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Re-Inventing

Ramco-Gershenson has changed itself and its properties.

ALAN ABRAMS

Special to the Jewish News

A

lthough shopping center devel-
oper/owner Ramco-Gershenson
Properties Trust has just entered
into a joint venture with the real estate
investment management affiliate of a
firm managing more than $600 billion
in global assets, the Farmington Hills-
based mega-giant isn't overlooking the
continued improvement of one of its
first holdings in Southfield.
Ramco CEO Dennis Gershenson,
whose family built and opened Tel-12
Mall at Telegraph and 12 Mile roads in
1968, is confident that consumers will
react favorably to the sixth major over-
haul of the community icon.
The opening of the Meijer store this

Dennis Gershenson at Tel-12

spring on the site of the former K-mart
is the latest stage in what Gershenson
calls the "demalling" of Tel-12. But
beyond offering improved service to
consumers in the trading area, it under-
scores Ramco-Gershenson's commit-
ment to add value to core assets.
The company is a fully integrated,
self-administered, publicly traded real
estate investment trust that owns, devel-
ops, acquires, manages and leases com-
munity shopping centers, regional malls
and single-tenant retail properties in 13

states. Traded as RPT on the New York
Stock Exchange, Ramco owns 74 shop-
ping centers totaling 15.3 million square
feet.
Last month, Ramco-Gershenson
announced it had formed a joint venture
with Clarion Lion Properties Fund, a
private equity real estate fund advised by
ING Clarion Partners. The venture
plans to acquire up to $450 million
worth of shopping centers in the
Southeast and Midwest.
Their first acquisition, nine shopping
centers in Michigan and Florida,
involved a transaction of more than
$266 million.
Purchase of three of the centers has
already been completed and the deals for
the remaining six are expected to close
this spring. The latter group includes
two Oakland County centers: Hunter's
Square, on Orchard Lake Road south of
14 Mile Road in Farmington Hills, and
Winchester Center in Rochester Hills.
The ING Group, the parent company
of ING Clarion Partners, is one of the
world's largest financial services compa-
nies with more than $600 billion in
global assets, including $57 billion in
real estate assets.
A large portion of Ramco's 74 proper-
ties are in Michigan. It owns the West
Oaks 1 and 2 centers in Novi,
Southfield Plaza on Southfield Road
between 12 and 13 Mile roads, Livonia
Fairlane Meadows and Auburn
Mile, among others.
The company has long roots in
Detroit's Jewish business community,
extending back to the Gershenson fami-
ly's ownership of Ned's Auto Supply Co.
Shopping center pioneers William and
Aaron Gershenson founded A&W
Management Co. in the 1950s and
began developing centers such as Tel-12.
Williams four sons, Joel, Dennis,
Richard and Bruce, assumed manage-
ment of the company in 1975. Ramco-
Gershenson went public in 1996 when
it merged with RPS Realty Trust to cre-
ate Ramco-Gershenson Properties Trust.
Dennis Gershenson became CEO with
Joel Gershenson as chairman of the
board.
"Tel-12 was an enclosed mall shop-
ping center back when enclosed shop-
ping centers were still relatively new and
Northland was the largest super regional
mall in the world," recalls Dennis

Tel-12 has an all-new look and purpose. But Circuit City is closing.

Gershenson.
During its first 25 years, until the
mid-1990s, Tel-12 was 100 percent
leased. But in the middle `90s that
changed. One reason was the advent of
super regional malls, centers like 12
Oaks and Fairlane. Another was the eco-
nomic circumstances leading to the
decline of Tel-12's two main anchors,
•
Montgomery Ward and K-mart.
Gershenson says national retailers
began to change the way they looked at
malls and the almost universal response
was, "We need to be in a shopping cen-
ter where we can average more than
$300 a square foot." Where super
regional malls were available, retailers
began to pull out of centers that were
more regional or local.
"Once 12 Oaks opened, Tel-12
became a convenience mall," says
Gershenson.
The ratio of national tenants versus
local and regional began to change.
Ramco-Gershenson's response was to
move quickly. The mall has undergone
five evolutionary expansions, beginning
with the addition of a food court as well
as adding retailers such as Crowley's.
The company also reduced the size of
Ward's, adding Circuit City, Office
Depot and Media Play.
Tel-12 continued to reinvent itself to
meet the changes in retailing until it
reached the point where Ramco-
Gershenson had to decide whether to
reinvigorate Tel-12 as an enclosed mall
or take it in a new direction.
Tel-12 has always benefited from its
unique location, making it highly attrac-

tive to retailers because of its conven-
ience. It is located near more express-
ways than anywhere ese in the Metro
Detroit region, and Telegraph Road
remains the most highly traveled traffic
artery in southeast Michigan.
"As an enclosed mall, Tel-12 had more
local tenants. We had to factor this
against variable costs, the costs of main-
taining the mall, which included real
estate taxes, insurance, property mainte-
nance and security. As those costs con-
tinued to escalate, the tenants found
themselves paying as much for mainte-
nance as they were paying in minimum
rent.
"We decided that the best direction
for the shopping center would be to de-
mall it, creating destination uses where
the mall used to be," says Gershenson.
The new Tel-12 focuses upon the
buildings on Telegraph Road adjacent to
Media Play, such as Lowe's. Gershenson
said the decision to include Meijer was
perfect for the trade area, as was adding
Michael's to the lineup of tenants.
"Tel-12 serves a broad trade area and
offers a variety of service uses, restau-
rants and general retailers, all very con-
veniently located. We're happy with the
transition and consumers are pleased
with the type of destination retailers we
have added," Gershenson says. "Tel-12
is an attractive place to shop, with a
good tenant mix for a new generation of
consumers."
Gershenson is being honored tonight
by the Detroit Chapter of the
International Council of Shopping
Centers as an "Icon of the Industry." ❑

JN

2/24
2005

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