RiverRock JVs to Accelerate Growth

WALNUT CREEK, CA-RiverRock Real Estate Group, a Southern California-based property management and leasing services firm with several million sf under management has formed a joint venture with the owners of 1.5 million sf of retail, restaurant and office buildings in Northern California, Nevada and the Pacific Northwest. The JV, Diablo RiverRock Inc., will handle management and leasing of the 27-property portfolio from a new office in Walnut Creek, CA.

RiverRock’s JV partners are Don Gaube of the Alamo, CA-based shopping center developer Alamo Group and Rick Dudum of Walnut Creek, CA-based Dudum Investments, and Dudum Sports & Entertainment, which operates restaurants that occupy many of the buildings the new JV will be managing.

RiverRock principal John Combs, previously head of US property services for Insignia/ESG, tells GlobeSt.com that Gaube and Dudum were looking at consolidating and internalizing management of their buildings and ultimately decided to do so by way of a joint venture that includes RiverRock, which will provide the property management expertise.

“The reason I wanted to do it was because it extends our geographic reach with people who can help us grow,” he says. “They own a lot of real estate.”

Rick Dudum tells GlobeSt.com that the JV was a way for him and Gaube to streamline their respective internal property management operations while continuing to participate in the profits from it. In addition, they plan to grow the business beyond their own properties by using their connections to generate additional third party management assignments.

Alamo Group chairman Don Gaube tells GlobeSt.com that the various entities that own the properties will pay the new JV a management fee (such a fee typically ranges between 3% and 5% of gross rental revenue) and the JV partners (Gaube, Dudum and RiverRock) will split the profits. The partners’ individual percentage interests in the JV were not disclosed.

In Northern California, some of the properties Diablo RiverRock will be managing include Bing Crosby’s Restaurant and Piano Lounge and McCovey’s Restaurant, both located in Walnut Creek. Both are new brands of Dudum Sports & Entertainment, with Alamo as its investment partner.

The assignment takes RiverRock’s management portfolio to approximately 8 million sf, a significant number but nonetheless behind the lofty goals Combs set for the company when he launched it four years ago. In interviews at that time, Combs said he wanted to have 15 million sf under management by 2006 and 65 million sf under management by the end of 2008.

Combs describes his operation as a “breakthrough property management model based on innovative, client-focused standards for operational efficiency, customer service, fee structure, outsourcing, personnel and training that increases the ability of building managers to positively impact the value of a real estate asset.” He declined to go into detail about his program or his fee structure, saying it is proprietary information that, if revealed publicly, would likely be copied and thereby put him at a competitive disadvantage. In interviews from 2003, Combs said that efficiencies in his model allow him to undercut the big-name competitors on cost by at least 10%.