Ketchum private equity firm buys Ohio shopping center

Headwater Capital has acquired a 112,630-square-foot shopping center in Ohio for $13.1 million, the second acquisition for the Ketchum private equity firm established in February 2016.

The Barrington Town Center in Aurora, Ohio is in an affluent community between Cleveland and Akron. It has a Heinen’s Fine Foods grocer, 10-screen Cinemark cinemas and several smaller businesses.

Headwater manages a series of investments in commercial real estate. Headwater CEO Robert A. Kantor believes Headwater will make about two to five acquisitions a year up to $15 million, typically involving small- to mid-size shopping centers. Headwater invests in the acquisition and also invites outside investors, including $5 million for the Barrington Town Center purchase, Kantor said.

Headwater’s other acquisition last year was the Olio Pavilion in Fishers, Ind., for $3.5 million in August 2016.

The Ketchum firm found Barrington Town Center in Ohio through Kantor’s frequent discussions with brokers around the West and the rest of the country.

Barrington matched the “limited criteria” Kantor supplied to Dan Cooper, a Cleveland broker at Cooper Commercial Investment Group, for investment properties Headwater sought. Kantor said the limited criteria” includes a price that is less than its worth, a reasonable level of annual income. He said he looks for properties with yield that will stay ahead of inflation.

“We want to stay away from the illusions of returns,” Kantor said. “The trick is to cultivate relationships so if a property meets our limited criteria we can respond in a quick time frame.”

Kantor projects Barrington Town Center will produce an average annual cash flow exceeding 9 percent over 10 years with an internal rate of return ranging from 12 to 14 percent.

“I assure you I didn’t know this when I started the project, but there is a lot of land available for development (near Barrington),” Kantor said. “Growth is a dynamic one loves in real estate. That was a bonus in Aurora.”