Simple Beginnings RGE RD Restaurant started in a field. Chef Blair Lebsack and Caitlin Fulton began their journey by building an oven out of river rocks on a farm near an ancient buffalo jump. They then hosted a series of long table dinners for their friends and neighbours under Alberta skies. From these simple beginnings, they envisioned a restaurant that would bring the flavours of the prairies into the city and create a connection with the land through a rich culture of service and culinary experience. We took stones out of their creek and built our first oven out there. We used mud and clay from their property to secure it all together. It’s probably my favourite place on earth.Blair Lebsack, Chef RGE RD 1.0 The first phase of Blair and Caitlin’s vision for a location in the city took shape in 2013 when RGE RD took over the Blue Pear, a small restaurant in the Westmount 107 building. The Blue Pear was in its own right a culinary pioneer in Edmonton, founded by Jessie and Darcy Radies. Jessie was also the founder of important initiatives in the early 2000s such as ‘Original Fare’ and ‘Live Local Alberta’, which were some of the first coordinated efforts to establish a local economy movement in the region. RGE RD completed extensive renovations to create a beautiful earthy atmosphere and build out new kitchen amenities. But the space was still quite small. Before long, their unique offerings attracted a dedicated following that had the little restaurant overflowing. Reimagining the Building Sparrow Capital purchased the Westmount 107 building in the spring of 2014. It was immediately obvious that something was odd. RGE RD Restaurant was already hands-down one of the best restaurants in the city but the building was just ugly. The facade was clad in a faded beige tin material. A large patch of bricks that had fallen off the outer wall of the restaurant into the parking lot. There was a desperate need for some love and attention. Sparrow set about reimagining the building with Ty Ziola and Tyler Dixon of New Studio, a local architecture firm that was later acquired by Dialog. The brief to the design team was to create an aesthetic that would establish a landmark in the neighbourhood and draw pedestrians from 124 St. onto 107 Ave. The mandate was to get people referring to the building as “You know, the building with the…” The concept went through several iterations before settling on a design featuring water-cut stainless steel panels perforated with a wave-like pattern on a backdrop of subtle coloured LED lighting. The renovations involved other major interventions, including replacing the original boiler and insulating the building envelope. The building was in desperate need of love and attention. Blair and Caitlin were particularly eager collaborators. Their entrepreneurial leadership helped us to establish a robust asset that all stakeholders could be proud of.Antoine Palmer, Sparrow Capital Co-Founder RGE RD 2.0 With designs underway, Sparrow engaged the existing tenants to learn more about their experiences in the building and their intentions for the coming years. Sparrow also discussed how rents would need to move at the end of the current lease terms. The rents at the time of purchase were quite low and would ultimately need to increase in order to afford the planned renovations. As it turned out, most of the tenants expressed a strong enthusiasm at the prospect of someone finally paying attention to their building. Blair and Caitlin were particularly eager collaborators. They were happy to renew their lease at market rates and began imagining the possibility of expanding their restaurant into the neighbouring commercial unit. This marked the beginning of a collaborative alliance with RGE RD that would continue to deepen and evolve into the next decade. RGE RD’s second phase of renovations expanded their footprint from 1750 ft2 to 3460 ft2. The expansion included a wood-fired oven and other kitchen amenities, as well as a small butchery and a new dining area. Two Powerful Lessons The successful renovations revealed two fundamental principles that would guide Sparrow going forward. First, RGE RD’s expansion added significant value to the building and helped achieve the rents needed to afford the original facade renovations and other building improvements. As such, RGE RD effectively became the anchor tenant at Westmount 107. Their tenancy helped establish a robust asset that all stakeholders could be proud of and that enhanced the cultural fabric of the neighbourhood. It was the quality of RGE RD’s cultural and operational capacity that led the way. Sparrow has come to describe this principle as “Commerce follows Culture”. Second, Sparrow observed that in the Edmonton market, there is no shortage of space: there remain large swaths of land and buildings throughout the city that are sitting empty and underdeveloped. And there is no shortage of money. Where there is a strong real estate asset and a strong tenant, debt and equity investment capital are readily available. What’s missing is leadership; specifically, entrepreneurial leaders who can empower others in capital work. The most precious resource in the Edmonton economy are those people who are willing and able to take on responsibility and leadership and carry the weight of capital to create value and solve problems for their communities. Westmount 107 was successful because of the value that RGE RD provided as a tenant. Blair and Caitlin were able to carry the load of capital and their entrepreneurial leadership was precious. Sparrow describes this principle as “Entrepreneurial Leaders are the Scarce Resource”. Entrepreneurial Leaders are the Scarce Resource The most precious resource in the Edmonton economy are those people who are willing and able to carry the weight of leadership and capital.Jim Huth, Sparrow Capital Co-Founder Recognizing the Value of Entrepreneurial Leadership In 2019, RGE RD approached Sparrow Capital regarding the vacuum repair shop occupying the main retail frontage of the building on 107 ave. The repair shop lease was up for renewal and the owners were considering retiring the business. Meanwhile, RGE RD’s small butchery and retail offsales were showing strong demand and Blair and Caitlin were imagining another phase of expansion of their culinary landscape. Given the lessons learned in the first phase of the project, Sparrow felt the need to recognize RGE RD’s contributions to the asset. They sat down with Blair and Caitlin to share a crash course in commercial valuation and the financial details of how RGE RD’s first expansion affected the project’s rents and property value. Sparrow then offered to lease the new space to RGE RD on simple fair market terms. Next, given that RGE RD’s signing of a new lease would again immediately increase the value of the asset, Sparrow offered RGE RD the opportunity to invest in the building at the current value of the asset before the lease was signed. Finally, Sparrow invited RGE RD to participate in a new form of partnership structure called Open Equity. The World’s First Open Equity Partnership The Open Equity partnership structure recognizes the value of entrepreneurial leadership by directly issuing equity to tenants who bring commercial assets to life. Tenant Stakeholders under the Open Equity model are not required to invest cash; they earn equity simply by serving their customers with competence and fulfilling the covenants of their lease agreement. Open Equity draws on many well-tempered precedents, synthesizing the principles of the ESOP employee ownership model and other frameworks of equitable ownership into an elegant partnership framework that adapts nimbly to a broad range of assets and initiatives, diverse contingency scenarios, and various configurations of stakeholder groups. In 2021, the Westmount 107 building was converted from a conventional holding structure into the world’s first Open Equity partnership. RGE RD Restaurant became the first Open Equity Tenant Stakeholder. Since this first Open Equity prototype, Sparrow has expanded the Open Equity offering to other tenants and intends to gradually convert its entire portfolio of assets and operating businesses to Open Equity. Open Equity allocates participation to stakeholder groups on the basis of the capacities they contribute to the asset RGE RD 3.0: A Culinary Landscape Under the new Open Equity structure, RGE RD took over an additional 3970 ft2 in 2019 to add a market-style Butchery and retail space. With this third expansion, RGE RD has evolved from their original 1750 ft2 restaurant to an integrated culinary landscape occupying over 7400 ft2. RGE RD’s new production infrastructure allows them to process every part of the products and animals they source from local farms and the new retail space provides an outlet for any surplus products that couldn’t otherwise flow through their restaurant. These integrated capacities, including RGE RD’s farmer relationships, restaurant, and expanded production and retail infrastructure, represent a near-zero waste, full-cycle ecosystem that makes best use of the offerings of the land and celebrates the richness of Alberta and Western Canada. We wanted to learn how to best utilize a whole animal. We decided to put some serious butcher shop equipment in here. We’ve never worked in a place where there’s less waste.Blair Lebsack & Caitlin Fulton, RGE RD Co-Founders Ultimately, we want the guests to notice this relationship across the table. Everything is in place to facilitate this connection. Caitlin Fulton, Director of Operations & RGE RD Co-Founder RGE RD’s approach to the culinary arts is deeply thoughtful. It is connected to the land; it holds and expresses the shared talents of their team; it makes use of resources with great efficiency; it carries quality relationships with a network of farmers and vendors; and it hosts a rich cultural experience for their community. The principles that inform this grounded and integrated approach are as applicable to the culinary industry as they are to every function in the Sparrow Capital ecosystem. Sparrow continues to be inspired by Blair and Caitlin’s beautiful demonstration of the value of entrepreneurial leadership. That leadership is the real value that currently anchors the commercial asset value of Westmount 107. Sparrow recognizes this and is proud to be collaborating with RGE RD as the world’s first tenant stakeholders under the Open Equity Partnership Framework.