The Arkansas-exclusive investment group that bought the Little Rock landmark Doctors Building last year has closed a securities offering with a haul of more than $41 million, including considerable skin in the game by its principal partners and their families.
The partners announced the financing success in a conference call with Arkansas Business on Tuesday, disclosing that it has planted a stake in software-as-a-service financier Recurring Capital Partners of Austin, Texas, and will have another major investment announcement in the coming weeks.
Led by Managing Partner Brad Henry, Natural Capital’s well-known partners — including Todd Simmons, CEO of Simmons Foods of Siloam Springs — reported that millions of dollars’ worth of renovations at the 1962-vintage Doctors Building are progressing well despite the pandemic.
Natural Capital spent $16.5 million to buy the 213,000-SF medical office building in October. At 500 University Ave., the building is just a couple of hundred yards from the busiest expressway exit in the city, near CHI-St. Vincent Infirmary and the University of Arkansas for Medical Sciences. The northwest corner of University and Interstate 630, a former Sears shopping center just behind the Doctors Building, is being remade as a mixed-use development, creating synergy in the area, the partners said.
“We started raising money for this fund in September of last year, and raised $41.25 million,” Henry said. “The strategy is pretty simple. We will invest in real estate, in operating companies, and in other funds as well. The reason for the diversified strategy is that we wanted to give Arkansas families private investment opportunities.”
The firm doesn’t manage anybody’s stock or bond portfolios, said Henry, whose partners include Simmons; Marshall Saviers, president and principal of Cushman & Wakefield/Sage Partners; and Brock Gearhart, president and CEO of Greenwood Gearhart Inc., a registered investment adviser in Fayetteville.
“We’ll invest in real estate, primarily medical office and affordable housing,” Henry told Arkansas Business. “And we’ll invest in operating companies that have a track record of positive cash flow, perhaps family businesses that are looking for an exit, an opportunity to sell and have the existing management team continue to grow the business.”
The ideal will be long-term investments that help Arkansans prosper. “We’re not buy and flip,” Henry said, noting that some of America’s most successful businesses have been built in Arkansas. “You know, our investors are 100% Arkansas families, which we’re very proud of. We are regionally focused, here in Arkansas and in surrounding states.” The regional approach offers a competitive advantage, he said, “there’s less capital chasing projects.”
The fund expects to invest from $3 million to $15 million in each opportunity it seizes.
“We expect to make 7 to 15 investments in this fund,” said Henry, who credited Gearhart and Saviers for coming up with the Natural Capital concept.
Gearhart took note of Arkansas’ entrepreneurial spirit, saying it infused not only the fund itself but also the name.
“The way Arkansas works, we have many entrepreneurs in the northwest corner of the state, and several in the central part as well,” Saviers said. “Natural Capital is a nod to the Natural State, even though the mandate extends beyond that to the Heartland. We want to kind of continue that legacy of Arkansans investing in Arkansas opportunities.”
Henry said the partners and their families hold the largest stake in Natural Capital.
“By aggregating with Natural Capital, we’ll be able to take advantage of larger opportunities,” Henry said. “Collectively, the four of us and our families are the largest block of investors in the fund. We launched this, as much as anything, to be able to invest together, but also wanted our capital to be right there alongside our investment partners.”
Simmons, whose Simmons Foods was fifth in Arkansas’ Business’ 2019 listing of the state’s largest private companies, said he was “really excited to focus in on business opportunities and operating businesses in this region. There’s many that may need incremental capital and additional expertise to help drive their growth, and we can be a part of that.”