Q&A: COO David Donato on CRC’s Retail and Multifamily Strategy

Donato, who started with CRC in 2000 and was most recently the senior vice president of  the multifamily and commercial division, now helps lead a national portfolio that exceeds $2 billion.

“Since 2013 Donato has been a member of CRC’s Executive Committee, the management group which sets corporate strategy and steers the direction of company, and he will remain in this role,” per the company statement.

In his new role, he will be charged with direct oversight over human resources, accounting, and investor relations, in addition to the shopping center and apartment operations which were already reporting to him.

CRC’s new COO spoke with Commercial Observer about his new position and CRC’s plans in the foreseeable future.

Commercial Observer: Tell me about your new role and your goals as COO?

Donato: Continental has been in an incredible growth mode since 2012 when we kicked off CRC Fund III, investing in value-add retail and multifamily in the Southeast and Mid-Atlantic. It has been pretty much nonstop growth and activity since then. My main goal as COO is to manage growth, from fundraising to building the best team to successful onboarding of acquired properties to best-in-class investor reporting.  

What is the company’s philosophy?

Continental Realty was founded in1960. Over 61 years, we have developed so many deep, meaningful relationships, and those have been key to our success. In recent years, we have layered on a focus on data. There are so many great data sources to mine as we pursue better and better properties and better and better outcomes for our investors, and we have invested heavily in some of these. So, Continental’s philosophy is to maximize stakeholder value by relying on some of the old—relationships—and the new—cutting edge data.

Characterize your strategy as it relates to multifamily, especially in the D.C. and Baltimore regions.

We are looking to grow throughout the mid-Atlantic and Southeast. I can confidently say we see every marketed apartment community in Baltimore and D.C., and we see quite a few off-market as well. It is always hard to know whether our next acquisition will be in Maryland or Florida or the Carolinas, or wherever. Acquiring apartment communities is incredibly competitive. But we are actively looking for acquisition opportunities in Greater D.C. and Baltimore. 

How about your retail strategy?

I came up in the business on the retail side. My first role at Continental was as a leasing agent for Continental’s Maryland shopping center portfolio. Our success in strip shopping centers confounds some people, but we are big believers in that particular sub-category of “retail investments.” Outdoor shopping centers function very differently than malls. As much as half of the tenants in our retail portfolio are medical providers (urgent care, dental, chiropractic, physical therapy, etc.), service providers (hair, nails, daycare, fitness, etc.), and restaurants. Think about that—we call it a retail portfolio, but only about half of our tenants sell products. This diversity of tenant type has led to consistent leasing demand, high occupancy, and a resilient rent roll.

How did the pandemic impact these strategies?

On retail, we worked hard to have an open line of communications with our tenants and to work with them when they could demonstrate that they needed the help. To date, we have lost very, very few tenants to COVID. I would guess we lost fewer than 15 tenants in a nearly 800-unit portfolio. We are not out of the woods yet, but most of our tenants have returned to some sort of normalcy for the moment. On multifamily, many of us in the industry were a little surprised to see apartment demand remain high. We have maintained occupancy and kept our residents and staff safe, which is obviously paramount. The pandemic has not really changed our acquisition strategy. We remain bullish on both retail and multifamily and likely will be net acquirers of both in the coming few years.

What are some recent notable deals the company has been involved in that are in these regions?

So far, our post-COVID acquisitions have been in the Carolinas, Georgia, Florida, and Texas; though, as I mentioned earlier, we are always looking in Baltimore and D.C. Just prior to COVID, we acquired Centre at Hagerstown, a power center fronting on I-81 in Hagerstown, Md., with Bed Bath & Beyond, Marshall’s, Ulta and others; and Governor’s Commons, a Gavigan’s Furniture-anchored shopping center in Glen Burnie, Md. 

What are your projections about the next 12 months for both retail and multifamily investments in the Baltimore and D.C. regions?

In the coming 12 months, I expect we will acquire between six and eight properties, a mix of multifamily and retail, in our targeted acquisition areas. I would expect several of those to be in Greater Baltimore / D.C., but it all depends on what opportunities come our way.

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