Developer Digs into New Partnership

October 21, 2005
Sean Madigan

RCP Development, a two-year-old Washington real estate development company, is getting major backing from Wall Street.

The company, headed by former Post Properties executive Steve Etminani, is forming RCP Capital, a joint venture with Citigroup Property Investors (CPI), which will give the developer the funds to build about $400 million in projects during the next several years.

The company, which is constructing a $76 million condominium project along Massachusetts Avenue near the Washington Convention Center, will continue to focus on area housing projects, Etminani says.

"Regardless of what you've heard about a bubble, it's definitely a long-term viable business," Etminani says.

Less than a year ago, RCP began interviewing about a dozen institutional investors, and about half of them were interested in partnering with the company, Etminani says.

But RCP chose Citigroup because of Etminani's long-standing relationship with CPI head Larry Elman. Etminani, while at Post Properties, worked with Elman in building a 260-unit project at 15th Street and Massachusetts Avenue.

"Your relationships, and trust, are the most important thing in this business," Etminani says.

Jason Grossman, CPI's vice president for North American investments, says the deal with RCP "is very unusual" because the company normally has a project in play before committing any capital. He says CPI can now get in on deals at a much earlier stage.

CPI will invest about $100 million in equity in the next several years; that would allow RCP to finance five to seven projects of $50 million to $60 million apiece.