Knisley, was having to depart abruptly from R.J. Kelly Co., the venerable Burlington real estate firm that had enticed him to leave Koffler Group just over a year earlier and help build its New England portfolio. “Although my time with RJK was relatively brief, I cer- tainly enjoyed it and we accomplished a tremendous amount,” says Knisley, not- ing that the firm closed on more than $70 million of transactions in barely a year, headlined by the $51.5 million purchase this spring of the GTECH headquarters in Providence, RI, a gleaming office tower and textbook example of pursuing best- in-class product in tertiary locations. Knisley says those purchases and others created “some nice momentum” for a firm that is especially experienced in the self-storage arena. “I wish them well and hope that they can keep it going,” says Knisley.
In opting to join Albany Road, Knisley says the appeal of being an owner was a deciding factor, especially given the fertile environment. “Given the fledgling and fitful economic recovery and disconnect in the real estate market (of core pricing versus secondary markets), we are going to see many attractive commercial real estate investment opportunities for an extended period of time,” says Knisley. “And we feel strongly that a well-capitalized, nimble firm is going to be well-positioned to take advantage of these opportunities.” The company is operating out of 10 High St. in Boston’s Financial District, and is working on launching its website.
For now, Knisley is welcoming inquiries regarding Albany Road be sent to Knisley@albanyroadrep.com.