By Sarah Trefethen
The key to Crown Acquisitions’ successful retail purchases has been thinking like a retailer, according to Haim Chera, who discussed his family company’s approach to real estate at the YM/WREA luncheon last week.
“Knowing the name, or the product or the brand that should be in the space is really our investment strategy,” he said.
At 666 Fifth Avenue, where Vornado recently purchased the retail space from Crown and other investors for $707 Million, Crown added value by identifying tenants who “didn’t need to be there” and replacing them with those that felt like a better fit, Chera said.
And the company is not afraid to back up its instincts with cold, hard cash.
In 2008, the landlords paid Brooks Brothers $47 million to vacate its space in the building eight years before the lease expired. That space was later occupied by the Japanese retailer Uniqulo in a blockbuster 2010 deal.
Convincing a retailer that a landlord knows what’s best for their business can also take persistence.
Again at 666 Fifth, Zara’s flagship store opened this March. But Chera recalls that he started courting the Spanish retailer back when Crown first bought its stake in the building. At one point, he was thrown out of an office, but he didn’t give up. “I believed in my heart that they needed a space on Fifth Avenue,” he said.
Like many landlords, the Cheras got their start in real estate because they were retailers themselves, owning and operating a chain of children’s stores in Brooklyn.
Haim started out on the retail side of the family business, but remembers that his grandfather always placed a premium on real estate.
“Every time we opened a store, there was a clock to see how quickly we could own the building,” he said.
His first lease was a 2,000 s/f Kay Jewelers on Fulton Street in Brooklyn. “I can remember how nervous I was to deliver it to the tenant on time and make it perfect,” he said.
To this day, there are things that make him nervous. Chera said he’s “afraid” of new developments, because of the time line involved. And he also looks closely at the infrastructure of an area before deciding to make an investment.
“We’re afraid of areas that don’t have public transportation,” he said, recalling that F.W. Woolworth never opened a store where there wasn’t a subway stop.
The flip side of that nervousness can be heard in Chera’s enthusiasm for the Santiago Calatrava-designed transportation center under construction at the World Trade Center, where passengers from 11 subway lines and the PATH train will disembark.
“If you ask me what has the biggest upside in Manhattan right now, it’s the Financial District,” he said, adding later, “they can’t build enough retail.”
Crown’s winning strategy means sticking with what they know, and turning to trusted partners when a deal brings them in contact with other assets, such as office or hotel space, according to Chera. “We try not to be generalists,” he said.
