Real estate private equity

Leased, income-producing property held for the long term. We pay closest attention to lease structure, the tenant's business, basis and replacement cost.

Supporting investments: Opus Packaging in Caledonia, a manufacturer's headquarters facility under a long-term lease. The 60th Street Warehouse in Kentwood began as a development and is now a fully leased building that ownership has retained.

Read more about stabilized real estate.

Properties where active ownership can change the outcome: renovation, leasing, repositioning or a new use.

Supporting investments: 4500 Cascade Road, a 1972 office building fully renovated in 2020 and reconfigured for several tenants. 4444 52nd Street, an industrial building in Kentwood acquired in late 2021, renovated and leased to SnackCraft. 833 Michigan Street, a former retail building redeveloped as medical office and retail space.

Read more about value-add real estate.

Several of our investments are industrial buildings, and they differ from one another in useful ways.

The 60th Street Warehouse is a new building designed for logistics, manufacturing and distribution, located in Kentwood's industrial corridor near US-131, I-96 and Gerald R. Ford International Airport, and leased to Proper Beverage Co. and Trane. 4444 52nd Street is an existing building on a 22-acre site, renovated for a food manufacturer that has since added production lines. Opus Packaging is a corrugated and packaging manufacturer's headquarters facility, acquired through a sale-leaseback.

When we evaluate an industrial building we start with function. Clear height, loading, power, truck circulation, site coverage and room to expand determine who can use the building, and the number of businesses that could use it is what protects the investment if the current tenant leaves. Location comes next: highway access, labor and the municipality's attitude toward industrial users. Then basis, measured against what it would cost to build the same thing today.

Supporting investments: 60th Street Warehouse, 4444 52nd Street, Opus Packaging.

Third Coast Development, our affiliate, has focused on urban development in Grand Rapids since its founding, and two Carbon River investments are mixed-use properties in the city.

833 Michigan Street is the commercial half of a project that paired medical office and retail space with Lumberyard Lofts, the residential building next door. The two were planned and built together. American Seating Park is the conversion of the historic American Seating Company factory complex on the West Side of Grand Rapids into a campus of office space, apartments and a restaurant.

Housing appears in our investments as part of mixed-use projects like these and, through a mezzanine debt investment, as credit extended to an affordable housing fund. The principals' direct apartment development, including Diamond Place and other projects on the Michigan Street corridor, has been carried out through Third Coast Development.

Supporting investments: 833 Michigan Street, American Seating Park.

A sale-leaseback lets a business sell its building and remain in it under a lease. For us it is a way to acquire well-located property with a committed occupant, and the underwriting covers both the building and the business.

Supporting investment: Opus Packaging. Carbon River acquired the real estate that houses the headquarters of Opus Packaging Group in Caledonia and leased it back to the company under a long-term lease.

Read more about sale-leaseback real estate, including the considerations for a business owner.

Carbon River was created to pursue opportunities beyond traditional ground-up development, and development remains Third Coast Development's business. Where a development makes sense as a long-term investment, the two firms work together.

Supporting investment: the 60th Street Warehouse. Third Coast Development handled site selection and acquisition, entitlements, design coordination, construction management, tenant negotiations and the capital structure. Both leases were signed before the building was delivered, and ownership was retained after completion.

We treat development risk as its own category. A site needs zoning, utility capacity and access suited to the building planned for it before the rest of the plan matters.

Some real estate opportunities arrive attached to a business, a capital structure problem or an ownership problem. We also invest in positions other than direct ownership where we understand the underlying property or company.

Supporting investments: SnackCraft, a convertible debt investment tied to the tenant at 4444 52nd Street, and the mezzanine debt investment noted above.

Read more about special situations.

Most of our property is in Kent County: Grand Rapids, Kentwood and Caledonia. That concentration is deliberate. Deep roots here give us relationships with brokers, lenders, contractors and municipal staff, and a working memory of which buildings have changed hands and why.

We invest outside the region when the opportunity and our knowledge of it justify the distance. Carbon River sponsored an investment in a former big-box retail building in Burton, near Flint.

The private equity page gives a fuller account of the principals' work in specific West Michigan communities.