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Monday, Jul 15, 2024

Lincoln Property Co. Buys Irvine’s RiverRock

Dallas-based landlord Lincoln Property Co., which counts a sizeable Orange County presence in owned and managed commercial real estate properties, has acquired Irvine-based property and asset management firm RiverRock Real Estate Group Inc., the Business Journal has learned.

The combined company will become the third-largest commercial property manager in Orange County, with a portfolio of roughly 17 million square feet in rentable square feet locally, and north of 100 million square feet companywide.

Financial terms of the deal were undisclosed.

RiverRock founder John Combs is now executive vice president of Lincoln Property Co. (LPC), which is expected to retain RiverRock’s 23 offices and 140 employees as part of the deal.

Combs invested an undisclosed amount in LPC as part of the transaction.

“I wanted it to be more of a merger than an acquisition, and I liked the idea of still being an owner of where I work,” Combs, a 2022 Business Journal Excellence in Entrepreneurship Awards honoree, said. “It was a big investment for me and a huge vote of confidence for everybody that I’m not going away.”

The combined companies will oversee 120 employees in Orange County, and 3,050 companywide.

Decade-Long Courtship

RiverRock, founded by Combs in 2003, oversees about 50 million square feet of office, industrial and retail properties in California and Arizona, with a value of over $10 billion.
It ranks sixth among property managers in Orange County, with a local portfolio of nearly 10 million square feet, according to Business Journal data.

RiverRock is the largest property management firm among local companies that only handle third-party management.

Local assets under management include the 2050 Main and Centerstone Plaza offices, as well as its Irvine headquarters alongside the San Diego (405) Freeway, which the company acquired in 2020 and kicked off an extensive upgrade that wrapped the following year.
RiverRock will maintain the local headquarters under the LPC umbrella.

RiverRock marks the first company acquisition for Lincoln Property Co., which operates its local holdings under the LPC West name out of a Newport Beach-based office headed by Parke Miller.

The company manages 7 million square feet in Orange County, including Flight at Tustin Legacy, a 470,000-square-foot creative office campus that’s nearly fully occupied after delivering in 2019.

LPC co-CEO David Binswanger “has spent 10 years courting John,” according to Alison Daubert, chief strategy and M&A officer at LPC.

Combs “has created a firm that’s truly unparalleled in terms of specialized property management on the West Coast,” Daubert said. “LPC has never had a specialized business development program, and this deal opens up that business line and paves the way for future M&A opportunities.”

Combs is a native of Texas, and received his MBA at the University of Dallas.

Compatible Fit

The acquisition is expected to help RiverRock expand to new markets with increased resources, according to Combs, who said the deal will provide greater career pipeline opportunities for its employees.

“Everything we do is for our clients and for our employees, and we felt we were missing the reach that some of our larger competitors have,” Combs said. “This deal makes us a more competitive firm.”

The two firms are culturally compatible, both Daubert and Combs said.

“This is all about smooth edges,” Daubert said. “Our cultures are aligned, making this a positive augmentation of LPC.”

The deal follows an announcement earlier this year from LPC in which the firm appointed Binswanger and Clay Duvall as co-CEOs, replacing LPC founder and Chairman Mack Pogue, and CEO and President Bill Duvall, both of whom maintain an ownership stake in the company.

“John built a legacy for client service that is second to none, and we are thrilled to have him as a key member of the Lincoln leadership team,” Binswanger said. “By combining our firms, we create an even stronger property management service offering that is bolstered by RiverRock’s unmatched knowledge and superior third-party management execution.”

OC Foothold

LPC’s new leadership structure came at the same time as a new investment from Stone Point Capital LLC, a Greenwich, Conn.-based private equity firm.

“We believe Lincoln is well positioned to take advantage of opportunities in the current challenging commercial real estate environment,” Agha Khan, managing director of Stone Point Capital, said.

Stone Point in 2021 teamed with fellow PE firm Insight Partners to buy Irvine-based real estate and mortgage data firm Core-Logic, in a $6 billion deal.

Pogue founded Lincoln Property Co. in 1965 as an apartment developer, which later launched an expansion into commercial development across the U.S. with the hiring of Duvall in 1977. LPC today is one of the largest privately held full-service real estate companies in the country with 275 million square feet of real estate under management on behalf of third-party institutional clients.

In the last five years alone, the company has acquired and developed more than $22 billion in commercial projects with more in the pipeline.

“The combined firm will have a much bigger presence in Orange County, and we’re eager to continue the great foothold established by LPC and Parke Miller,” Combs said.

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