The Business Journal
February 4, 2005

Sam Black, Staff Reporter

Wayzata-based H.J. Development just added the largest shopping center yet to its growing local portfolio - Riverdale Crossing in Coon Rapids, a nearly $40 million deal that closed Jan. 27.

The acquisition continues H.J.'s transformation from a part-time hobby of its two founders to a growing local real estate player that owns and manages more than $150 million and about 1 million square fee to retail space. "We still look at ourselves as a small company. We like it that way. We're hands-on," said Gary Janisch, who co-owns the firm along with Jerry Hertel.

H.J. bought 350,000 square foot Riverdale from Dallas-based Invesco Real Estate Advisors. Invesco company officals could not be reached for comment.

H.J. plans to put in more than $1 million to upgrade the exterior and landscape of the 40-acre site that is home to Cub Foods and Wal-Mart.

Russ McGinty, a broker at Minnetonka-based Madison Marquette Realty Advisors, said it's unusual for a locally-owned company the size of H.J. to buy up grocery-anchored retail centers, a class of real estate sought out by institutional investors for the past several years.

"It isn't that they can't own them, it's that most people usually don't have the funding source," he said. "Something like Riverdale Crossing, that's a very large play."

Hertel said the company uses different banks, some local and some from out of town, to finance its projects. For the bigger projects, it's used larger institutional funding sources, like insurance companies, as bankers. Also, H.J. has invited about eight individuals to join some investments.

"They're people that we've known or people that know us," he said.

From Hobby to Career

The duo started their company in 1983 when they teamed up to develop a 7,000 square foot retail center in Savage anchored by a Tom Thumb.

At the time, Janisch was a vice president a Fabcon Co. in Savage, and Hertel was a principal at Juran & Moody, Inc., a bond company in Minneapolis.

The men did projects in 1984, 1985, and 1986. By 1998, they decided to give up thier day jobs and do a lot of golf and fishing.

But that got old, and in 2001, he and Hertel started building again. The men, who are both in their 50s, are good friends and even share an office together. "Since 1983, we've never had one argument," Janisch said.

In 2001, H.J. built small centers in Savage and Elk River. Then in the past two years it bought Albertville Crossing from Minnetonka-based Oppidan Investment Co., and two Cub-anchored centers in Lakeville and Burnsville from Minnetonka-based Opus Northwest.

H.J. plans to hold onto its properties, which are fully leased today. The company has about eight other employees and at different times has employed the daughters of Janisch and Hertel.

Gary's son-in-law, Jeff Carriveau, who spent six years as an industrial broker at Bloomington-based United Properties, now oversees leasing and development for H.J. He joined the firm about a year ago and is in the process of becoming a partner with Janisch and Hertel.

"Jeff is very aggressive and a street-smart individual who has a sixth sense for real estate," said Jon Yanta, a United Properties broker who worked with Carriveau. "He can uncover or find opportunities that other people just can't see. It's a quality not too many people have."

Besides looking for new tenants, Carrivau is out looking for investments in the retail sector. The firm has no plans to get into industrial, office or residential real estate at this time, Janisch said.

"The growth we're on is structured growth. We're not just taking everthing on."