The two Newbury Street Aggregation Programs, both joint ventures with institutional partners, were created to provide its investors with the unique opportunity to take advantage of the fragmented nature of the ownership and inconsistent, often sub-par, management of the 200 individual buildings that make up Newbury Street’s eight-block retail district. Taurus, in just three years, became the largest owner on the street, transforming the street’s disparate assets into an institutional grade investment product.
Newbury Street is by far the most popular shopping street in Boston, seen by many as one of the most prominent shopping streets in the US, comparable with Rodeo Drive in Los Angeles. High end retailers such as Cartier, Chanel, Armani and Burberry have stores here, sharing the street with small boutiques and stylish restaurants and street cafes.
Taurus’ CEO Peter Merrigan recalls: “We established a strategy to invest in the only high street in Boston, where there was no single owner of more than 10 buildings on a 200 building street. We created an institutional product by building a critical mass of buildings to benefit from economies of scale and the creation of a brand. Institutional investors would not have been able or willing to buy building by building, but they were very much interested in buying the aggregated portfolio. In fact we created a ‘core’ investment product.”
The buildings are subject to strict regulatory requirements in order to preserve and protect the overall integrity of the historical Back Bay area of Boston. The strong regulatory protections mean that demolishing an existing building in order to make space for a new development is not permitted. Architectural modifications to existing structures are also very limited – although Taurus was able to obtain more concessions to expand floor space and redevelop its real estate than any other owner had managed in previous years.
The overall Portfolio consisted of 28 properties, spread across eight blocks and made up more than 10 percent of the buildings on and around Newbury Street. Taurus was the largest single owner of real estate in the area. The advantage for Taurus: a critical mass which could be exploited positively prior to the sale of the portfolio to enable Taurus to shape the retail market and to create conditions which would be more than satisfactory for institutional investors. Two examples of Taurus’ success in this are the standardization of lease agreements and the economies of scale in property and tenant management.
Taurus also successfully established a brand image for its Portfolio, “The Newbury Line”. Alongside creating a unified identity, this consistent branding also enabled local retailers to engage in better and, above all, more uniform marketing strategies. In this approach, Taurus was able to transfer a strategy normally used by shopping malls to a shopping street. This unified approach under the Newbury Line banner resulted in an increase in revenues and additional economic stability for the tenants. Taurus focus was on attracting retailers who have a limited number of outlets in selected locations as these are less susceptible to fluctuations in local markets. With this recipe for success it comes as no surprise that the Newbury Portfolio practically “sold itself,” as Peter Merrigan described the sale. Taurus sold its Newbury Street Portfolio to Jamestown Properties, a German provider of US property funds.