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Profile
Across America –
Federal regulators are closely examining banks that finance a large number of real estate projects. Bank regulators are particularly concerned with the surge in commercial real estate loans, up 16 percent to $1.3 trillion last year. Obviously, bankers aren’t thrilled with the possibility of stiffer regulation, which could stifle business. If the current proposals become regulations, bankers fear the safety measure could put a damper on business. With these federal regulators cracking down on the commercial real estate lending world, Across America isn’t worrying. In fact, according to Ann Schmitt, CEO of Across America, the company is embracing it. “It opens a tremendous opportunity for Across America. We are an equity development partner as opposed to a lender and we will continue to do 100 percent financing. For Across America, it is a huge opportunity to grow our business.” Ms. Schmitt took control of the company as president and CEO during July 2006.
The regulators point to the banking crisis of the late 1980s and early 1990s. As a result, thousands of banks and savings-and-loan institutions from 1987 to 1994 collapsed and needed federal aid, according to the Federal Deposit Insurance Corp. “The regulators want to avoid the same catastrophic downturn of late 1980s. The foreclosure rates are climbing, which is causing concern for the commercial lending industry,” Schmitt points out.
Many times developers cannot obtain their full profit potential due to a lack of additional financing capacity, which minimizes the number of developments they can complete. Across America is able to provide 100 percent financing, thus allowing the developer to take on additional projects, which in turn will increase their overall profit. Once the developer builds the project, profits are split 50/50 when the project is sold upon completion, a process that usually takes six to nine months. “From our customers, it isn’t that a bank won’t do another commercial real estate loan, but there is a question as to how much real estate lending they want to do, how they will allocate capital and what portion of that capital will be allocated to small real estate commercial projects,” Schmitt explains. “Banks are looking to ask a few more questions. The developer will have a few more hurdles to cross. The Across America finance process, however, is simple, easy and very direct.” One criterion to Across America’s preferred types of transaction is for the site to be in the shadow of an anchor, big boxes or grocery-anchored centers. The lease term must be at least 10 years and NNN.
Considering that the concept of 100 percent financing is the company’s specialty, Across America is remaining optimistic. The company’s goal is to penetrate five percent of the $9 billion small box retail market within five years, and is concentrating on single pad or small box transactions with project costs ranging from $1 million to $4 million. “We focus on businesses in small box retail, single-pad development space and provide 100 percent financing to the developer for those projects, from land acquisitions to entitlements,” Schmitt explains. “Across America can allow the developer to extend their range, unlike bank financing.” But that doesn’t necessarily mean that the company is against banks. “Across America has good relationships with banks,” Schmitt, a former banker herself, points out.
One of the company’s success stories was a project with a Lone Star Steakhouse in CA, completed in the last year or so. Across America provided 100 percent financing and worked with the developer, a franchisee for Lone Star Steakhouse. “Our company worked with him with his first step in the development. We’re most proud that the project was completed on time, on budget, with us providing the financing,” Schmitt explains. The result? Becoming one of most successful Lone Star Steakhouses in the country. The project was a “winner all the way around. Our relationship with the developer is good. The developer is doing very well and will continue to expand their portfolio,” says Schmitt. Perhaps Across America’s ongoing success stems from a trifecta approach where, as Schmitt puts it, “the retailer/tenant wins, Across America wins and the developer wins.”
Across America has projects in the works for corporate and franchise units with other national retailers such as IHOP, Grease Monkey and Checker Auto Parts. According to Schmitt, the projects are “moving along just fine, with several Grease Monkey shops and IHOP restaurants to open within the next four to five months.”
The company is actively marketing themselves to national chains to be their preferred financer of new projects. Additional retailers that Across America has attracted include Red Robin, FedEx Kinko’s, Arby’s, Ruby Tuesday, Starbucks and Boston Pizza. Family Dollar, another success story, is growing at 500 stores annually, with the average store selling for $1 million. “We have seen an increasing interest amongst developers, because of the hassle-free experience Across America offers in terms of obtaining financing for their projects,” explains Schmitt.
Upholding their regional sales strategy, Across America intends to hire regional sales representatives throughout the U.S. to build additional regional developer relationships. The company’s goal is to hire 50 regional sales representatives during the next four years. The company recently obtained $10 million in financing to boost its combined equity and subordinated debt. In its second year of being in business, the company sold two projects for $1.8 million in revenue and last year sold three projects for $7.95 million in revenue. Its most recent sale was of two Kwik Wash facilities located in Parker, CO and Littleton, CO to a third party investor for $5.05 million. Across America provided 100 percent financing for the two single pad retail projects.
To sum it up, the company is confident about the future of retail real estate. “We’re very bullish at Across America,” says Schmitt.
For more information, contact John Whitson, Across America, 1660 17th Street, Suite 450, Denver, CO 80202; 303-893-1003; Email: jwhitson@aard.us; Web site: www.aard.us. |