COVER STORY, OCTOBER 2004

A PASSION FOR PROGRESS
Hopkins Real Estate Group has developed into a real estate player in Southern California.
Randall Shearin

For 30 years, Hopkins Real Estate Group has been helping to develop Southern California. Steve Hopkins entered the real estate business when he was 25 and never looked back. While he started as a broker, he entered the development business in 1973 when he developed a two-story office building in Newport Beach. The company also built its first retail center that same year in Huntington Beach. From the moment he built his first retail center, Hopkins knew he was hooked.

La Mirada Theatre Center in La Mirada, California, was a signature redevelopment project for Hopkins Real Estate Group.

“It just seemed more interesting to me,” he says. “It also seemed more difficult, which I thought was better for barriers of entry.”

At first, Hopkins did everything himself, from site selection to leasing to financing. Over time, he began developing relationships with popular tenants at the time, like Alpha Beta, Stater Brothers and Von’s. In 1981, the company built its first public-private partnership deal in an urban infill area, something it has since become famous for. The first project, located in the city of Maywood, near Los Angeles, was a real eye-opener for Hopkins.

“There were four things that center created: the creation of jobs, the elimination of blight, an increase in property tax growth and sales tax growth,” says Hopkins. “That cemented my thought that when working with municipalities, a retail developer really brings something to the table that no one else can.”

Hopkins followed that project with a larger one in the city of Lakewood, where it developed all four corners of a busy intersection. California grew tremendously in the 1980s, as it continues to grow today. Hopkins foresaw the day when retail opportunities in the state would be mostly recycled properties — older, obsolete centers that needed to be redeveloped.

The last few years, especially, have seen Hopkins become an incredibly strong player in California. The developer is creating a number of centers through its partnerships with larger companies. It has partnered with a financial player, as well, to help propel Hopkins to being one of the most active private developers in California today.

“The biggest challenge for any private company in retail development today is finding a capital source that matches up with the developer’s needs,” says Hopkins.

Earlier this year, Hopkins Real Estate partnered with Rockwood Capital. Under the agreement, Rockwood will be Hopkins’ capital partner on a number of projects. Rockwood raises capital for Hopkins, who in turn places that capital into its developments. The company has recently acquired its first property to develop with Rockwood, and is under contract to acquire two more. Rockwood has initially earmarked $50 million from its Fund V for Hopkins’ future projects.

“Having an equity partner that helps our organization empowers us to execute our business plan,” says Hopkins. “It really changed our company overnight. It enables us to do more development; in addition to tenant relationships and relationships with municipalities — aspects that any developer can bring to the table — we now have a capital source and a defined niche that, combined with our track record, gives us an advantage.”

Hopkins is leery of having too much capital to do too many developments, so it has set up a system with Rockwood to get the green light. It provides a specific set of criteria — internally known as a preliminary financial package — that provides a snapshot of each deal to Rockwood.

Los Altos MarketCenter in Long Beach, California.

Hopkins has also partnered with a larger developer to handle some of its retail development. The partnership with Lennar Partners allows Hopkins to develop retail centers at some of Lennar’s master developments. The two developers have a 150-acre site along the 405 Freeway in the city of Carson, California. The environmentally impaired property will be remediated and Hopkins plans to develop a destination retail center on the site. The NFL has also been in negotiations to build a stadium on the site, should the area win a franchise. Hopkins says there is room for both properties on the site.

Hopkins is also developing six small centers at Lennar’s Newhall project. The relationship with Lennar began several years ago and has prospered through the years. Currently, Lennar and Hopkins are working on the redevelop of Whitwood Mall in Whittier, California, taking the center from an obsolete regional mall to an open-air town center.

La Habra Marketplace.

“When you work with Lennar, it is a co-development,” says Hopkins. “It isn’t passive capital. I see that as value-added. We run our organizations with very much the same philosophies in mind. We are a lot alike and we work together well.”

In January 2004, Hopkins partnered with General Growth Properties to purchase Redlands Mall in Redlands, California. The two companies plan to redevelop the center in the near future. One innovative and new feature for both Hopkins and General Growth is that the two companies plan to build up to 250 units of multifamily space at the center.

For the properties that Hopkins develops, it outsources all the management to Coreland Companies. Hopkins outsources all the management so that it can concentrate solely on development.

©2004 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.