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Still flying high

FORMER MILITARY PILOT JIM THOMPSON TAKES ON GROUND-UP DEVELOPMENT FOR REGENCY

By Joel Groover

When Jim Thompson was flying F-15s in the Florida Air National Guard, shopping centers were just another matchbox-size feature on his horizon. Flying supersonic jets in perilously tight formations tends to focus the mind on the task at hand. “You learn early on that you’ve got to have a lot of faith and confidence in the fellow you’re flying three feet away from,” said Thompson.

Today the 52-year-old heads East Coast investments for Jacksonville, Fla.–based Regency Centers. And these days, when he takes to the skies at the controls of a twin-engine Beechcraft Baron, he has more freedom as well as ample incentive to look more closely at the landscape below. “It’s a great way to look at real estate and to get around to a lot of properties in a short time,” he said. “That little Baron has come in quite handy.”

Intrigued by the real estate business, Thompson joined what would become Regency Centers immediately upon finishing his stint in the Guard in 1981. Over the next 25 years, his hard work, mastery of the technical side of the business and, perhaps most of all, astute approach to leadership and relationship-building helped turn a local real estate operation into one of the country’s largest retail REITs, says Martin E. Stein Jr., Regency’s chairman and CEO. “Jim is extremely diligent and thoughtful, and he has just wonderful instincts,” said Stein, whose father, Martin Sr., founded Regency’s predecessor firm in 1963. “But what really distinguishes Jim is his excellent leadership skills. He has a wonderful track record of training people and team-building. It may go back to his military background.”

Thompson has been managing director and head of operations for Regency’s East Coast portfolio for the past 13 years. He and his 100-person team were charged with leasing and managing some 250 properties valued at upwards of $5 billion and totaling about 25 million square feet. “He has done a terrific job,” Stein said. “Net operating income for those properties grew well over 3 percent, with strong rental rate growth and occupancies over 95 percent.”

Thompson’s mission as head of East Coast investments is not to squeeze more revenue out of existing centers, but to stir up new business opportunities, largely through ground-up development. In May Regency announced that Thompson would replace the firm’s two top executives on the development side: Mac Chandler, who left to join his family business in Southern California, and John Euart, who retired at the end of 2007.

Thompson will work closely with the firm’s vice presidents in Jacksonville and in Atlanta; Boston; Raleigh, N.C.; and Washington to pursue Regency’s traditional core business: grocery-anchored shopping centers in markets with top-notch demographics. But the firm is also branching out into larger property types. “We’re using our retail expertise to build some of these community centers of the type anchored by Target or Kohl’s,” Thompson said. “That works beautifully, because generally a grocery component can be part of the development as well. The Target gets you the soft goods and junior anchor interest. The grocery gives you that daily traffic with some of the more service-oriented retail merchants.”

Thompson is the son of an aerospace engineer and grew up mostly in the South. His family lived across the street from NASA’s Manned Spacecraft Center, in Houston, during his high school years and eventually settled in Atlanta. He attended Auburn University on an ROTC scholarship and began training as a fighter pilot in 1979.

He says flying F-106s, F-16s and F-15s in Jacksonville taught him lessons that shaped his approach to managing people. Before taking off on a training mission, Thompson and his fellow pilots would sit through briefings in which their goals, tactics, expectations for one another and back-up plans were laid out in precise detail. After the mission was over, they would return to base and hash out what had happened during the operation. These debriefings were, to put it mildly, open discussions. “We would sit across the table and look at each other and say, ‘How well did we do?’ If we didn’t do well, we would very frankly talk about what went wrong,” Thompson said. “If you screwed up, you were kind of wide open. You were sitting there, ‘Yeah, I screwed up.’ The beauty of that arrangement is, you constantly get better. You admit your mistakes, but then you go out next time and hopefully don’t make those mistakes again.”

In the same way, Thompson’s approach to dealing with young leasing executives centers on giving them precise instructions and then following up with honest critiques of their performance. Regency has long taken a systematic approach to building and maintaining retailer relationships, and Thompson has worked hard to make sure his leasing agents, even those in markets hundreds of miles from the Jacksonville headquarters, know precisely what is expected of them and follow the same basic rules. In a commercial real estate version of trusting your wingman, however, Thompson also gives them what he says is an extraordinary level of autonomy. “You still see situations where every lease gets executed back at the home office,” Thompson said. “That is a needless extra three weeks added to the process. We try to decentralize­ so that our people in the field can be nimble.”

Thompson likes the Wall Street–imposed discipline that came with Regency’s public offering in 1993. The need to give shareholders the best possible results helped steer Regency toward its winning focus on such market-dominant anchors as Kroger, Publix and Safeway. This discriminating approach continues to serve the firm well, according to Ken Avalos, a retail analyst at St. Petersburg, Fla.–based Raymond James Financial. “Regency constantly analyzes the quality of its properties to cull those it considers high-risk or slower-growth centers,” he wrote in a report in May.

Regency achieved much of its current bulk through a series of major acquisitions, including Security Capital in 1996, Branch Properties in 1997, Midland Group in 1998 and the $1.1 billion acquisition of Pacific Retail Trust in 1999. Thompson played a key role in all of these events.

Since the acquisitions market tightened in 2000, Regency has focused on building new centers. Thompson clearly will have his work cut out for him in his new job on the development side. The firm has some $2 billion in new projects in the pipeline, Stein says. About two dozen Target deals are in various stages of completion, and each of the three top grocery chains — Kroger, Publix and Safeway — now anchors about 70 Regency centers. The firm is also doing more business with traffic-generating Starbucks, which operates nearly 100 stores in Regency properties.

For Thompson, the pace of Regency’s growth — its portfolio doubled about once a year during the height of its acquisition spree in the mid-to-late-1990s — seems nearly as dizzying as an evasive maneuver in an F-15. When Regency went public in 1993, its portfolio totaled about 20 shopping centers. In fact, the company, which through the 1980s focused on local office markets, was just then getting started in the retail business. “A couple of us who have been here a good, long time kind of look at each other sometimes and pinch ourselves,” Thompson said. “ It has been an incredible ride.”