Less than two months after Thomas Properties Group completed its $1.2 billion merger with Parkway Properties, the former senior management team from the Los Angeles-based real estate investment and development firm have formed Coretrust Capital Management. Thomas Ricci, Randall Scott and John Sischo will be joined by Charles Toppino, founder and president of Oak Pass Capital, in the new venture.
In September, Thomas Properties announced that it would be liquidating the assets in its joint venture with the California State Teachers’ Retirement System (CalSTRS), for whom it had managed approximately $4 billion in gross asset value over a 10-year partnership. As part of the merger, Parkway lent Thomas Properties $80 million to help liquidate the joint venture, and two Houston office towers owned by Thomas Properties and CalSTRS landed in Parkway’s portfolio.
Despite the rocky conclusion to Thomas Properties’ story, Sischo told PERE that the Coretrust team takes pride in its history. “Tom, Randy and I basically ran the firm, and I think that legacy is who we are,” he said. “Now, we need to say, ‘That’s the old company and what we did, and this is the new company.’ We have a lot of history, but we’ll be able to do even more than we’ve done in the past.”
Sischo argued that Coretrust’s “cycle-tested” team distinguishes the firm from other new players. At Thomas Properties, Sischo served as co-chief operating officer and led the firm’s capital raising, acquisition and finance efforts. Ricci, an executive vice president, led entitlement and redevelopment, while Scott, another executive vice president, oversaw asset management and development on the East Coast. Toppino, meanwhile, was a founding partner of Secured Capital, which merged with Eastdil Realty in 2006 to form brokerage giant Eastdil Secured.
Sischo, Ricci, Scott and Toppino have been involved in such notable projects as Gas Company Tower and Wells Fargo Center in Los Angeles, as well as the California Environmental Protection Agency building in Sacramento. In addition, they have managed money for such major institutions as TIAA-CREF and UBS.
Coretrust will focus on acquiring core-plus and value-added office properties through co-investments and separate accounts in such markets as Los Angeles, San Francisco, Seattle, Houston, Austin, Dallas and the Washington DC area. “Every prognosticator in real estate says that office is in the beginning of its recovery,” said Sischo. “We see a strong correlation with the job growth in our target markets.”
Coretrust plans to put out approximately $250 million of equity over the next two years in order to make more than $600 million in investments, according to Sischo. The firm currently holds a portfolio of three assets totaling 370,000 square feet that it retained from Thomas Properties and has a pipeline that includes investments in Seattle and a portfolio in the Mid-Atlantic region.
Coretrust is backed by an “institutional opportunity fund partner,” which Sischo did not reveal but described as “a fund back-stopped by major institutions.” As of now, the firm does not have plans to launch a commingled fund.
“Strategically, in our minds, this is the best path,” Sischo told PERE. “I’ve raised enough money to know that we want to concentrate on building a pipeline and building a story to bring to our investors.”