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Friday, June 19, 2009

NRC Realty Advisors Expands Services

NRC Realty Advisors has made a name for itself in the convenience store and gas sector as one of the leading realty companies. Over the last few years the firm has plunged heavily into the restaurant industry, and plans on becoming one of the preeminent realty advisors in the space, as well. What's also interesting about the company is that its name doesn't fully reveal the scope of services available to restaurant operators.

NRC was founded 20 years ago by Evan Gladstone as an auction and sealed bid contractor, selling over $2.2 billion in commercial and residential real estate since inception. But as NRC Managing Director Denny Ruben states, the company "got on the map with convenience stores," including assignments with Circle K and BP. Ruben came across NRC when he was general counsel and executive vice president with GE Capital, Franchise Finance, and he hired NRC to sell properties from various portfolios. In 2004, Ruben left GE to become a partner in NRC, and the company broadened its scope to include financial advisory.

In fact, real estate and financial advisory services can overlap. NRC offers advisory services on recapitalizations, portfolio analysis, sale/leaseback financing, workouts and restructures, merger and acquisitions, bankruptcy and divestitures. Or, said Ruben, financial advisory can stand on its own and not include the real estate part of the business, such as when NRC leads negotiations with a restaurant company's lender. Ruben himself has 30 years of experience in real estate and finance, and has brought on other principals with a broad breadth of real estate knowledge, including Sheree Andersen, VP, with 20 years of experience, who hails most recently from GE, as well.

And then there are the auction services, which is how they started in the first place. The company has a sealed bid program and vast database of more than 100,000 qualified buyers, says Ruben, helping them deliver the highest price in the shortest amount of time. For instance, the company was retained by GE in 2003, and since then has sold almost 1,400 properties for gross proceeds of more than $503 million. One of the more recent, high-profile engagements for GE was the Bennigan's Chapter 7 bankruptcy, where NRC sold most of the Bennigan's and Steak & Ale properties in which GE held an interest.

Looking ahead
"We've been hired to sell all sorts of commercial real estate, and restaurants can be sold," Ruben says. "We've learned that a 5,000 to 6,000 square foot restaurant on a good site will have appeal and probably can get sold. A former car dealership? It's hard to sell that real estate" because it's hard to reconfigure and rehab the space for another business.

And, with the glut of real estate out there, "you can lease for attractive rates and you don't have to worry about getting the capital to buy a site," he added.

As NRC and Ruben's group works with restaurant companies and lenders and investors on every day, Ruben tells his clients "there is money to be had out there" for the right deals. In the sale/leaseback arena, for instance, there are still major REITs and private investors looking at deals, but the underwriting is more conservative, with investors looking for 2.5x to 3x EBITDAR to rent coverage ratios, and higher cap rates.

Private investment firms are more aggressive than REITs, he says, but the 1031 market has literally all but shut down because they cannot get the debt to finance the acquisitions. The money center banks are still lending and they specifically want to do deals where they have a relationship, he notes, and regional and local banks are becoming a more prominent fixture in deals.

"I do see it opening up," says Ruben. "We've heard from people who want to get into the space and they see that there are opportunities."

For more information, visit www.nrc.com.

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