Among the empty storefronts, scaffolding stands an optimistic development director

Felix Reyes, New London's new director of economic and community development

Published May 19, 2018 in The Day | View PDF
By Greg Smith, Day staff writer

Felix Reyes, New London's new director of economic and community development

Photo by Sarah Gordon / The Day

New London — Downtown developer Eric Hamburg strides out of the second-floor office of Felix Reyes on Wednesday afternoon with a rolled-up set of blueprints and stack of file folders clutched under one arm.

Hamburg recently closed on 74 State St., the former Mallove’s Jewelers, adding a fifth building to his collection in the heart of downtown. He’s considering a restaurant for the corner of Bank and State streets, with water-view apartments above. His initial plans for the former Capitol Theater on Bank Street are a mix of apartments, restaurants and an indoor market.

Hamburg said obstacles remain but he cracks a smile when asked about his confidence in getting his projects completed and waves a thumb in Reyes’ direction as if to indicate Reyes will be an important player.

Reyes, the city’s new director of economic and community development, exudes confidence and optimism. It appears to be contagious.

“I’m very optimistic. There’s no use coming to work if I’m not optimistic and encouraged that I can have some success in getting things done,” Reyes said. “I truly feel the best days are ahead of us.”

Reyes says he has reason to be optimistic. On Thursday, he and Mayor Michael Passero met with some of the major players in the off-shore wind industry. State Pier is attracting attention and Reyes said the city needs to be able to work with whatever industry is looking to set up shop.

Later that night, the Planning and Zoning Commission approved plans for a 98-unit apartment complex on city-owned land at the corner of Bank and Howard streets, the long vacant former Parcel J. He said the same company that has pitched the development, A.R. Building Company, is filling up its most recent residential project at 60 Mansfield Road.

Back in his office, Reyes sits at a table and traces his finger along a color-coded map of downtown buildings. He pops up from his seat and walks to a whiteboard to sketch a diagram and explain how many of the downtown buildings are physically interconnected, an example of why cooperation between property owners will be needed as a flurry of restoration work on the historical structures continues.

Reyes, 36, took on the job of director of development and planning in March and said he has started meeting with downtown property owners to develop relationships during what he sees as a major boom in the development scene.

“I make it a point to build and develop relationships with people that want to invest in New London,” he said. “It’s critical to have the relationships, to know what are your struggles and what are your needs.”

‘No political ties’

Reyes, who lives in Trumbull with his wife and two young children, was traveling to Chicago every month at his previous job as a senior project manager with the development and construction management firm LendLease when he read about the departure of his predecessor, Tammy Daugherty.

The position’s job duties were expanded to include a focus on policy recommendations, technical advisory services and development of long-term strategies for the city to be able to attract new businesses and development.

The job description was right in his wheelhouse.

“I told my wife, ‘I have to apply for that job,’” Reyes said. “It just occurred to me that what I was prepping for (in previous jobs) was this position. I know the people. I know the neighborhoods. I know a lot of the problems. I have no political ties. My method of getting things done is perfect for moving some issues that we need to address.”

A 1999 New London High School graduate, Reyes earned a degree in architecture from Wentworth Institute of Technology, kicked off his career at Barun Basu Associates in New London and moved on to several different companies in commercial real estate, planning, architectural design and construction industries.

Among other accomplishments, he managed the build-out of 300 restaurants for Yum Brand, the renovation and development of 50 Citizens Bank branches and served as project manager and architect for capital improvements at the Merit 7 Corporate Office Park in Norwalk.

As Passero would later say after a trip with Reyes to Boston to meet with a group of high-profile developers, “he speaks their language.”

Reyes never really disconnected from New London or its sports teams. His parents still live here and he has been visiting several times a month.

“I’m very much attached to the neighborhoods, the culture,” he said.

His phone “blew up” when his hiring was announced by the city. Everyone he knew from school contacted him to express their congratulations, he said.

Technology upgrade needed

As for the work ahead, Reyes said he has his hands full.

He has a staff of 12 between the Building and Planning and Zoning departments and is helping to craft a job description for the next economic development director, a position that has remained vacant since the retirement of Ned Hammond.

Part of his work will be to modernize the Building Department, a group he said is composed of experienced professionals using antiquated technology. He intends to change that and computerize most of the paperwork to become more efficient.

As for blight, Reyes said the downtown property owners will have noticed an increase in citations over the past few months as the city ramps up its efforts to get properties into compliance with the property maintenance code and look presentable.

He’s aware construction Dumpsters line a portion of Bank Street and several buildings are encapsulated by scaffolding with chutes hanging out of open windows. Most of the work to date has been demolition and owners taking stock of what they have, he said, which is necessary if the buildings are to be renovated.

One developer he has yet to meet with is Bill Cornish, someone who he said is critical to the success of the downtown because of his vast holdings. His office has received complaints, he said, about the state of Cornish’s buildings but will reserve judgment, he said, until he understands whether Cornish has an overall plan.

Historical buildings are being scooped up by developers at a dizzying pace and Reyes said his plan is to help guide the work so the projects are completed.

Between Hamburg and Yehuda Amar, another developer who has continued to add to his downtown portfolio, Reyes said, “we have two of the most aggressive developers in the prime of downtown.”

“You can’t ask for a better scenario,” Reyes said. “This is a critical time. I’m encouraged.”

New London’s Capitol Theater Has New Owner

New London’s Capitol Theater

Published March 23, 2016 in The Day
By Greg Smith, Day staff writer

New London’s Capitol Theater

In this 2005 Day file photo, members of “Imagine – It’s a Capitol Idea!,” a group for the restoration of New London’s Capitol Theater, tour the Capitol Theater with Ned Hammond, the New London Economic Development Coordinator, and guest consultants from the League of Historical American Theaters in downtown New London Tuesday, Oct. 25, 2005. (Suzanne Ouellette/Day file photo)

New London — The long-abandoned Capitol Theater has a new owner who is exploring options for its future use and said a music and entertainment venue is not out of the question.

Eric Hamburg, founder and president of Westport-based Industrial Renaissance LLC, purchased the property at 35 Bank St. Wednesday for $68,000 from Jonathan Chau.

Hamburg said he would explore possible uses once a structural engineer gets into the building and completes a thorough analysis.

“It looks like hell because it’s been vacant for 40 years,” Hamburg said. “But the city put a new roof on in 1999 which literally encapsulated and preserved the building. Structurally, it seems to be in good shape.”

The former vaudeville and movie theater closed as an X-rated movie theater in 1974 after being cited for code violations and non-payment of taxes.

The city purchased the building in 1978 and later handed it over to a developer, Maxim Development Group, in 2006 under a development agreement giving the company 30 months to complete a $2.5 million renovation of the building into a 2,000-seat venue for live music and other performances.

The work was never completed.

Chau had acquired the property, sight unseen, in 2010 for $20,000 at a tax auction. The property has sat idle since then.

Hamburg said extent of future renovations will be dictated by his ideas for what it could become.

“It’s a cool building with neat architectural features,” Hamburg said. “We will find something exciting to do … that will benefit downtown.”

Earlier this year, Hamburg said, he purchased 15 Bank St., another vacant building two doors down from the Capitol Theater that used to house H. Marcus & Co., a clothing store, and had an old duckpin bowling alley on the third floor.

Both buildings date back to 1920s but have “good bones,” Hamburg said.

His idea for the former Marcus building is to renovate the upper floors into high-end apartments with retail, perhaps a restaurant, on the ground level.

Hamburg has experience in the city, having purchased and renovated seven apartments at 1 Hamilton St.

He also was one of five developers vying for preferred developer status for the historic Lighthouse Inn.

His $7 million to $10 million plan for the former inn was to renovate the mansion into 20 or more luxury apartments and build additional townhouse-style units on the property.

Buying and Repairing Broken and Underperforming Businesses

Eric Hamburg in article in The Suit

By A. Marie Velthuizen

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Eric Hamburg in article in The Suit

Most private equity financing firms retain the businesses they invest in only until enough improvements have been made for the firm to turn a respectable profit when the business is sold. Yet a handful of PE firms are opting for a different approach. In a trend being cultivated by a much smaller number of PE firms, distressed businesses purchased with the goal of restoration to profitability are being kept for significant periods of time – sometimes indefinitely – since a financial harvest different from the standard “return on sale” is sought by investors with rather long-term goals.

Industrial Renaissance (IR) is one of these firms opting to keep, rather than sell, the struggling or underperforming businesses they acquire. Eric Hamburg, the firm’s president explains.

“It is difficult to build a significant business that is running well. This can take plenty of money and many years,” Hamburg said. “Once that has finally been done, it is our preference to continue to own that business and continue to work with it.”

In fact, Hamburg said that his goal is to make such a marked improvement in the working and profitability of a struggling business his firm acquires, that selling it just would not even be considered an option.

IR’s website provides an extensive list of characteristics sought in a potential purchase. Fifteen descriptions make up this list, ranging from the absence of a management leader, a liquidity-constrained balance sheet, little or no earnings, long lead times, slow revenue growth, and a high cost and overhead structure. Other characteristics include fractured relationships with lenders, high inventory levels with low inventory turnovers and a documented need for operational improvements.

“Our list is a bit lengthy,” Hamburg admits. “Yet, the more of those check marks that a business hits, the more we tend to like them as a potential investment purchase. This makes us different from other investment firms that look at historical performance as a gauge to judge future performance. We tend to look forward with a business – and look toward what can be created with it.”

Perhaps the most important characteristic on that list is a quality product offering the ability – proven or unproven – to capture market share. If a firm has that, Hamburg’s interest is piqued. Add positioning in an industry with consolidation potential, and expect that Hamburg and IR are taking a good long look.
While he regularly approaches a potential investment as an interested buyer, at other times Hamburg approaches from the perspective of a CEO looking to take over and run a business.

In industry terms, it is called a “CEO-driven acquisition.”

“Many times, we find a great CEO – or he or she finds us – and they have a vision for an industry with the potential to create substantial value,” Hamburg explains. “We conduct thorough research, develop, validate and document an investment strategy and contact companies because they fit our strategy and not necessarily because they are actually for sale at that time.”

Other strategies include seeking businesses that have a “disruptive technology” but are unable to effectively market it. IR’s definition of disruptive technology is a breakthrough invention or innovation that changes the rules of competition within a particular industry by being so forward-thinking that it displaces the rest of the competition by setting everyone else back to zero.

In this scenario, Hamburg said that velocity is the key to success.

Much of the time, the disruptive technology is owned by a small company lacking the experience or ability to harness explosive market growth.

“We come in and help small companies accelerate through that growth curve by creating velocity and the execution of their business plans before the window of opportunity closes on that breakthrough,” Hamburg said.

Seizing opportunities and fixing “broken” or underperforming companies are the hallmarks of Hamburg’s two-decades plus career buying companies.

From July 1985 to March 1993, Hamburg was a senior manager with New York-based Accenture, where he led the design and implementation of business turnarounds in the United States and Europe. In 1993, Hamburg became a partner with Kidd, Kamm & Company, a firm specializing in middle market leveraged buyouts.

“I wanted to put myself in the laboratory environment learning how to acquire businesses,” he said. “But I always wanted to work for myself. So, three years later, in 1996, Industrial Renaissance was formed by putting two worlds together – my operating background and the experience I had gained in purchasing businesses.”

“The name “Industrial Renaissance” was chosen,” Hamburg said, “because it symbolizes transformation, rebirth and rebuilding.” According to Hamburg, that’s what his firm and the work of its employees are about.

This is best evidenced in the firm’s real estate division.

Hamburg, a master cabinet maker who put himself through college running a commercial cabinet business, is also passionate about old brick buildings.

Our mission is to buy and build successful businesses. We are buyers and builders of businesses, not buyers and sellers of businesses. We are focused on the acquisition of companies that are underperforming, or possess a disruptive technology, where value can be created by fundamentally transforming the companies we invest in or the industry segments in which they compete.

“I am on the lookout for vacant, brick buildings with good “bones” that can be transformed into income producing, multi-family and multi-use properties,” he said with an upbeat voice. “I love working with my hands and building things. With the financing capabilities that Industrial Renaissance brings, we can put the entire project together.”

The fact that neither Hamburg, nor anyone working for IR has ever worked on Wall Street, he considers to be a major asset for his clients.

“We do not come across as purely financially oriented,” Hamburg said. “We are highly approachable, normal people. We come across as operators – and we communicate with the seller much like we are talking to a fellow team member.”

The Importance of Buying and Building Businesses

Our mission is to buy and build successful businesses.

It takes too many years to build a great business with amazing business strategies just to turn around and sell it to an unknown buyer. That’s why Industrial Renaissance is a unique type of investor who grows businesses for future generations. We have the experience to know better than to sell your business. We don’t buy businesses to flip them. We buy businesses to build them. We care about the companies we invest in.

Industrial Renaissance is not a private equity fund or venture capital fund. We’re a team of seasoned operators and business executives who have worked in businesses ranging from manufacturing to medical devices to aerospace technology.  Our principals and senior advisors have experience in a wide range fields and know how to improve businesses and take them to the next level. They are business strategists, not venture capitalists or business brokers. You may need a CEO or a strong partnership. We’re here to provide that for you. We like to help companies with a proven product and that need coaching as well as money. We don’t select companies based on the size of revenues or earnings, or the size of our equity investment. Our team’s business mission is to buy and build large, dominant, successful businesses.

We want to create business value, not invest in businesses that are already at their peak. We like underperforming companies that have been around for a long time.  We like companies that have developed a breakthrough technology and have a window of opportunity to capture market share.  Maybe they’re looking for new management, a new business strategy, or restructuring. Our team is flexible and can work in the capacity that suits any particular businesses needs. We diligently work to create business models that can fundamentally transform the companies we invest in and the industry segments in which they compete.

At Industrial Renaissance, we’re long-term thinkers and investors. We never charge an investor management fee. Instead, our incentives are aligned with, and in the best interest of the businesses we invest in. For us to make money, all of our investment partners, underachieving and high growth companies we invest in, need to make money. That’s unique in the business investment industry.

If your company is in financial trouble, you need a new CEO, have a disruptive technology, or you’re looking for a new business strategy, please call us today at 203.254.7420.