People - FEBRUARY 7, 2014

Industry veterans form Coretrust Capital Partners

by Reg Clodfelter

Three founding partners of Thomas Property Group — Thomas Ricci, Randall Scott and John Sischo — have teamed with Charles Toppino, a founding partner of Secured Capital and current president of Oak Pass Capital, to form Coretrust Capital Partners, a new private real estate operating company. The formation of the new company follows last year’s merger between TPG and Parkway Properties.

A vertically integrated operating company, CCP will offer institutional investors a wide array of services including fiduciary investment services, property management, leasing and property development. Initially, the firm will invest with separate accounts and dedicated joint ventures, though the founders have not ruled out raising a commingled fund at some point in the future.

“The timing is great,” Sischo explains. “We believe this is an exceptional time to acquire core-plus and value-add office properties in strong submarkets in the West Coast, Southwest and mid-Atlantic regions, and we have several initiatives under way.”

The firm anticipates investing $250 million of equity in its first two years — $100 million in 2014 and $150 million in 2015 — which is expected to produce approximately $700 million in gross asset value.

Toppino, a long-time industry veteran, formed Secured Capital in 1990 with partners from his time with Drexel Burnham Lambert. He went on to form Oak Pass Capital two years ago, and remains with the firm.

Ricci, Scott and Sischo have worked together for more than 15 years since founding TPG with Jim Thomas in 1998. “The three of us had always planned to put a company together,” Sischo says.

“We are a cycle-tested team, a team that has managed a significant amount of institutional capital with major pension plans, and we have taken a company public,” Sischo adds. “You don’t see that kind of management team hanging around.”

As part of TPG, the three worked together on a number of prominent acquisitions and build-to-core projects, including the development and construction of a 1 million-square-foot tower in Sacramento, Calif., that would become the headquarters of the California Environmental Protection Agency and become the only LEED Platinum certified building worldwide for existing buildings over 500,000 square feet.

As members of TPG, the CCP team also worked with the California State Teachers’ Retirement System on the acquisition and development of Arco Plaza in Los Angeles, which eventually became City National Plaza.

“We bought a building that was effectively redlined in the market and completely rebuilt the systems, taking a building that tenants didn’t want to occupy and turning it into a premier building in the marketplace,” Sischo says.

The 2.5 million-square-foot project took nearly five years to complete and brought the building from lease levels of around 20 percent to a little less than 90 percent.

“It is a classic case study of everything that needs to be done,” Sischo continues, “from redevelopment to repositioning and rebranding.”

TPG merged with Parkway Properties in October 2013. “We found ourselves in a position in which we thought the best execution for the shareholders was a merger of the company,” Sischo explains.

As a condition of the merger, Sischo and his partners retained three properties from TPG’s portfolio totaling approximately 370,000 square feet in Northern Virginia. These buildings became the seed properties for CCP.

CCP will take some of the nation’s leading executors of develop-to-core strategies and let them do what they do best. “We think we’re very well positioned for where the office market is going as it relates to employment growth,” Sischo concludes. “Part of the real motivation of why we think this is a great time is were finally seeing rent growth without a lot of new development, and we think there is a real hole to get into the market today.”

CCP will have a West Coast headquarters in Los Angeles that can be reached at +1 213-689-0000, and offices in Philadelphia and Northern Virginia to run its East Coast operations.


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