Bain Capital Real Estate and 11North Partners Form Joint Venture to Invest in Open-Air Retail Centers
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Examining the strategic partnership between Bain Capital Real Estate and 11North Partners, we observe a significant move in the real estate investment sector. This collaboration aims to capitalize on the current trends favoring open-air retail centers. Factors such as the persistence of work-from-home arrangements and the growth of omnichannel shopping have bolstered the demand for these types of properties. The partnership's broad investment mandate across the risk-return spectrum indicates a flexible strategy that may appeal to investors looking for diversified exposure within the retail real estate market.
Furthermore, the historical performance of Bain Capital in the consumer and retail sector adds a layer of confidence in their ability to identify and leverage emerging market trends. The emphasis on necessity-based tenants is particularly noteworthy, as these tenants tend to provide more stable cash flows and may be less susceptible to economic downturns. The strategic transformation and merger led by Brian Harper at RPT Realty suggest a forward-thinking approach that could be beneficial in navigating the evolving retail landscape.
The formation of this partnership is indicative of a market opportunity that Bain Capital and 11North Partners believe is undervalued. The mention of 'historically low supply growth' coupled with 'increased demand' suggests a favorable supply-demand dynamic that could lead to capital appreciation and potentially above-average yields for investors in the medium to long term. The strategy to focus on necessity-based tenants within open-air retail centers is a defensive play, hedging against the volatility of the broader retail sector which continues to be disrupted by e-commerce.
Investors should note the potential for this partnership to create a high-quality portfolio that could deliver strong returns. However, it is also important to recognize that the retail sector is subject to rapid change and the success of this venture will depend on the partners' ability to adapt to consumer behavior and the competitive landscape. The reference to 'bifurcation of the retail sector' hints at a selective approach to investment, targeting sub-sectors within retail that are positioned for resilience or growth.
The strategic partnership between Bain Capital and 11North Partners is set against a backdrop of evolving consumer habits and the shifting dynamics of the retail real estate market. The focus on open-air retail centers reflects a nuanced understanding of how the retail experience is changing, with an emphasis on convenience and safety, which have become more prominent due to the pandemic.
Real estate investors should be aware of the long-term implications of this trend, as the preference for open-air centers over traditional enclosed malls could reshape the landscape of retail real estate investment. The expertise brought by Brian Harper and his team, given their experience with RPT Realty and its merger with Kimco Realty, suggests a strategic vision that could identify and execute on value-creating opportunities within this specific niche of the market.
It's also important to consider the operational aspects of managing these assets, where the team's experience can be a decisive factor in driving occupancy rates and rental income. The partnership's ability to leverage Bain Capital's consumer insights and retail connections may provide a competitive edge in tenant selection and asset management.
11North was founded by CEO Brian Harper, a 25-year real estate industry veteran with significant retail experience. Most recently, Mr. Harper served as President and CEO of RPT Realty (NYSE: RPT), where he successfully led a strategic transformation of the company and oversaw its merger with Kimco Realty (NYSE: KIM) in January 2024. At 11North, Mr. Harper is joined by several senior executives from RPT Realty, who have a long track record of working as a team to create value.
“Today, open-air retail centers benefit from a confluence of tailwinds and strong real estate fundamentals that create an attractive risk-return opportunity,” said Mr. Harper. “We believe historically low supply growth and increased demand for open-air shopping centers, driven by strong retail sales, persistent work-from-home trends, and the increased prevalence for omnichannel shopping, provide a favorable backdrop for the sector. Throughout my career, I have admired Bain Capital for their deep knowledge across multiple sectors throughout the world and their strong investment track record. We share a strong conviction in the open-air retail space, and we are excited to leverage their deep retail connectivity and differentiated consumer insights. With a demonstrated history of generating strong returns and a lack of challenged legacy assets, our focus will remain on offense in what we believe will be a compelling investment environment.”
“Through Bain Capital’s 40 years of investing in the consumer and retail sector, in partnership with such brands as Staples, Domino’s Pizza, Burger King, Dunkin’ Donuts, Canada Goose, and
About Bain Capital Real Estate
Bain Capital Real Estate was formed in 2018 and pursues investments in often hard-to-access sectors underpinned by enduring secular trends that drive long-term demand growth for real estate assets and services. The Bain Capital Real Estate team has been executing its strategy since 2010 (formerly as a part of Harvard Management Company), having invested and committed over
About 11North Partners
11North Partners is a real estate investment firm focused on curating a portfolio of retail investments diversified across markets and product types. With a focus on the intersection of superior performance and bold vision, the 11North team is dedicated to redefining the traditional approach to retail real estate.
The team’s combination of deep industry expertise, retailer and owner relationships, and blue-chip institutional partners provides unique insight into the ever-evolving retail landscape and unparalleled access to deal flow. 11North seeks to deliver attractive risk-adjusted returns through unlocking value across retail verticals including real estate ownership, debt and operating company investment. For more information, visit https://www.11northpartners.com.
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Source: Bain Capital Real Estate
