Amazon Same-Day Delivery is Massive Opportunity for Industrial Investors, according to Wharton Equity’s Peter C. Lewis

JERSEY CITY, NJ — Peter C. Lewis, Chairman and President of Wharton Equity Partners kicked off CAPRE’s Industrial Real Estate Revolution with some broad, yet critical, remarks. “Morning Inspiration with Peter C. Lewis: Finding Equity and Structuring Deals with Institutions and High Net Worth Investors in Today’s White Hot Industrial Arena” was a boisterous session that touched on everything from big picture strategy to the day-to-day nitty gritty – with a key connecting force: the future of the industrial space, which is likely going to arrive sooner than anyone ever thought.

Lewis began by situating this topic within the changing offerings of Amazon, specifically their recent shift to same-day delivery. “We’re at the dawn of a change that is going to affect us for decades to come,” he shared. “And industrial is just beginning to change. This is the top of the first inning. The things that are about to change in this business are things that no other asset class has ever seen before.”

Less than 1% of sales are same-day now, but experts predict that will creep up to 20% quickly, shared Lewis. “How is this possible?” he asked the room, full of investors, brokers, and property managers enjoying their coffee. “You’ve got to be right next to the population. The whole movement is about getting as close as you can to the population so that you can get to peoples’ doors as quickly as possible.”

However, Lewis then offered a perplexing disclaimer about the state of the industry – industrial supply is actually decreasing, because other asset classes offer higher margins for those looking to sell land and product. “What makes this fascinating is that the supply of assets around the cities are becoming smaller and smaller,” he explained. “That presents opportunities and challenges.”

“I’ve never seen an asset class go through as much change as industrial is about to, because of e-commerce and technology. It’s a game-changer,” he beamed, before making a prediction. “We’re going to start to see micro-distribution. You’re going to have to have places in the city – we’re looking at places in the city like garages, and dark retail. It can’t be on the 18^th floor of an office building. It’ll have to be in the basement, so that you can get goods to people, especially if it takes an hour to get over the bridge!”

Lewis then explained some nuances of structuring deals in the space – for example, industrial assets have often been misunderstood, and usually offer more value than meets the eye. Furthermore, institutional investors require a lot of time to make a decision, because of so many stakeholders. “So, you have to start socializing before you need the money. Seek out the institutions, and chat with them about what they’re doing. Talk to them about deals you’ve done and what you’re looking at. Don’t wait until you need the money to go to them – it’s too late.”

“Don’t forget that they’re very focused on expertise in markets — they want to grow,” he advised, offering another key piece of insight from his experience. “They’ll do a $7 Million USD deal, so long as they feel you can do more. So, you have to have ideas for how to scale – together. “ Lewis then shared that most sponsors put up about 10% of equity funding — on average. “That’s something to think about as you approach these institutions.”

Next up was a comparison of development deals vs value-add projects. “With development deals, you’ll probably see higher prefs, but as you get deeper into the waterfall, more juice back ends,” offered Lewis. “On the income deals, you’ll see a little lower prefs. Maybe you’ll get away with an 8, more likely a 9. The question is then, where do the waterfalls go from there? But believe, you can negotiate with these firms.” However, at that point, Lewis decided to offer a key piece of advice for anyone seeking to seal a deal.

“Early on, if you’re looking for money, quickly get to the bottom line,” he urged. “Say, Tell me what you guys are going to give us on structure. Don’t wait until you get the deposit, to say, wait, you want 15 pref? It’s too late at that point, and they know that. This is why I like to say you should socialize early — so that you know what they want. And funnily enough, once you start doing deals with institutions, they all start to worry that you’re going back to their other competitors. You can use this to your advantage. They need to know that there’s a credible threat of you going somewhere else — in a respectful way, of course.”

Before wrapping up his remarks and seeking questions from attendees, Lewis explicitly shared the moral of his presentation. “We’re in a great spot right now. It’s a unique point in history for this business. However, you have to be really, really focused to try to find properties, because it’s very hard. And you want to start thinking about where your equity is — and early,” he summarized. “And lenders, by the way, are important too. The smaller the asset, the more likely it is that you’re going to be dealing with local banks. You’re going to need to think about those relationships as well. Is there recourse, or is there not going to be recourse? We stay away from recourse as much as possible, but some banks can’t do that. So, you want to be thinking about your capital stacks early on.”

“My feeling is that anywhere along the east coast, where there’s a population, rents are early in their move up,” he then surmised, offering a key take-away for the room. “There could be a point where it slows down a bit, but I think that in the next couple of years, the concept of single-digit rents will be completely obsolete. And I think at some point we’ll see rents crossing over into the territory where office rents are.”

Wharton Industrial Announces 1 Million SF Spec Warehouse 100% Leased to Major Clothing Brand

Atlanta, GA. – (March 29, 2019) Wharton Industrial announces they have leased their 1 Million square foot development project in Atlanta, GA to PVH Corp., the company behind clothing brands including Calvin Klein and Tommy Hilfiger.  The recently-completed building was developed and built by Wharton Industrial, Red Rock Developments and an affiliate of Starwood Capital Group.

PVH Corp. has signed a 20-year lease at the distribution building, which is part of an industrial real estate project along Interstate 85 just south of Atlanta called Shugart Farms. Jones Lang LaSalle provided advisory services to the owners.

PVH will invest $77.6 million into the distribution center and warehouse.  The company will create 575 jobs, according to a release. In a statement Thursday, Gov. Brian Kemp’s office said the project will bring more business to the Port of Savannah.

PVH, formerly known by the brand Phillips-Van Heusen, has six divisions including Calvin Klein North America, Tommy Hilfiger North America and Heritage Brands Wholesale.

Wharton Industrial is a platform company of Wharton Equity Partners, a New York City-based real estate investment firm formed in 1987. The company has extensive experience acquiring, developing and operating all asset classes, including having recently purchased in excess of $450 million of multifamily properties primarily in the southeast US through its affiliate, Wharton Residential.  Wharton Industrial currently has 3 million square feet under construction and $100 million of existing buildings in the pipeline.

Peter Lewis Says E-Commerce is Changing Industrial CRE

JERSEY CITY, NJ – New Jersey may be the Garden State, but lately, you could be forgiven for calling it the e-commerce state. No Garden State CRE summit is complete without a conversation about the latest in shipping and receiving goods from orders placed online. That’s why CAPRE’s Northern New Jersey and Gold Coast CRE Summit featured a presentation, click here to view, by Peter Lewis, Chairman and President of Wharton Equity Partners, a firm which sold a wealth of properties in multi-family in favor of redeploying capital into industrial properties.

“Industrial Real Estate Capital Raising, Development & Leasing in 2019: Is New Jersey Positioned to Lead the Nation in Industrial Activity in the next Three-to-Five Years?” relied heavily on the 32 years of experience offered by Lewis, whose firm aims to looking ahead based on trend lines, to figure out the best to be putting their money. According to Lewis, this foray into industrial real estate has been the most exciting opportunity of his career —  because it is the only business within real estate that is undergoing such a profound transformation, thanks to technology.

“We’re at the dawn of a new industry,” he asserted, before giving a taste of what his firm has been up to recently. “We’re acquiring a building in Philadelphia, right next to Center City, about 300,000 square foot warehouse. When we went to see the CBRE broker and were just getting an overview of the market, he had a set up for the property crumpled up in the corner. We took a look at it, and he said, you don’t want this. It’s a crappy warehouse. There are pigeons in the rafters, there’s a ramp in the middle of it.”

“I asked where it was located, and he said, it’s next to 6 million people,” he continued. “So we immediately looked at it, said we’re going to buy this property, and we’re going to close on it in two weeks. So we’re going to just re-do it – pull the roof off, re-do the floors, re-do the parking lots, re-do everything. And already, we’re getting inquiries from Peapod, and from all of these other firms that want to get their stuff into the city within an hour.”

According to Lewis, what is so fascinating about this experience is how we live in a world that is divided. “Some people look at this real estate as though it’s your grandmother’s real estate from 50 years ago, but others are looking at it with regard to how it’s going to be used in the years ahead, thanks to what is occurring in the world right now,” he explained. After all, the pace of e-commerce sales is increasing exponentially. FedEx recently projected that the number of packages that are delivered in one day will double – from fifty million to one hundred million.

“15% of all sales (in the US) today are online, and in Europe it’s 23%. China’s growing faster. So we have these tailwinds pushing us forward into the consumption of online goods,” asserted Lewis, who then shared that his firm not only builds large distribution centers in the Northeast, but also in the Southeast.

The things that we look at in Industrial, especially with regards to the Northeast, is when you look at the Meadowlands for example, the pace of rent increases astounding. “Today we’re probably at $14-$16 bucks, depending upon the location, and those rents are jumping at least 5% per year right now.”

“As we look at the Northeast, particularly in this region, we honestly love the market around here. But we’re also very interested in the Lehigh Valley. We’re signing a contract right now to buy a 600,00 square foot warehouse down there. And the reason is because of density. All of this activity around e-commerce is predicated upon getting goods to consumers as quickly as possible.”

“You may have read about how Amazon recently announced that there would be no more 2-day Prime – it’s all 1-day Prime,” chuckled Lewis. “When that happened, people saw it and then went back to their jobs. But in the boardrooms of Wal-Mart and Target, they started crying. Because it meant that if they don’t catch up and do 1-day as well, they’re going to be out of business. There are retailers now that are looking at extinction – not just tepid sales. So there’s an urgency to figure out how to change their supply chain to get goods into the city faster.”

Wharton Equity Launches E-Commerce Industrial Platform

Developing 1 Million SF Warehouse/Distribution Facility in Atlanta

NEW YORK/PRNewswire/ — Wharton Equity Partners announced today the launch of its e-commerce industrial platform, Wharton Industrial, with the acquisition of an approximately 80-acre parcel of land in Atlanta. The property, which will be developed with a 1 million square foot warehouse/distribution facility is part of Shugart Farms, a master-planned industrial development with the potential of up to 14 million square feet. The project is a joint venture among Wharton Equity, Red Rock Developments, the Shugart family and a large real estate private equity firm. The Shugart family has owned the over 2,000 acres comprising Shugart farms for more than 50 years.

“We have been studying the effects that e-commerce is having on the logistics and distribution business and made a strategic decision to launch a major initiative to capitalize on what we believe will be significant opportunities in the many years ahead,” noted Peter C. Lewis, a founder and President of Wharton Equity. “It is our intent to build in excess of 10 million square feet over the next couple of years. In addition, we are keenly focused on acquiring obsolete warehouses around major cities and repositioning them into state-of-the-art properties that will attract “last-mile” users,” Lewis added.

The company will be concentrating on the primary and secondary markets in the US where it can develop buildings generally greater than 500,000 square feet, and which will appeal to users seeking Class A space. For its value-add properties, Wharton Equity will be targeting the top 25 MSA’s where the demand for real-time delivery is becoming a top priority of retailers.

Wharton Equity’s move into e-commerce warehouses is consistent with the firm’s history of identifying secular changes and moving quickly to develop significant businesses around these nascent trends. For instance, in 2012, sensing the pent-up demand for multifamily housing, Wharton Equity aggressively began acquiring value-add properties in the southeast US, and purchased $400 million of assets within 3 years.

“One of the great joys of my career has been the ability to proactively seize opportunities around big ideas before they become apparent to the investment community at large,” says Lewis. “It has been very rewarding that this pioneering approach, which is often lonely, has resulted in out-sized gains for our partners over the last 30 years.”

Wharton Equity Partners, formed in 1987 and with offices in New York City and Miami, is a diversified real estate sponsor with deep hands-on operating experience across various real estate assets and strategies. The firm serves as a holding company for a suite of real estate businesses, including Wharton Residential, Wharton Industrial, Wharton Hospitality and Wharton Urban, and has been involved with well in excess of $1 billion in transactions since inception.

Wharton Residential Acquires 210-Unit Multifamily Property In Nashville, TN MSA

Continues Focus on the Acquisition of Value-Add Properties in Strong Secondary Markets

NEW YORK, NY — Wharton Residential, a Wharton Equity company, announces the acquisition of Cedar Pointe, a 210-unit multifamily property located in Antioch, TN. The property, built in 1988, was acquired from the original developer in an off-market transaction. The purchase follows almost $400 million of multifamily acquisitions and dispositions the firm has undertaken over the last few years which have generated annual weighted average returns in excess of 25%.

The firm is planning an ambitious renovations program at Cedar Pointe including: replacing the siding with HardiePlank, changing out the windows; upgrading units; renovating the clubhouse, pool and leasing center and enhancing the landscaping. “We’re really excited about re-envisioning this asset by providing luxurious amenities such as a gourmet outdoor kitchen, jet sprays in the pool, cabana area, fire pit, WiFi throughout and great areas for gathering in the clubhouse,” says Peter C. Lewis, President and founder of Wharton Equity.

As an emerging sub-market in Nashville, TN, Antioch caters to residents seeking workforce housing, “This is an opportunity for us to transform a property, and significantly improve the residents’ experience all at a great value,” adds Lewis.

Antioch is located within 20 minutes of downtown Nashville and Nashville International Airport. The area is a beneficiary of the tremendous job growth the City is experiencing, particularly in the health care sector. Employers like HCA are in the immediate vicinity. Besides the robust job market, Nashville is one of the most sought-after places to live in the US with its professional sports teams, music industry, great culinary scene, and affordable lifestyle.

Wharton Residential, a family company of Wharton Equity Partners, is focused on the acquisition and development of multifamily properties primarily in the southeast United States. Over the last number of years, Wharton Residential has acquired in excess of $400 million of multifamily properties in partnership with major institutional and high net worth investors. Wharton Equity Partners, formed in 1987 and with offices in New York City and Miami, is a diversified real estate sponsor with deep hands-on operating experience across various real estate assets and strategies. The firm serves as a holding company for a suite of real estate businesses, including Wharton Residential, Wharton Industrial, Wharton Hospitality and Wharton Urban, and has been involved with well in excess of $1 billion in transactions since inception.

Peter C. Lewis, Guest Lecturer at Columbia Business School

 
New York — Peter C. Lewis, Founder and Chairman of Wharton Equity Partners, was a guest lecturer at the Columbia Business School where he presented in front of two real estate finance classes on the topic of the “Future of Real Estate.”

“I was honored to be able to speak to the students at Columbia Business School where I was a student some 30 years ago,” noted Mr. Lewis. “It’s such an exciting time in the industry with changes that are occurring and I wanted to share how I see the world going forward and the opportunities that are unfolding,” he added.

Mr. Lewis speaks from experience when commenting on trends in real estate, as his firm, Wharton Equity Partners, has established a reputation over its 30-year existence for being on the forefront of capitalizing on change and being nimble in taking advantage of opportunities. For instance, post the recent downturn, Wharton Equity was an early investor in multifamily assets located in secondary markets where the firm acquired over $400 million in assets. In addition, Wharton Equity has recently made an assertive move into big box industrial development in light of the burgeoning growth of demand from e-commerce and manufacturing companies.

“Going back to Columbia reminded me of how special this institution is, and how it spawned my curiosity about business. There is an electricity at the school shaped by its global student body and speaking in front of this inquisitive audience was something I will treasure for a long time to come,“ said Lewis.

Wharton Equity Partners, formed in 1987 and with offices in New York City and Miami, is a diversified real estate sponsor with deep hands-on operating experience across various real estate assets and strategies. The firm serves as a holding company for a suite of real estate businesses, including Wharton Residential, Wharton Industrial, Wharton Hospitality and Wharton Urban, and has been involved with well in excess of $1 billion in transactions since inception.

Peter C. Lewis Featured Speaker at the New York City Family Office 2018 Outlook Forum

 
New York — Peter C. Lewis, Founder and Chairman of Wharton Equity Partners, was the featured speaker at a family office conference held on December 12 at the law offices of Baker Hostetler located in Rockefeller Center.

Mr. Lewis’s presentation centered on his view on where real estate is headed in 2018 and beyond. He has spent a 30-year career observing trends and acting on these observations in selecting strategies for Wharton Equity to pursue. “Since founding Wharton Equity in 1987, we have chosen an investment approach which is agnostic to asset types or strategies. What governs where we invest is related to where we think things are going, rather than where they currently are,” notes Mr. Lewis.

For instance, capitalizing on the surge in e-commerce, the firm recently launched Wharton Industrial, a platform focused on the development of big box warehouses, as well as the acquisition of last-miles properties. The firm’s initial transaction is the development of a 1 million square foot warehouse/distribution facility located in Atlanta, GA. Additionally, in 2012, while others were targeting the primary markets for the acquisition of multifamily properties, Wharton Equity pursued secondary markets such as Savannah, Nashville and Charlotte, and acquired over $400 million of properties since that time. Finally, Wharton Equity was an early investor in self-storage amassing nearly 10,000 units before selling the properties to a public REIT and Northwestern Mutual Life Insurance.

“It has been one of the great joys of my career to have the freedom to pursue strategies that were pioneering at the time, and proved to be prescient in hindsight,” Mr. Lewis adds. “While there is obviously concern that the markets are getting over-heated, we see an enormous amount of opportunity in picking big themes to invest in, and letting time marinate our thesis.”

Wharton Equity Partners, formed in 1987 and with offices in New York City and Miami, is a diversified real estate sponsor with deep hands-on operating experience across various real estate assets and strategies. The firm serves as a holding company for a suite of real estate businesses, including Wharton Residential, Wharton Industrial, Wharton Hospitality and Wharton Urban, and has been involved with well in excess of $1 billion in transactions since inception.

District 36 Grand Opening in Midtown Miami

Miami, FL – Developers Wharton Equity Partners and Mack Real Estate Group have completed construction of the Eve at the District, named after an art piece (“Eve”) by Hawaii-based artist Anna Sweet which is featured prominently in the lobby. The project injected 195 luxury rental units and over 61,000 square feet of retail/restaurant space in an area nestled between Midtown Miami and the Design District. Located at 3635 Northeast 1st Avenue, the developers employed Stantec for architecture and design services. Susan LaFleur, director of hospitality and residential interiors of Stantec’s Miami Office reveals, “Our design team was seeking a ‘wow factor’ that would immediately engage and intrigue the guest and set the sensual tone of the space. Eve did that so wonderfully that naming the project after her was obligatory.” Two additional pieces of work by Sweet, will be displayed in the new building’s public spaces.

Featured in The Real Deal

City Furniture Signs as Flagship Tenant for District 36

Lease is for 28,000 sf of project’s total 63k sf of commercial space plus 195 apartments
 
By Ina Cordle

City Furniture just signed a lease as the flagship retail tenant at District 36, the new mixed-use project on the edge of Midtown Miami and the Design District.

The furniture showroom represents the first tenant for the recently completed property developed by Mack Real Estate Group and Wharton Equity Partners.

Comras Company CEO Michael Comras and Comras’ Irma Figueroa, director of retail leasing and sales, represented the developers in the 28,000-square-foot lease at 3635 Northeast First Avenue, according to a release. Monette Klein-O’Grady and Daniel W. O’Grady of Prime Sites Inc. represented City Furniture in what will be its first urban expansion. Terms of the lease were not disclosed.

The store will span the entire northern block of of Northeast 36th Street, from Northeast First Avenue to Northeast First Court, Comras said. The site will represent Tamarac-based City Furniture’s 17th showroom in Florida. 

In total, District 36 has 500,000 square feet, including 63,000 square feet of retail, showroom and café space, and 195 rental apartments above, at the intersection of Midtown Miami and the Design District.

Wharton Equity, a real estate investment firm with offices in Miami and New York City, has been active in the Miami market in recent years. In December, the firm, together with Northwood Ravin, bought the late Marty Taplin’s office building and property in Bay Harbor Islands for $20.25 million, with plans to develop a mixed-use project. Wharton Equity also owns a 2.3-acre development site in the heart of Miami’s Central Business District, zoned for more than 2 million square feet of mixed-use development, including more than 2,200 residential units. It also owns and is renovating the Sheraton Miami Airport Hotel in partnership with Hersha Hospitality and a New York private equity fund.

The area on the outskirts of the Design District is increasingly attracting furniture and furnishings stores, as showrooms continue to be priced out of the district’s core. Nearby, real estate investor Sam Herzberg bought the Brown Jordan building at 3625 Northeast Second Avenue for $13 million in May 2016. And art collector Ella Fontanals-Cisneros plans to redevelop a building for design-related tenants at 301 Northwest 36th Street, which she bought in February 2015 for $8 million.

Featured in Multi-Housing News Online

Wharton Acquires 18 Apartment Communities for $250 Million

MHN Exclusive

New York — Wharton Equity Partners has completed the acquisition of an 18-property multifamily portfolio encompassing 4,179 units. The New York City and Miami-based real estate investment firm paid $250 million for the portfolio. The acquisition brings Wharton Equity’s recent multifamily purchases to over $400 million, a total the firm is seeking to significantly add to in 2014 with its expansion into the New York City area and Miami markets.

Wharton completed the purchase via a joint venture with an institutional partner and BH Management, a national multifamily property owner and operator. Wharton will provide comprehensive asset management and operating partner oversight, while BH will serve as the property manager.

Most of the portfolio is situated in North and South Carolina, with the remainder located in Kentucky, Kansas, Texas and Georgia. Many of the portfolio’s properties are in highly sought after markets such as Columbia, S.C., Charlotte and Savannah.

“The properties were undercapitalized,” Peter Lewis, president and founder of Wharton Equity Partners tells MHN. “Besides deferring capital improvements, there were not sufficient funds for proper marketing and other less tangible initiatives, [such as] landscaping, lighting and signage. This erodes employee morale, as well as reduces the competitiveness of the properties. With the capital Wharton and its partners are bringing to the portfolio, we believe the properties will be quickly infused with a new sense of excitement and commitment.”

Lewis reports that several factors attracted Wharton Equity to the portfolio. Among them were locations in strong secondary markets, the potential to add value through interior and exterior improvements, and the fact that the transaction size provided economies of scale. In addition, Wharton was able to negotiate directly with the seller in an off-market transaction.

Challenges included coordinating due diligence on 18 assets, and closing within 60 days, as required under the contracts. Another hurdle was securing nearly $200 million in debt “flexible enough to allow us to execute on our business plan of repositioning and selling the assets,” Lewis says.

Wharton Equity intends to invest approximately $17 million into the properties over the coming 18 months. That capital infusion will go toward completing deferred maintenance and undertaking value-add upgrades to the properties and unit interiors.

With the firm’s history in residential development, Wharton Equity always brings a fresh perspective to its examination of properties, Lewis says. That perspective may result in the company initiating simple steps like the relocation of signage, the addition of lighting or the painting of an accent wall in a model. It may also mean evaluating staff and assisting in training.

“Given Wharton’s experience in construction, Wharton will work closely with BH Management in reviewing capital improvement programs,” Lewis says.

$45 Million Savannah Acquisition

New York — Wharton Equity, through its Wharton Residential Platform, has acquired a brand new, 326-unit Class A property located in Pooler, Georgia, a highly-desirable sub-market of Savannah, which was in the final stages of lease-up. When the company went into contract, the asset was under 60% occupied and was 80% leased upon closing, evidencing Two Addison Place’s strong demand. “Continuing our strategy of purchasing great multifamily properties in growing markets, Two Addison Place is a prized acquisition that we will be proud of owning for years to come,” states Peter C. Lewis, President of Wharton Equity.

Inspired by the architecture of Addison Mizner, architect of The Cloister Hotel in Sea Island, GA and many of Florida’s most luxurious landmarks, the property has red tile barrel roofs, wrought iron balcony railings and stucco siding. Although in first-class condition, Wharton Equity will be enhancing the asset from adding a fire pit and a second gracious fountain, to supplementing landscaping, signage and lighting.

Wharton Residential, a family company of Wharton Equity Partners, is focused on the acquisition and development of multifamily properties primarily in the southeast United States. Over the last number of years, Wharton Residential has acquired in excess of $400 million of multifamily properties in partnership with major institutional and high net worth investors. Wharton Equity Partners, formed in 1987 and with offices in New York City and Miami, is a diversified real estate sponsor with deep hands-on operating experience across various real estate assets and strategies. The firm serves as a holding company for a suite of real estate businesses, including Wharton Residential, Wharton Industrial, Wharton Hospitality and Wharton Urban, and has been involved with well in excess of $1 billion in transactions since inception.

Featured in Real Estate Weekly

Sharp learning curve puts money maker Lewis on the fast track to next big thing

By Konrad Putzier

Many developers spend their entire career specializing on one region or asset type. Peter C. Lewis has found success by doing the exact opposite.

Over his almost 30 years in real estate, the chairman, president and founder of Wharton Equity Partners has switched from developing master-planned communities in Greater New York to acquiring self-storage units, to purchasing multifamily buildings in the South and Midwest, and then back to buying multifamily buildings in Greater New York.

“I’ve always looked at the world and said ‘What’s going on and how can we take advantage of it’,” he said. “We want to be adjusting to the times and not be beholden to any particular strategy or asset class.”

This flexibility has not only led him into unchartered real-estate territory, but also made him an investor in emerging growth companies such as tech startup dataminr – a company that mines Twitter for breaking news.

Right now, Lewis believes the times are favoring multifamily buildings in cities such as New York or Miami.

Wharton Equity bought a two million square foot development site in Miami last year, and hopes to invest an another $250 million in New York and Miami in 2014 – half of Wharton’s planned total investment volume for 2014.

Lewis, a native of Great Neck, Long Island, did not start out in real estate.

After graduating from Wharton with a BS, he began a career in banking in the early 1980s. Lewis worked as a credit analyst at Manufacturers Hanover Trust, got an MBA at Columbia and had a year-long stint at Arthur Andersen (“not my cup of tea”), before earning his spores in investment banking at E.F. Hutton on Wall Street.

As an analyst, he worked in the division that financed real-estate projects for three years. “I was getting antsy,” he recalled. “I didn’t like the bureaucracy and I wanted to be the guy who buys the building, not just the provider of capital.”

In 1986, Lewis left E.F. Hutton and decided to set out on his own. Together with David E. Eisenberg, Wharton’s current CEO, the ambitious twenty-something bought a development site for a shopping center on Long Island.

“I really didn’t know what I was doing,” he recalled. “It’s a whole different story when you are the recipient of capital, instead of just providing the money. But nothing speeds up the learning process more than knowing your financial survival depends on it.”

In the end, Lewis and Eisenberg flipped the site for almost a $1 million profit, and used the money for a deposit on a 317-unit residential development site in Montville, NJ. With the help of Howard Blitman and his construction company, who gave the two no-names much-needed credibility among investors, Lewis and Eisenberg built the 317-unit townhouse and condo complex, Montville Chase. The project gave Wharton Equity its first credentials as a developer.

Over the following years, the company developed several residential projects in Greater New York. But in the mid-90s, Lewis noticed that land in and around New York was becoming scarcer and more expensive.

“We concluded the housing business wouldn’t be for us unless we moved to places like Florida or California,” he said. “So we moved into income-producing properties, setting our sights initially on self-storage buildings.”

“It was a fantastic business — no one ever called and complained that the water wasn’t running properly.”

Wharton Equity started off by buying almost 80 percent of all self-storage units in the Hamptons, rebranding them, and selling them for a profit. Then, the firm repeated the exercise, buying 6,500 storage units in Long Island City, the Bronx and Yonkers from GE Capital.

Lewis painted the buildings purple to make them stand out, unified them under one brand name, and sold them to Northwestern Mutual Life for a substantial profit.

Around 2006, Lewis formed an opportunity fund with an institutional partner in anticipation of the pending downturn.

The fund acquired a mixed-use project in Lexington, Kentucky as well as two warehouse buildings in midtown Manhattan, specializing in high-end art storage. Facing a difficult fund-raising environment, Lewis subsequently sold his interest and set his focus on multifamily acquisitions.

Wharton Equity has been making up for lost time, buying more than $400 million in multifamily projects, consisting of over 6,400 units in eight states, in less than two years.

Last month, Wharton Equity announced the acquisition of a $250 million, 18-property multifamily portfolio.

Kenneth Hoff, president of Multi Housing Equity Partners, who helped source and structure the deal on behalf of Wharton Equity, is actively involved in helping the company find additional properties to acquire in NYC and the southeast.

Despite his busy schedule, Lewis has found time to teach a younger generation the tricks of the trade.

He has taught a class in entrepreneurship at Columbia University, and said he is looking to teach at the University of Pennsylvania’s Design School this spring. Lewis, who is married with three children and lives in Old Westbury, said he is far from done.

“I’d like to see if we can do more than $500 million in acquisitions this year,” he said, adding that he plans a “major push” in New York multifamily and hospitality.

“We are moving into a stage of the real estate cycle where the theme will be urban,” Lewis said. “Real money will be made designing cool projects in cities like Miami and New York that cater to renters seeking social, lifestyle-type living in a vertical environment.”

Then he added: “I think we can go bigger. It’s not my ego, it’s more a question of: why not? Setting high goals and achieving them is the highest joy.”

Featured in The Real Deal: New York City Real Estate News

District 36 Tops Off in Midtown Miami

Construction began mid-year 2015

By Sean Stewart-Muniz

Developers Wharton Equity Partners and Mack Real Estate Group have topped off their 19-story apartment building District 36 in Midtown Miami.

Construction of the mixed-use tower first began in mid-year 2015 after Wharton and Mack closed on $68 million in construction financing with JPMorgan Chase Bank.

The development partners are building 195 rental units and 63,000 square feet of retail space split between the first and second floors. Comras Company, headed by Michael Comras, is handling leasing for the building’s commercial spaces.

Located at 3635 Northeast 1st Avenue, District 36 is expected to open by the end of 2016. The development partnership first paid $9 million for the acre-sized site in 2014, according to Miami-Dade County property records.

ADD Inc., now with Stantec, is designing the project. The architecture firm’s principal Jonathan Cardello told The Real Deal in May 2015 that the project’s purpose was to act as a bridge between Miami’s Midtown and Design District neighborhoods.

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Sub-Zero Wolf inks lease for flagship showroom in Miami Design District

Wharton Equity Partners is developing the two-story building at the entrance to the Design District

By Ina Cordle

Sub-Zero Wolf, the high-end appliance maker, has signed a lease for its first Florida flagship showroom in Miami’s Design District, The Real Deal has learned.

Lyle Chariff, president of Chariff Realty Group, told TRD Sub-Zero Wolf is taking the entire 9,000-square-foot second floor of the upcoming building at 3711 Northeast Second Street being developed by the real estate investment firm Wharton Equity Partners.

The sale to Wharton Equity Partners included the conceptual designs by Touzet Studio and entitlements, Chariff said at the time. One of the conditions that the purchaser made was that Chariff Realty Group stay on to be the exclusive leasing agent.

When completed, the new two-story building, called 3711, will have a 10,000-square-foot first floor with 32-foot tall ceilings that will make the second floor appear “to float” over the highway, Chariff said.

“We believe this is going to be the most visible showroom in the Design District, considering its position on the highway, I-195, which has over 100,000 eyeballs a day going in and out of Miami Beach,” David E. Eisenberg, CEO of Wharton Equity Partners, told TRD.

The property will also have an 8,000-square-foot rooftop event space with a retractable cover for entertaining. “Sub-Zero fell in love with this space because of the rooftop deck being a 360-degree view of Miami,” Chariff said.

Sub-Zero will be able to use the rooftop for events and for demonstrating summer kitchen appliances, Eisenberg said. “We, as the owner of the building, expect to generate additional income renting out the rooftop for select special events,” he added.

New York-based Wharton, founded by Eisenberg and Peter C. Lewis in 1987, has been active in the Miami market in recent years. Wharton just topped off District 36, a 500,000 square-foot, mixed-use project at Northeast 36th Street and Northeast First Avenue on the edge of the Design District and Midtown. Wharton also owns a 2.3-acre development site in the heart of Miami’s Central Business District, zoned for more than 3 million square feet of mixed-use development, including more than 2,200 residential units.

The building is scheduled for completion by the end of this year, and Sub-Zero will move in during the spring of 2017, Eisenberg said. Currently, Madison, Wisconsin-based Sub-Zero has just one showroom in the Southeastern U.S., in Atlanta, according to its website.

The new showroom is part of the push for furniture showrooms and home furnishings stores to move to the edge of the Design District, as luxury boutiques take over the heart of the area. Outdoor furniture company Brown Jordan recently opened its store in a new property developed by Chariff Realty Group at Northwest 36th Street and Northeast Second Avenue, near Midtown Miami.

Chariff said rates for ground floor space can range from $100 to $150 per square foot in that part of the Design District. He declined to disclose Sub- Zero’s rate, but said it is at a premium to other second floor space in the Design District due to its visibility and prominence on the highway.

“We have had a lot of serious interest and offers from tenants who want the first floor and we have been very selective to create the ideal co-tenancy,” Eisenberg said. “Because we have Sub-Zero taking the entire 9,000 square-foot space the tenants are willing to pay extra to be on the first floor.” He expects the first floor to have complimentary businesses such as design and home furnishings firms.

“We’re very strong believers in Miami and we believe the long term prospect of Miami is extremely strong,” Eisenberg, who leads the firm’s Miami office, told TRD. “We are making a long-term investment in Miami.”