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Expanding empire.

North Little Rock's J.D. Ashley Family Reigns Over $50 Million Retail Portfolio

More than a few eyebrows were raised when news hit the streets of a reported $11.5 million deal to buy Lakewood Village in North Little Rock.

It was an aggressive move by the traditionally conservative Ashley family, led by its 70-year-old patriarch, J.D. Ashley Sr.

The addition of this project to the Ashley fold will push the value of the retail developments they control to $50-$55 million. This retailing portfolio ranks as perhaps the largest in central Arkansas among Arkansas-based owners, and maybe even the entire state. The family also controls undeveloped commercial land worth an estimated $15 million.

The troubled but beautiful 172,000-SF Lakewood Village project is now under contract, and a deal with Boatmen's National Bank of St. Louis could close any day.

"If J.D. is paying a higher-than-expected price, you can bet he's got a tenant or two in his hip pocket ready to come in," says one competing commercial Realtor. "He works the national scene really hard, and he's done it for a long time."

If the Lakewood Village buy goes through as expected, the Ashleys will manage retailing space totaling more than 2.5 million SF. That area likely will grow in the coming weeks as leasing and development activity at the project regains momentum.

"We've got several major retailers talking with us," J.D. Ashley Sr. says. "We're not far enough along to announce anyone, but if things work out, we would double or even triple the amount of retail space in a little time.

"We don't count a deal until they make a commitment, and even then, it's sometimes not until it's a signed deal. If one retailer we're talking with signs oil, we would double immediately."

And that could also entail constructing a parking deck and two-story addition on the north end of Lakewood Village to accommodate the increased shopping traffic.

The Ashleys also intend to open up an additional 10 acres for the 160,000-SF Indian Hills Shopping Center in North Little Rock and add 14,000 SF to the Kroger space there.

Their proposed Dogwood Square project on U.S. Highway 65 in Conway is scheduled to open next spring, with 41,550 SF of retailing space.

This development activity is indicative of the hot pace of retail projects during the past two years.

"Usually after Christmas, it's very slow, but the last two years we've seen more people wanting to do deals," Rick Ashley says.

The demand for small tenant space, between 600-1,500 SF, is in particular demand, says J.D. Ashley Jr. Toward that end, they will be developing 20,000-22,000 SF at Mabelvale Plaza in southwest Little Rock.

When the Mabelvale project at Baseline Road and Interstate 30 is completed, it will eventually encompass an estimated 500,000 SF of retail space. The 60-acre site adjoins a 122,000-SF Wal-Mart store. The giant Bentonville-based retailer bought the 23-acre location from the Ashleys.

The Mabelvale Square site illustrates the amount of patience sometimes required to see a site reach maturity.

"We had a sizable financial commitment in that before we ever developed anything," J.D. Ashley Sr. says. In fact, the option on that land was maintained for 13 years until it was activated last year.

"They put together a piece at a time, and now they've got quite a number of properties," says Reed McConnell, a North Little Rock-based developer.

Such patience has led to a roster of 16 Arkansas projects that house 212 tenants, who employ 3,360 workers and generate annual retail sales of $360 million.

Close-Knit Few

"Dad's such a people person," J.D. Ashley Jr. says. "Whenever we run into someone who's particularly tough to deal with, we always know we can get Dad to come in to harmonize with them.

"He's so relaxed and calm. He takes his time and is unhurried."

The family conducts its business through three entities: Square Associates Construction Co., a general contracting firm; Ashley Co., a real estate brokerage firm; and J.D. Ashley & Associates, leasing and management.

"We can build for less because we have our own construction company, and we can lease for a little less because we handle our own leases," J.D. Ashley Sr. says.

"As you can see, we have a very modest office," J.D. Ashley Jr. adds.

The family has moved into marketing with an enterprise called Ashley/ Shewmaker Outdoor Advertising, which is focused on the mediums of billboards and bus benches.

"We're just getting it going," J.D. Ashley Jr. says.

The Ashleys typically control properties through a general partnership arrangement, where they have controlling interest and handle leasing and management chores. Outside participation in projects is limited to only a handful of investors.

"It's strictly a close-knit few," J.D. Ashley Jr. says.

Rick Ashley adds, "We don't solicit investors at all."

A group of lawyers approached J.D. Ashley Sr. in the early 1970s to develop North Heights Shopping Center (now Camp Robinson Shopping Center). Instead of doing the deal on a fee basis, Ashley struck a bargain for 50 percent ownership split with Stuart Hankins, Sam Hilburn, Larry Wallace and Zachary Wilson.

The same crew came together for Indian Hills Shopping Center five years later. These lawyers also are involved in various combinations with other Ashley projects.

On the Dogwood Square project, the Ashleys are working with Mike Fendley, whose father joined in the development of Pike Plaza and its surrounding acreage.

The Ashleys are involved in an undeveloped 117-acre tract on Mann Road and Base Line Road with Reed McConnell and Apartment House Builders. The property is zoned for mixed-use development.

"We'd just as soon sell it and roll it into something else," Rick Ashley says.

J.D. Ashley Jr., 39, became active in the family business about six years ago, ending his gig as a musician. His younger brother has pursued a career in real estate since his teen-age years.

"I can remember reading leases and sitting in on negotiations when I was 14 years old," says Rick Ashley, now 37.

The two brothers also recall working on the blue-collar side of development when they were younger. Among those duties were building a retaining wall in front of Pike Plaza and keeping tally of how many dump truck loads of dirt were unloaded during construction of the Camp Robinson Shopping Center.

A third brother, Todd, 31, works in residential real estate sales in southwest Little Rock. Two daughters, Melody and Candace, round out the family.

Their father's career in real estate began in the 1950s and grew out of the restaurant business. J.D. Ashley Sr. came to Little Rock from his family's Searcy County farm near Leslie after a stint at college in Conway.

He worked in a pharmacy to pay his way through Arkansas State Teacher's College (now the University of Central Arkansas) and even pursued a dream of becoming a pharmacist himself. That changed when he learned his boss made $50 a week.

"I knew then that I would never be able to buy my own drugstore, so I dropped out of school," Ashley says. "I knew there must be something else out there better."

He moved to Little Rock with $5 in his pocket to work and learn arc welding in 1941. Ashley eventually relocated to work in the Detroit shipyards during World War II and was later inducted by the Army for service in Europe.

War Stories

Paul Spikes, a home builder by trade and a friend of Ashley's, was trying to put together a Little Rock project at the southeast corner of University and Asher avenues.

Spikes first optioned the land in 1954 but was unable to bring the deal together. As a result, Spikes was forced to continually renew his purchase option in pursuit of developing what would later become The Village Shopping Center.

The expense of optioning the land began to siphon needed cash from his home-building business, which began to suffer from his fixation on The Village Project.

In 1956, the cash crunch finally reached a critical point, where Spikes needed a partner with additional funds.

"He came up and offered a half interest in the proposed project if I would renew the option," Ashley says. " I helped him with getting tenants, and that was my first experience with that sort of thing."

Perhaps the pivotal deal on Ashley's first retail project was a contingent lease of 18,000 SF with the national chain of W.T. Grant Co. The junior department store chain would only come aboard if the center could attract another department store tenant that was 18,000 SF or bigger.

Ashley heard Spikes turn down a telephone offer for an 8,000-SF lease offer by H.O. West, who was looking to expand his Minden, La.-based chain into Little Rock. Ashley said whoa, not so fast. Desperate to salvage the project, they drove to Louisiana to negotiate a deal with West.

"We ended up making him a deal he could not refuse [an 18,600-SF lease at 60 cents per SF]," Ashley recalls. "That store ended up being one of the best grossing stores for West.

"I've learned that you need to be open-minded in negotiating leases. If I hadn't been sitting there and overheard the phone call, I don't know if we'd ever gotten that shopping center off the ground."

A major difficulty in attracting tenants for The Village was a pact among Little Rock's downtown department stores not to set up shop in any west Little Rock shopping center.

That retailing consortium remained intact until Sears broke rank in the early 1960s and migrated to its current University Avenue location.

Even with the key leases in hand, Ashley and Spikes had to sell controlling interest in The Village to Winrock Enterprises Inc. to finance the development.

Eventually, they sold out entirely in the mid-1960s, but Ashley was hooked on commercial development. He began to ease out of the restaurant business, eventually phasing out his ownership of Razorback Drive-Ins and Summerfield's Restaurant as the success of Pike Plaza in North Little Rock mounted.

A month after The Village Shopping Center opened in September 1959, Ashley and partner C.B. Fendley opened the first phase of Pike Plaza.

Only 45 undeveloped acres are left of what was once a 100-acre tract that Ashley and Fendley put together west of the shopping center. Much of that land was used for expanding Pike Plaza or sold off for medical offices around Baptist Memorial Medical Center, Riley's Oak Hill Manor and rental property.

"I had the pleasure of meeting Sam Walton back when I built Pike Plaza," J.D. Ashley Sr. says. "He had six Ben Franklin stores that were 6,000- to 8,000-SF each. He wanted to go in the project, but we already had had Sterling [another five-and-dime store] signed on.

"He was wanting to open a 25,000-SF discount retail store, and Ben Franklin was going to back him with merchandise, but they backed out."

After that brush with retailing history, the next time Ashley heard from Walton was when he wanted to open Wal-Mart No. 110 in North Little Rock.

The elder Ashley remembers dickering a few years back with Holiday Inns Inc. founder Kemmons Wilson over a then-undeveloped 2.5 acres on Shackleford Road. The Ashley land is now home to Tia's Tex-Mex and Black-Eyed Pea restaurants and Smitty's Billiards.

Wilson was scouting for hotel sites for his namesake chain and offered Ashley a low-ball price of $50,000 for the valuable property.

"He was playing with me," Ashley recalls.

What did you do?

"I laughed at him," says Ashley with a chuckle.

What did Wilson do?

"He laughed, too," Ashley says, breaking into full-blown laughter at the memory. "He knew what he was doing."

Hard-ball negotiating over pennies that add up to serious dollars is why a Kmart store is now selling its wares in Cabot instead of a Wal-Mart.

"We lost a Wal-Mart deal over a nickel per SF," Ashley says. "We had to have that nickel to amortize our loan. They offered $1.25 per SF, but we had to have $1.30 per SF to cover the construction costs we had.

"We wanted to get them in, so we went back to find a way to trim costs and make it work. After we came back at their price, they passed, saying that deal was only good for that day."

Easy come, easy go.

Protected by its conservative stance, the family was able to contend with adversity when the rent roll at Pike Plaza was rocked by a series of bankruptcies by West Department Stores, Otasco and Magic Mart. Occupancy plummeted to 75 percent.

"If I would've had a mortgage on this, I would've been in trouble," J.D. Ashley Sr. says. "We're not much for building spec space. I've seen too many people get in trouble by doing that. "

The Ashleys' track record for success appears destined for greater heights with the Lakewood Village move and other expansion plans on the drawing boards.
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Title Annotation:retailing portfolio of North Little Rock's J.D. Ashley family
Author:Waldon, George
Publication:Arkansas Business
Date:Sep 20, 1993
Previous Article:Wal-Mart still no. 1.
Next Article:Gwatney tops state sales.

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